DAVY VIEW

Having pre-released Q3 operating profit of €1.2bn on October 13th, IAG delivered €1,206m (consensus: €814m, Davy: €826m). A trading outlook for 2022 was provided. At current fuel prices and exchange rates, IAG expects its 2022 pre-exceptional operating profit to be approximately €1.1bn (consensus: €619m, Davy: €698m). Net cash flow from operating activities is expected to be significantly positive for the year. Net debt is estimated to increase by year end, linked to seasonal booking patterns and capital expenditure associated with aircraft deliveries in quarter 4. Quarter 4 2022 capacity, measured in ASKs, is expected to be approximately 87% of 2019, resulting in full year 2022 capacity of c.78% of the 2019 level. Capacity in the first quarter of 2023 is anticipated to be approximately 95% of 2019.This and the commentary of the pension deficit — no deficit reduction contributions are expected under the existing overfunded protection mechanism — should be well received.