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EUR 200.00
For Business Accounts Only
 Liquidity: The current 10 Bn mean~40% of the normalised annual revenues, which is above the industry average and allows the company to face the rest of the year relatively calm. The group rules out a rights issue for the time being and in the short-term.
 Cash outflows: should gradually decrease over the coming months, in this regard, the € 200 M estimated on a weekly basis could be cut thanks to lower leasings and new cost savings measures. In this regard, we stress that even though the gross capex for 2020 has been cut to € 3 Bn (from € 4.2 Bn), the net capex (real cash outflow) will total € 2.4 Bn after assuming the expected leaseback deals. As for potential downsizing plans, the company confirmed it is studying a -30% reduction in British Airways and -20% in Aer Lingus, considering that this could be extended to other airlines of the group.
 Capacity and future situation: The company maintains its estimate of -50% capacity in 3Q’20 (vs. -90% in the 2Q’20) although this will depend on the final flight conditions (safety, health, etc.). In 2021 it expects capacity to be -20% lower than 2019 levels. Beyond the potential aid package that some rivals could obtain, some Tier2 players could disappear and/or at least become much smaller than in the past (i.e. Norwegian), which in any case should give rise to fewer or weaker operators. Defending its position in Heathrow is a priority for the company.
The company maintains its message based on its comfortable financial position and on its efforts to reduce cash outflows. We believe that April (when we estimate that around € 890 M were burnt) would have been the worst month in this regard and, thanks to oil hedging and cost-cutting, the cash outflows will decrease. In any event, the visibility continues to be very low and the company is adapting to a new scenario, where it should have a more favourable competitive position going forward. In any case, we do not see drivers in the share price in the short-term, with the delivery to be seen from the end of June being key. The possible resumption of the activity at the end of June in the proportion foreseen by the company will depend on the EU recommendations and on the possibility of bilateral corridors among European countries.
IAG: MEETING WITH THE COMPANY (ANÃLISIS BANCO SABADELL)
Highlights from the meetings held today with the company: Liquidity: The current 10 Bn mean~40% of the normalised annual revenues, which is above the industry average and allows the company to face the rest of the year relatively calm. The group rules out a rights issue for the time being and in the short-term.
 Cash outflows: should gradually decrease over the coming months, in this regard, the € 200 M estimated on a weekly basis could be cut thanks to lower leasings and new cost savings measures. In this regard, we stress that even though the gross capex for 2020 has been cut to € 3 Bn (from € 4.2 Bn), the net capex (real cash outflow) will total € 2.4 Bn after assuming the expected leaseback deals. As for potential downsizing plans, the company confirmed it is studying a -30% reduction in British Airways and -20% in Aer Lingus, considering that this could be extended to other airlines of the group.
 Capacity and future situation: The company maintains its estimate of -50% capacity in 3Q’20 (vs. -90% in the 2Q’20) although this will depend on the final flight conditions (safety, health, etc.). In 2021 it expects capacity to be -20% lower than 2019 levels. Beyond the potential aid package that some rivals could obtain, some Tier2 players could disappear and/or at least become much smaller than in the past (i.e. Norwegian), which in any case should give rise to fewer or weaker operators. Defending its position in Heathrow is a priority for the company.
The company maintains its message based on its comfortable financial position and on its efforts to reduce cash outflows. We believe that April (when we estimate that around € 890 M were burnt) would have been the worst month in this regard and, thanks to oil hedging and cost-cutting, the cash outflows will decrease. In any event, the visibility continues to be very low and the company is adapting to a new scenario, where it should have a more favourable competitive position going forward. In any case, we do not see drivers in the share price in the short-term, with the delivery to be seen from the end of June being key. The possible resumption of the activity at the end of June in the proportion foreseen by the company will depend on the EU recommendations and on the possibility of bilateral corridors among European countries.
Underlying
International Consolidated Airlines Group SA
International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.
Provider
Sabadell
Francisco Rodriguez
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