International Consolidated Airlines Aktie

[Foreign Language] Ladies and gentlemen, good morning to you all. I would like to thank you for attending the shareholders' meeting of International Consolidated Airlines Group S.A. I also wish to thank the members of the Board of Directors who are here today for their presence.

Let us begin the meeting. I would like to inform all the attendees that the Board of Directors has requested the presence of the notary, Ms. Ana Fernandez-Tresguerres Garcia, who is seated at the table on the side of the auditorium to take the minutes of the meeting.

I also remind you that any shareholders who wish to participate must have first identified themselves and registered on entry to the auditorium and must have handed over a written account of their comments. If they wish them to be recorded verbatim in the minutes drawn up by the notary.

Shareholders attending remotely that wish to participate, must have sent them using the online platform as it was indicated in the call notice. Finally, I inform you that the period for voting via the online platform for those shareholders attending remotely will remain open until the end of this shareholders' meeting.

I give the floor to the Secretary.

Good morning. To comply with the legal formalities, it is placed on record that in Madrid, at the Auditorio Rafael del Pino, Calle de Rafael Calvo 39A, with the possibility of attending remotely at 12 noon on the 18th of June 2026, the shareholders' meeting of the International Consolidated Airlines Group S.A. is held on second call, having been called pursuant to the Board resolution of the 7th of May 2026.

The call notice was duly published on the 11th of May 2026 in the newspaper, La Razon on the website of the Spanish National Securities Market Commission by means of another regulated and corporate information announcement and on the corporate website where it has appeared without interruption since then and is, therefore, deemed to have been read for all purposes.

This shareholders' meeting is chaired by Mr. Javier Ferran as Chairman of the Board of Directors and the Board Secretary, Alvaro Lopez-Jorrin acts as meeting Secretary of such. The governing panel is, therefore, composed of those 2 individuals and the directors attending.

A list of attendees has been drawn up according to which there is sufficient quorum to validly constitute the shareholders' meeting on second call and to transact all the business on the agenda. Detailed information on the quorum will be provided once the list of attendees has been closed and prior to the shareholders' speeches.

Briefly, the agenda for the meeting contains the following items: one, approval of the 2025 financial statements and management reports of the company and of its consolidated group; two, approval of the consolidated nonfinancial information statement and sustainability information report for financial year 2025; three, approval of the management of the Board of Directors during the 2025 financial year; four, re-election of the KPMG Auditores, S.L. as auditor of the company and of its consolidated group for financial year 2026 and delegation of powers.

Five, approval of the proposal for the allocation of 2025 results; six, 2025 final dividend approval; seven, approval of a reduction in share capital by means of the cancellation of up to 461,166,953 shares, 10 per cent of the share capital and delegation of powers for the implementation thereof.

Eight, re-election for the 1-year terms stipulated in the bylaws of Mr. Javier Ferran, Mr. Luis Gallego, Ms. Eva Castillo, Ms. Margaret Ewing, Mr. Maurice Lam, Mr. Bruno Matheu, Ms. Heather Ann McSharry, Ms. Simone Menne, Mr. Robin Phillips and Mr. Paivi Rekonen and the appointment for the 1-year terms stipulated in the bylaws of Mr. Daniel Pinto.

Nine, consultative vote on the 2025 annual report on directors' remuneration; 10, authorization for the derivative acquisition of the company's own shares by the company itself and/or by its subsidiaries; 11, authorization to the Board of Directors with the express powers of substitution to increase the share capital pursuant to the provisions of Article 297.1 b of the Companies Act.

12, authorization to the Board of Directors with the express powers of substitution to issue securities, including warrants convertible into and/or exchangeable for shares of the company, establishment of the criteria for determining the basis for and terms and conditions applicable to the conversion or exchange.

13, authorization to the Board of Directors with the express powers of substitution to exclude preemptive rights in connection with the capital increases and the issuances of convertible or exchangeable securities that the Board of Directors may approve under the authorities given under Resolutions 11 and 12; a, up to 10 per cent of the share capital on an unrestricted basis; and b, up to an additional 10 per cent of the share capital in relation to an acquisition or a specified capital investment.

14, delegation of powers to formalize and execute all resolutions adopted by the shareholders' meeting. The proposed resolutions prepared by the Board of Directors on the above items and the relevant reports have been available on the corporate website from the date of publication of the call notice and are therefore also deemed to have been read for all purposes.

[Foreign Language] Dear shareholders, it's a pleasure to welcome you once again to IAG's Annual General Meeting. We must -- today, after a year in which our group executed its strategy with discipline and ambition, strengthening our position as one of the global leaders in the aviation sector and remaining true to our purpose of connecting people, businesses and countries.

Before going into detail, I would like to begin by acknowledging on behalf of the Board, the hard work, dedication and commitment of everyone at IAG. Your efforts have been essential in navigating a complex environment, accelerating our transformation and continuing to deliver solid results.

And I would also like to thank all of you, our shareholders, for your trust and ongoing support. In the acknowledgment section, I would also like to recognize the work of our Director, Nicola Shaw, who is leaving our Board after 9 years of service to the group.

In 2025, once again, we demonstrated our ability to translate strong demand into consistent results, supported by rigorous management, continuous efficiency improvements and an increasingly competitive operational base in a highly demanding environment. Our purpose is not just a statement. It is a guide for decision-making and a real foundation for long-term value creation.

When we speak of connecting people, businesses and countries, we are also speaking of contributing to the economic and social development of the markets and communities in which we operate of facilitating opportunities and fostering relationships that generate shared prosperity.

In 2025, we allocated EUR 3.4 billion to strengthen the group's capabilities and prepare for the next stage of growth. This investment effort encompasses both the introduction of more efficient aircraft and improvements in products, technology and key infrastructure to enhance the customer experience and strengthen our operational performance.

The group's performance in 2025 allowed us to continue generating value for shareholders. In this context, we announced in February a share buyback program of EUR 1.5 billion, of which EUR 500 million has already been completed and the second tranche of another EUR 500 million is underway.

Our priorities, as outlined in our strategy are to achieve sustainable growth, industry-leading margins and maximize returns for shareholders. We are well positioned to do that, thanks to our strong balance sheet and liquidity, which allows us to keep delivering on our strategy and build confidence in IAG for the long-term.

We continue to embed sustainability in our business. And -- this commitment is reflected in the modernization of our fleet in the search for efficiencies, in the push towards sustainable fuels and other initiatives to reduce our climate footprint through alliances and innovation. This advance should go hand-in-hand with a framework that allows Europe to reduce its emissions without undermining its connectivity or its competitiveness. That is why the transition needs to be orderly and pragmatic, built on measures that are effective and achievable.

Governments and businesses need to work together so that sustainability strengthens rather than constrains a strong and competitive aviation sector. While our results are strong, we remain very focused on the external pressures facing our sector. Aviation continues to operate in a highly complex environment shaped by geopolitical tensions, airspace restrictions, supply chain challenges and an evolving regulatory landscape. However, we are navigating this environment from a position of strength.

The diversity of our airlines and businesses gives us flexibility and our strong financial position provides resilience. Together, this allows us to respond with agility, manage the uncertainty and continue delivering our strategy.

Ultimately, our success depends on our people. Our colleagues are the ones who deliver our results every day. Their experience, dedication and professionalism are what drives excellence across our operations and the service we provide to customers around the world. One of our greatest strengths is the diversity of our workforce. We bring together more than 120 nationalities with different backgrounds, perspectives and experiences.

Diversity makes us better. It strengthens our decision-making, fuels innovation and helps us build a more resilient organization that is better prepared for the future. In terms of corporate governance, we remain committed to the highest standards of good governance and transparency.

In 2025, we continue to comply with the Spanish and U.K. corporate governance codes, reflecting a disciplined management framework and a strong culture of accountability that we consider essential to sustaining the group's long-term success.

So far in 2026, we have seen solid operational performance and resilient demand across our key markets. As we look ahead to the second half of the year, we remain cautious. There are clear opportunities, but also ongoing challenges from cost volatility to geopolitical uncertainty, such as the conflict in the Middle East and a more demanding economic backdrop.

In this environment, we will continue to rely on the strength of our brands, the diversity of the group and our financial discipline to deliver our strategy while ensuring our purpose connecting people, businesses and countries remains at the heart of everything we do. This is something we can all take pride in, the role we play in supporting people, enabling growth and contributing to the societies we serve. Thank you to all of you for your continued support.

The CEO has the floor.

[Foreign Language] Good afternoon, and thank you very much for attending this Annual General Meeting. I would like to begin by highlighting a key point. 2025 was another very strong year for IAG. We continue to execute our strategy with discipline supported by our transformation program. And that resulted in record financial results, a stronger balance sheet and a greater ability to continue investing in the future of our group.

As the Chairman already pointed out, IAG has responsibility and a significant presence wherever we operate. Connecting people, business and countries and this is not just operating sites. This supports businesses, tourism, trade and investment between countries. And what really matters is how we turn that strength into lasting value, profitability, customer service, commitment to our employees and a relationship of truth with all our stakeholders.

As mentioned earlier, 2025 was again a year of solid results. We increased our revenue by 3.5%, boosted operating profit before exceptional items by 13.1% and raised adjusted earnings per share by 22.4%.

Behind these figures, there are 3 factors I would like to highlight. The first is that we continue to see resilient travel demand. The second is the quality of our brands in key markets. And the third is the value of having a diversified group capable of drawing on different geographies, segments and brands to sustain performance in a more balanced way.

Throughout the financial year, we saw generally solid demand. And although there were signs of softness in some markets during the summer, the overall picture for the year was clearly positive. We closed 2025 with an operating margin of 15.1% at group level, surpassing our target range of 12%, 15% over the cycle.

Iberia and British Airways achieved margins of 16.2% and 15.2%, respectively. These margins reflect the positive impact of our transformation, operational discipline and improvements to our customer offering. All of this is complemented by an investment of EUR 3.4 billion in our fleet technology infrastructure to strengthen our future performance. All of this is complemented by investment in our fleet, as I said, this performance is also reflected in our ability to reward shareholders.

The Board proposed an interim dividend of EUR 228 million, bringing the total distribution for 2025 to EUR 448 million, an increase of 8.9% per share compared to the previous year. Added to this is additional excess cash return program worth EUR 1.5 billion, of which EUR 500 million has already been completed and the second tranche of a further EUR 500 million is underway. This brings total excess cash returns announced over the last 3 years to EUR 2.85 billion.

Our business model and strategy are designed to generate sustainable profit growth in the medium-term. The first pillar of the strategy is to strengthen the core of the business. This means continuing to drive our portfolio of leading positions and strengthening our brands in markets where we see attractive growth opportunities.

In the coming years, we plan to increase our capacity in line with the mix of growth we are seeing in our markets and with planned aircraft deliveries. We expect this growth to continue to be supported by tight global supply dynamics. Both delays in aircraft deliveries and the fact that a proportion of these aircraft are being used for replacement rather than growth are the main reasons for this dynamic.

Returning to the first pillar of our strategy, one of the best examples of the strength of our positions is the North Atlantic, where we remain leaders alongside our partners. It's a key market for the group and performed well throughout 2025, particularly in the premium segments.

In this context, the entry into service of the Airbus 321XLR by Aer Lingus and Iberia has opened up new opportunities for efficient growth, offering greater flexibility to develop routes, increase frequencies and fly to destinations with highly attractive demand profile.

We also hold a distinctive position in Latin America, which remains strategic due to its potential for structural growth. Iberia with a long-standing strength in this market continued to strengthen its presence with more frequencies and new development opportunities.

In the short haul, intra-European market, we have seen a mixed picture. Spain has continued to show dynamism, while other parts of the continent, the environment has been more challenging due to the weak demand and cost pressures.

Outside these markets, we continue to apply a highly selective approach to capacity deployment with positive results in several regions, particularly in Asia Pacific. We are continuously investing in the offerings of all our airlines to improve the customer experience, operational resilience, efficiency and sustainability.

Our 2 most important non-financial metrics, on-time performance and the NPS improved in 2025. The group punctuality rose by 4.6% to 82.4% with a particularly notable improvement in British Airways, whilst Iberia and Vueling continue to deliver benchmark levels within the industry. Iberia Express was the most punctual airline in Europe, while Iberia ranked among the most punctual in the world.

When operations run more smoothly, customer perception also improves. This progress has been reinforced by investments in customer service, lounges, the in-flight experience and digital tools. In the same vein, the introduction of high-speed WiFi connectivity across the group airlines through the agreement we signed with Starlink is further evidence how we aim to enhance the quality of the product we offer using the latest available technology.

Alongside our airline business, we continue to develop activities that broaden our revenue streams and drive growth with lower capital intensity. In this area, IAG Loyalty once again performed very well, supported by growth in active customers, increased Avios generation and the renewal of strategic agreements with key financial partners such as American Express.

The Holiday business also continued to perform well and contribute to the group as a whole through British Airways holidays. We're also continuing to develop other less capital-intensive businesses such as our alliances with other airlines. These remain an essential part of the group's long-term strategy as they expand our customers' access to a global network of destinations and frequencies.

And of course, our maintenance business in Spain, which serves both internal and external customers. Noteworthy here is the recent signing of the agreement with CFM for the maintenance of LEAP engines, which will be carried out at La Munoza. As well as the creation of new company IAG Engine Tech to provide the service.

Transformation remains one of the group's key drivers for improvement. Thanks to this, we have gained efficiency, strengthened our ability to adapt and created a more solid foundation to sustain competitive margins across different scenarios. The key point is that this work is not yet complete. We continue to see concrete opportunity to streamline processes, boost productivity and improve execution across various areas of businesses.

[Foreign Language] Complementing this transformation is our focus on innovation, digitalization and investment discipline. We continue to invest in our fleet, technology and products with the aim of strengthening the differentiation of our brands, improving operational efficiency and advancing sustainability.

In 2025, we placed orders for 71 new generation, more fuel-efficient, long-haul aircraft with options for a further 23, a decision that supports both fleet renewal and future growth within our value creation framework. During 2025, we made progress on fuel renewal -- fleet renewal, increased the use of sustainable fuel and continue to work on operational improvements that reduce our footprint.

At the same time, we maintain our clear stance in the regulatory debate as the Chairman has pointed out. The transition will only be effective if it's underpinned by workable rules, appropriate incentives and a framework that does not disproportionately penalize the European industry compared to the global competitors.

As for workforce, none of this, none of what we achieved will be possible without our 75,786 employees. Throughout 2025, we continue to support the professional development at every stage of their careers. We do this through graduate and apprenticeship programs, our pilot academies and a firm commitment to an inclusive, diverse and leadership-oriented working environment. We also continue to make progress on initiatives, enabling employees to share in the business success such as share purchase schemes.

In terms of challenges, 2025 presented significant external challenges. The air traffic control situation in Europe continues -- remains complex, affected by airspace closures, staffing issues and weather-related disruptions. Although 2025 was slightly better than 2024, it remains a significant obstacle for our customers and the sector's efficiency.

Added to this are delays in aircraft deliveries and supply chain challenges, factors that push us to be disciplined to protect our customers and preserve our operational reliability. We're also monitoring the various proposals for the expansion of the airports where we operate, such as Heathrow, Madrid-Barajas and El Prat.

As you are well aware, we support growth and infrastructure improvements, but such growth must be accompanied by a cost competitive model and improved service standards. Added to these challenges is the geopolitical uncertainty we are experiencing this year stemming from the war in the Middle East and its impact on fuel prices.

Fortunately, the U.S. and Iran seem to have a sort of agreement. But since the conflict broke out, our prices have doubled. And given that fuel accounts for around 1/4 of our cost base, this poses a significant challenge. Today, we're facing this situation from a much more -- much stronger position with a stronger balance sheet, a lower leverage ratio and a robust cash position.

This greater resilience driven by transformation we are undertaking across the group enables us to weather volatile situations such as the current one more effectively, better absorb cost pressures and continue to manage the business with flexibility and long-term confidence.

We have faced difficult conditions before. We firmly believe in the fundamentals of our business model in the execution of our strategy, in our resilience and in our continuing -- and in continuing to deliver value to our shareholders. Ultimately, a model of -- and a strategy do not deliver results in their own. It is the people who make them happen.

I would like -- I would, therefore, like to conclude by reiterating my sincere thanks to our employees for their hard work, their professionalism and commitment to maintaining the highest standards in very difficult conditions, to our customers for the trust they continue to place in our brands and to you, our shareholders, for your constant support. It is thanks to this collective effort that we will overcome the current challenges and be prepared for those that lie ahead. Thank you very much.

The Secretary will now take the floor to report on the definitive quorum now that the list of attendees has been closed.

[Foreign Language] The share capital amounts to EUR 461,166,952.70 and is represented by 4,611,669,527 ordinary shares, each with a par value of EUR 0.10 belonging to a single class and series. In accordance with the provisions of Article 28 of the bylaws and Article 23 of the shareholders' meeting regulations, a list of attendees has been drawn up according to which there are 182 shareholders attending in person or by electronic means owners of 152,377,151 shares that represent a nominal of EUR 15,237,715.10, which is a 3.3% of the share capital.

And there are 383 shareholders attending by proxy owners of 2,923,790,175 shares that represent a nominal of EUR 292,379,017.20, which is an equivalent of 63.4% of the share capital. From the shareholders attending in person, 132 shareholders, owners of 150,944,040 shares have exercised their right to vote through remote means.

Therefore, there are 565 shareholders in-person or by proxy in the General Shareholders' Meeting, owners of 3,076,167,323 shares that represent a nominal of EUR 307,616,732.30, which is 66.7% of the share capital.

It is placed on record that the stock treasury of the company, that is 250,522,152 shares, which represents 5.43% of share capital. It has been taken into account to calculate the percentages necessary for the constitution of this general meeting. But according to the law, the exercise of the voting rights corresponding to these shares is suspended.

[Foreign Language] In view of the data provided by the Secretary and in accordance with the provisions of Articles 193, 194 of the company's law, Article 28 of the bylaws and Articles 22 and 23 of the shareholders' meeting regulations, it is confirmed that the necessary requirements for the valid constitution of the shareholders' meeting on the second call and to transact the business on the agenda have been met.

The notary will now take the floor.

In compliance with the provisions of the Spanish corporate legislation, I must ask the meeting whether there are any reservations or protests concerning the statements of the Chairman and the Secretary with respect to the number of shareholders in attendance and the capital present in-person and by proxy.

Shareholders attending remotely wishing to lodge reservations and protests in this regard may do so using the section of the online platform provided for this purpose so that they may be recorded in the minutes. There are no -- there being no objections, the valid constitution of the shareholders' meeting on second call to transact on all the business on the agenda is hereby confirmed.

I give the floor now to the Secretary to organize for speeches.

[Foreign Language] In accordance to the provisions of the shareholders' meeting regulations, the floor is now open to speeches by the attendees who have so requested. Speakers are asked to ensure that their speeches do not run over 5 minutes established in the regulation to facilitate the conduct of the meeting.

Once all the speeches have been finalized, the appropriate information or clarification requested will be provided where possible. Ms. [ Artemis Cerrara ] has the floor.

Good morning, Chair and Board members and shareholders. It would seem that IAG's shareholders found enough kerosene to increase, which is good news for all of our shareholders, but also for you, the Board members and our company as a whole. Last year, I trusted a return of price at around EUR 7 per share, but it seems that, that objective is closer now. At the moment, we've surpassed the barrier of EUR 5 per share, which places IAG's share on the takeoff ramp to levels post-pandemic.

But Chair, last year, I asked you 3 specific questions with regards to the capital reduction policy and the reduction in value of the share. And with all due respect, I must say that your answers were too generic in nature without hardly any information apart from some general thoughts. So I would like to share a thought process with you all with regards to the lack of specificities and details given something which is becoming a common practice amongst management teams and listed companies.

And I'm thinking here about the CEO of Repsol, Mr. Josu Jon Imaz, who seems to be rara avis in the way he answers the questions. And believe me, this is a clear example to be followed. So Chair and shareholders, when somebody has done 900 kilometers there and back to attend in-person a general shareholders' meeting and has taken the trouble to prepare a speech where not only I'm grateful for the management task you do, but also you create doubts about the future.

I think it's not very respectful on your behalf towards that shareholder, but also towards all shareholders as a whole to not take the trouble to develop in details the answers given to the questions asked by the shareholder. And I consider that when a person has a responsibility to manage a prestigious company such as this, they should show full will to give full transparency and especially because of the interest shown by the shareholder in terms of the company.

And the shareholders may only represent a small part of the capital, but we feel closer to the company than many of those big shareholders whose stake is measured in more than 5% rates of share capital. So this is just a constructive criticism. Thanks to the free float and the small shareholders, this is why companies can list on the IBEX 35, because one of the criteria to be included there is that the turnover should be wide in scope and that the free float should have an insignificant amount.

And you mustn't kid yourselves. It is the shareholders that place you at the head of these companies, but those who really feel the heartbeat of the companies we invest in are the small shareholders, not the big shareholders. And like myself, we put our net worth at risk in the companies that we trust in. Many of us are your customers in addition to being your shareholders. And so therefore, Chair, with all due respect towards you and the Board of Directors at the helm of this company, I trust that you'll be able to give me more specific details in the answers you give me.

In September 2020, there was a capital reduction of EUR 996 million, EUR 663 and -- the number of shares remained constant at EUR 0.5 to EUR 0.10 per share after a capital increase in October of 2020, and there were a number of shares at over [ 404 ] million and the capital at EUR 496 million. And the capital has been reduced by 7.23% through 2 amortizations of shares, one in September 2025, the other in March 2026.

The number of shares in circulation is still over EUR 4,600 million, [ 2.300x ] those that existed before the pandemic, whilst the current capital is 46% more than what existed in 2020. So the nominal value is just 1/5 and the true value in terms of capital is approximately half of what it was worth then. So it's reasonable to suggest that a counter split at 2:1, although it's a neutral transaction in terms of capital would be worth going into to increase the intrinsic value of the share, making it more appealing for shareholders and less volatile.

So therefore, I would like to ask the question I asked last year again. Are you considering the possibility of doing a counter split to reduce the number of shares in circulation and to strengthen IAG in the markets and through repurchase of shares, that's beginning to give the results to recover the value of shares and make it more appealing for shareholders?

My second question is, after the program of EUR 500 million in execution now, will you consider to reduce capital through repurchase? And what percentage of the share capital would you consider should be reduced in reasonable terms? And I'd like to convey to you my congratulations to you all because of the rhythm in reducing net debt in the company.

As we've seen from the last quarterly results, the fact that the share price has increased as well as the reduction of 30% in the net debt of the company, we can only describe this as being a total success, continue along these lines because with a net debt ratio of 0.5x, we can say that we are one of the airline groups that is strongest in the world with good creditworthiness.

So I hope that the answers you give me will ensure that I still want to do that long journey from Asturias to come to this General Shareholders' Meeting or maybe I'll come by plane next time. That's also a possibility. Thank you very much.

[Foreign Language] Thank you. Mr. Carlos Fernando Alvarez has the floor.

[Foreign Language] My question is actually a very short question for you. I'd like to know whether there are any programs other than to celebrate the 100th year of Iberia in 2027. That's it.

[Foreign Language] Thank you very much to the shareholders for your questions and for your comments.

[Foreign Language] I'll start with the last -- the second question. It is a historic year. And thank you very much for that comment. It is for the company, not just to celebrate for celebration, but also to thank and acknowledge the work of all those that have helped us. This is a key year for us. So it won't be a single one-off event. It will be a number of events in the course of the coming 12 months, which are now being -- currently being prepared, but it is a historical moment and certainly a time to celebrate. Thank you very much for your question.

As for the comment from our shareholder, Mr. [ Irleda , ] I'd like to thank you again for traveling so far to come here for your attendance here today. I make a note, clear note of your comments. I do apologize if where you believe that we have not been followed your expectations or my expectation.

Now relating to your questions, the third one is not so much a question, is a comment. I do agree with what you say, and we very much appreciate your very kind words. But perhaps let me answer them in a jointly, because there's a certain link and flow between them. Now specifically, no, we're not at present recognized -- considering a counter split.

The company has a lot more individual shareholders than most listed companies for various reasons, and a lot of them are, in fact, in Spain because this is the result of the Iberia's privatization scheme. We also have about 35,000 employees across the world whom we welcome and invite to become shareholders. A lot of them, for out of affective purposes, give 1 share to their children. A lot of them are minors, of course.

A counter split would increase the price of the share. Its impact -- the financial impact, of course, is neutral. But we think that for now, it is better to continue with this accessible value in consideration for these personal circumstances, which I just mentioned. We do hope the share to go up. And hopefully, normally or symbolically, we can review or get a higher price than what we had in the past.

Regarding your second question, we have announced -- we did announce this scheme. And -- and our purpose here is to be disciplined on the use of the company's resources where the priority is the business, its growth and then to remunerate our shareholders through dividends. And if we have additional resources, we invest them in the best possible way. And if we believe that the price of the share is attractive and only in those circumstances, then we would consider a share repurchase scheme.

It is our purpose to stick to this policy and as a result, there might be repurchases in the future. Now your specific question is, do we have a limit concerning these repurchases? And the answer to your question is no, there is no limit. But let me give you more details on this, specifically on what you've asked.

What may could happen is that if at a given moment, if -- when you repurchase and the price continues to go up and the significant repurchase and the price of the share reach a certain level, that instead of a counter split, we would do a split to continue to have the attractiveness of the company to the families and the shareholders, the individual shareholders of the company that is. I hope I've answered your question.

Many thanks to everyone for their contributions. We will now -- we will now endeavor to answer the questions. It is not apologies, it's now time to submit the proposed resolutions prepared by the Board of Directors concerning the items on the call notice agenda to vote. The floor is granted to the Secretary.

Since shares representing more than 50% of the subscribed voting capital are present in-person or by proxy, the proposed resolutions will require an absolute majority for the approval of items 7, 11, 12 and 13 on the agenda and a simple majority for the remainder items.

Shareholders may vote for, against or abstain from voting in relation to some or all of the proposed resolutions, for which purposes, they must complete and sign the voting card given to them on entry to the auditorium and hand it to the notary's table at the end of the meeting or follow the voting procedure established in the online platform for those attending remotely.

If cards are handed in with some of the voting boxes left unchecked, the vote will be deemed cast in favor of the resolutions prepared by the Board of Directors. In contrast, if voting cards are not handed in, the shareholder will be deemed to have abstained from voting on all items put to the vote.

I remind the meeting that in accordance with the provisions of Article 32.2 of the shareholders' meeting resolutions, once the Chairman has a record of the existence of sufficient votes in favor, he will declare that the resolutions have been approved without prejudice to any statements made to the notary by the shareholders.

Both votes cast using remote means as well as the direction of votes cast on the different proposed resolutions prepared by the Board of Directors in the case of proxies have been duly processed, and the results will be provided to the notary.

In light of the available data with more than 99.99% of the votes having been counted, it has been verified that all the resolutions proposed by the Board of Directors have received a favorable vote of a number of shares exceeding the majority required by law and the bylaws for their valid approval, as explained previously.

Accordingly, I declare that all the proposed resolutions prepared by the Board of Directors have been approved without prejudice to the votes cast at this meeting by the shareholders present, which will be duly counted in the result of the votes.

The notary will authorize the minutes of this meeting, adding necessary legal requirements. The shareholders' meeting is therefore adjourned. Many thanks for your attendance.

Good morning, ladies and gentlemen, and welcome to International Airlines Group Q1 2026 Results. [Operator Instructions] I would like to remind all participants that this call is being recorded.

I will now hand over to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead.

Thank you very much. Good morning, everybody, and welcome to the IAG first quarter results. As usual, I'm joined by Nicholas Cadbury, our CFO, as well as the IAG Management Committee. And for the first time, I would also like to welcome José Antonio Barrionuevo, our incoming CFO, to the call.

I'm pleased to report a strong first quarter. We grew revenue by 1.9%, reflecting continuing strong demand for our airlines and networks. We grew profit by 77% to deliver operating profit of EUR 351 million. Our operating margin improved by 2.1 points to 4.9% in our seasonally quietest quarter. This good profit performance was mostly achieved before the impact of the Middle East conflict, which we expect to have a more substantial impact in the rest of the year.

We have started this year in an incredibly strong position, so we are uniquely well set to navigate the headwinds that the crisis has created. We have leading positions across diverse geographical markets. We have leading brands across different customer segments in those markets. And we have structurally high margins supported by our well-established transformation program that help us to absorb some of the effects of this volatility.

I will also mention at this point, our capital-light Loyalty business, which grew revenue by 10% and profits by 32.6% at a 20% margin. And we have an incredibly strong balance sheet at 0.5x net leverage. Finally, due to our cash-generative business model, we are on track to complete the remaining EUR 1 billion of our excess cash return by February 2027, as we previously announced. Bringing this all together means that we have an opportunity now to prove how resilient this business is. We have faced macro challenges like this before. We have a well-established transformation program, which means that we are taking all the revenue and cost actions that you would expect. And we are well positioned to take advantage of opportunities that arise as a result of the current market situation. So in summary, I'm very confident in the longer-term prospects for this business.

And now I hand over to Nicholas to take you through the numbers in more detail.

Thank you, Luis, and good morning, everybody. I'm pleased to share our first quarter results with you. Before I go to the performance, I just want to highlight that this quarter contains only a limited impact on fuel costs from the Middle East conflict. We expect subsequent quarters will be impacted to a greater extent.

Focusing on the first quarter, we delivered a strong operating profit of EUR 351 million, up EUR 153 million versus last year, driven by the strong passenger revenue growth, partly offset by an increase in fuel costs in March. The increase in operating profit benefited from the early timing of this year's Easter holidays and a small impact from the closure of Heathrow Airport on March 21st last year.

We've seen strong demand across most of our markets, particularly in our premium cabins and in both the North and South Atlantic markets, which represents around about half of our capacity. Cargo revenue reduced slightly year-on-year, driven by the normalization of the Red Sea related pricing surge, particularly in the first half of last year, and a small reduction in tonnage relating to less Middle East capacity. Other revenue saw a small increase year-on-year at constant currency with a reduction in third-party MRO revenue at Iberia due to a change in how certain components are charged, and this was offset by the continuing growth in our Loyalty business. FX, particularly the impact of the weaker USD against both the euro and the sterling drove a benefit of EUR 48 million to the profit in the quarter.

The right-hand side of this shows the strong performance of our businesses. Our leadership positions across diverse markets and strong brands drove this exceptional performance with all but Aer Lingus delivering improved results in the quarter. Aer Lingus saw a larger seasonal loss year-on-year, driven by the ongoing high level of capacity from competitors into Dublin, putting pressure on yields together with the Manchester base closure costs.

British Airways delivered high profits and margins year-on-year, driven by strong passenger unit revenues, which increased 8.5% in the quarter. BA saw strong demand across its long-haul network, particularly on North Atlantic and short-haul leisure routes in addition to a strong business travel market. Iberia delivered an operating margin of over 9% in the quarter, up 1.6 percentage points year-on-year, driven by a strong revenue and improved cost performance. Iberia saw strong demand on routes to Latin America and in the Spanish domestic market.

Vueling also delivered an improved result, but with a smaller seasonal loss year-on-year, driven by a strong revenue performance. The performance of Spanish domestic routes was particularly pleasing, although routes to the U.K. and Italy were a little bit more challenging. But Loyalty, including our BA Holidays, continued to deliver high-quality, high-margin asset-light earnings with profits increasing over 30% in the quarter and margins increasing to over 20%. The growth in profit came mainly in the Loyalty business driven by non-airline partnerships with the holiday business flat year-on-year as we invest in the holiday platforms. Looking forward, we expect Loyalty to deliver just over 10% earnings growth for the full year.

Turning now to our regional revenue performance in more detail. The revenue performance was extremely strong with passenger unit revenue increasing 8.2% at constant currency and 3.5% on a reported basis. Capacity was broadly flat year-on-year, less than we guided at the full year results due to the cancellations of flights to destinations in the Middle East, which would normally be fully reallocated to other markets at short notice and due to the availability of aircraft due to ongoing technical challenges.

We are very pleased with the North Atlantic performance where unit revenue increased by 6.8% at constant currency on a small reduction in capacity. The underlying performance sequentially improved compared to the previous quarter. And whilst the North Atlantic performance worsened for Aer Lingus driven by intensified competition, performance of British Airways was notably strong. BA saw strong demand in both business and leisure segments for both premium and nonpremium cabins, and business segment revenue grew from all points of sale, but notably strong from the North Atlantic point of sale.

Latin America and Caribbean continues to be our strongest long-haul network performer with unit revenue increasing by 9% at constant currency on year-on-year and increasing capacity of just under 2%. All 3 cabins for Iberia contributed to the strong performance in addition to both the Spanish and Latin America point of sale. Domestic saw very strong unit revenues, which increased 18% at constant currency on a 2.5% reduction in capacity. Performance was strong across both the Canary and the Balearic Islands in addition to the Spanish Mainland, partly benefiting from the disruption to the train services.

Unit revenues on European routes increased 6% on a 1.6% cut in capacity. Aer Lingus short-haul performance worsened as a result of additional competition, and BA and Iberia saw strong performance in business and leisure segments, with Vueling seeing benefits from improving their revenue management approach and the timing of the Easter holidays. Africa, Middle East and South Asia was impacted by the Middle East conflict with cancellations on routes to the Middle East in March, offset by benefits from customers shifting travel away from the Middle Eastern hubs on to routes in South Asia and Africa. And likewise, in Asia Pacific, routes benefited in particular from passengers avoiding the Middle Eastern hubs in March with Far East routes seeing good growth in both business and leisure segments.

Total unit costs improved by 0.5% and nonfuel unit costs improved by 0.9% year-on-year. Fuel unit costs increased 0.9% in the quarter. Whilst fuel rose during the quarter, particularly from February 28 due to the Middle East conflict, this was largely offset by our hedging strategy and the timing of the pricing of our commodity contracts. The Q1 cost performance benefited from the FX movement of 4.6%, increasing plus 3.6% on a constant currency basis. This partly reflects the pay deals, the impact of employee national insurance increases in the U.K., supplier cost increases, and the higher ownership costs driven by investments in our new fleet. Capacity will be lower than the 3% increase I guided at the full year results in February. And whilst we are taking cost actions to mitigate the increase in fuel price, the lower-than-planned capacity growth will be a slight headwind on nonfuel costs.

Adjusted EPS increased by 56% in Q1 reflecting the strong performance in the quarter with adjusted profit after tax increasing by 71%. Adjusted EPS increased by 56%, lower than the increase in profit after tax, due to the positive fair value movement on the convertible being included in profit, but excluded from the EPS calculation. This was partly offset by the lower share count due to our share buyback program.

Our balance sheet continues to be exceptionally strong and continues to strengthen further during the quarter. Net debt reduced both year-on-year and quarter-on-quarter, falling to EUR 4.2 billion at the end of March, reflecting the strong profitability, seasonal working capital inflows, and the buildup of bookings for future travel ahead of the peak summer. Likewise, net leverage fell to 0.5x, reflecting lower net debt and strong profitability.

Q1 saw one A321XLR delivered, and we still expect to take delivery of 17 aircraft this year. And lastly, we expect to spend about EUR 3.5 billion on CapEx this year, slightly down on the EUR 3.6 billion guided in February, but mainly just due to small phasing changes. We remain committed to the investments we are making as part of the transformation program, such as the commercial replatforming of BA that is delivering benefits for us this year.

And on that note, I'll hand back to Luis. Thank you.

Thank you, Nicholas. With regards to the Middle East situation, we have already taken decisive action, and we continue to ensure that we are controlling the things that we can control. Firstly, looking at our network, we have reallocated our capacity that used to fly to the region, which was about 3% of the total group capacity. In the short term, some of that has been added to routes where there is currently a deficit of supply that was previously flown by the Middle East carriers. For example, British Airways has added flights to Bangkok, Singapore and the Maldives. Some have been reallocated back to core markets such as by Iberia and Vueling replacing Tel Aviv flights with more flights in the domestic markets.

Further out, we are also expecting more demand on routings which might previously have gone through the Middle East, such as from India to the United States. And British Airways are also adding some alternative winter sun capacity to the Caribbean and Sri Lanka. We have also decided to use some of the spare aircraft capacity to add resilience to our schedules, which have been affected by engineering and maintenance supply chain issues.

We are continuing to review our plans for the longer term should the conflict and higher fuel prices be sustained. On fuel price, we continue to be well hedged for the rest of the year. This allows us to protect customers to some extent from the volatility and allows us to take considered decisions on pricing and capacity. We are confident with the fuel availability through the summer due to our positions in our main markets and the fact that we have invested in self-supply capability in our hubs. Today, the situation is more about price than availability. We are also working with governments in each of our home markets as well as with the EU to ensure that the industry is getting the support it needs to navigate this crisis.

Moving on to our outlook for the rest of the year as well as into the longer term. As I mentioned at the beginning, we start from a very strong position with our diversity of markets and brands, high margins, and a strong balance sheet. Demand for travel continues to be robust in our main markets, and we have seen resilient book revenue at 80% for the second quarter, which is in line with historical level. But the impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated. We are now forecasting a total fuel cost for the year of EUR 9 billion, which is EUR 2 billion higher than the EUR 7 billion scenario for the 31st of December 2025, that we presented at our full year results in February. We are actively addressing these headwinds.

And as a result, we expect to recover around 60% of this fuel cost increase this year. This will be done through revenue and cost management, reflecting the different markets in which our brands operate as well as the benefits of our transformation program. For example, this includes the revenue uplift of the new British Airways commercial platform, which last year included a new revenue management system, payment system, and website booking channel. We are using data-driven software and insights to deliver more efficient, lower cost operations such as with the AI-based engine maintenance tool that we are developing around the group. And our investments in new, more efficient fleet will play their part. And we have a strong track record of execution to ensure this is achieved. You can be assured that we know what to do and that we will take the right actions to ensure the long-term success of this group.

We continue to expect to generate significant free cash flow, but for it to be slightly lower than the EUR 3 billion for this year that we guide at the results in February. And based on our strong cash generation, we are on track to continue the remaining EUR 1 billion of excess cash returns by the end of February next year, as previously guided. Meanwhile, our long-term prospects remain strong, if not even stronger than before. We expect it to be difficult for less strong airlines to cope with the high price of fuel, which can lead to opportunities for us as well as a more consolidated industry. And our business model and strategy will ensure that we remain one of the best performing airlines groups in the world.

And on that note, we'll open now the call to questions.

[Operator Instructions] And your first question comes from the line of Alex Irving from Bernstein.

Two from me, please. The first is on winter capacity. You set out your plans for Q2 and Q3, but what are your early thoughts on Q4? Lower contribution quarters, hedging starts to roll off, could capacity even be down year-on-year?

Second one, Luis, let's pick up on the last comment that you made. You rightly point out that your margins are higher, your balance sheet is stronger than competitors in your main markets. Do you expect competitors to retrench, enabling you to invest countercyclically and capture share? And if so, where do you see the biggest opportunities, please?

Okay. So when we reported full year 2025 results, we expected an increase of capacity for this year of around 3%. What we are saying now is that we are going to reduce to 1%, more or less; for the Q2, it is 1%, for the Q3, it is 2%. We are not talking still about the Q4, because still we are working on the program. And to be honest, the capacity is going to be also affected by this situation. But in principle, the growth that we expect for the year is going to be around 1%.

So the second question about opportunities that we can have. Yes, as we said, we started this crisis in a very strong position. We are well hedged. As we said, we continue with our transformation. So we are going to navigate this crisis much better than others. And we have seen in previous crisis that this brings opportunities to the table. We have seen the situation, for example, of Spirit in U.S., and we are sure that in Europe, some airlines are going to have also difficulties. And some of them also, they will need to reduce capacity. That can be an opportunity for us. So usually, after this crisis, we are even stronger than we were before.

Your next question comes from the line of Jaime Rowbotham from Deutsche Bank.

Two from me. So firstly, in terms of the revenue and cost initiatives to recover the fuel cost headwind, where are you finding it easier to increase fares without too much impact on demand? Any comments on forward bookings or forward pricing would be welcome. And what specifically are the cost initiatives that you referred to, please?

And secondly, in terms of jet fuel supply, in addition to some shortages in Southeast Asia, there have been a few reports of issues in Europe, places like Italy, Sweden. Have you been completely unaffected so far? And do you expect that to remain the case?

Okay. So about the pass-through, we said that we expect to recover around 60% of the higher fuel cost that we are going to have. And yes, it's a mix of revenue and cost management actions. For sure, the revenue improvement that we are talking about is an average, and we are going to have a variation by market and also by segment. We are going to have a stronger recovery for sure in long-haul and premium markets, and we are going to have more difficulties to increase the pass-through in more competitive markets like short-haul Europe.

In terms of cost, what we are doing is reviewing all the discretionary spend that we have. We don't have any plan to cut investments, because at the end we continue with our plans to be stronger for the future, but we continue with our transformation program to be more efficient. And about the fuel shortages. So I think all of you are receiving mixed messages about fuel. But for us, all the job that we did previous to this crisis for many years is delivering results now.

So it's true that there is less jet fuel coming from the Middle East, that there are other regions with record supplies, for example, the U.S. And this, at the end, is a global supply chain. So all the actions we did in order to increase our self-supply are working now, and we are confident that we are not going to have any issue for the summer in our main hubs and main markets. Asia was concerned some weeks ago. But now we know that Asia is also building up reserves. So that's the reason of the confidence that we are going to operate the schedule that we have for the summer.

Your next question comes from the line of James Hollins from BNP Paribas.

I'd like to start by saying best of luck to Nicholas, and thanks for everything José Antonio. Nicholas, I'm going to send you off with a particularly annoying question, which is around full year CASK ex-fuel or unit cost ex-fuel. Clearly, it was guided down 1%. Very obviously, you removed that because you cut around 2 percentage points of capacity. I was wondering with obviously Luis' take on some of cost actions, discretionary spend, et cetera, how close you might still get down 1%? And should we still assume 2 percentage points of FX benefit?

And then one for Lynne, if she's on, on Aer Lingus. Clearly, we've had troubles with strikes we've now got or seeing the ongoing troubles with competition on transatlantic. Is that getting worse? And is it time to start thinking about sort of transformation plans, network considerations, et cetera, on Aer Lingus?

Thanks, James, and I enjoy working with you, too. So thank you for that. Just on nonfuel CASK, you're right, at the year-end, we said it would be down about 1% overall. And I don't think we'll be far off from that actually. The reason we haven't given guidance is we don't quite know what the denominator in the ASK is going to be in Q4 yet as well. But my anticipation, it will be kind of closer to flattish overall.

Aer Lingus?

Yes. So on the Aer Lingus side, there's various reasons why I'm positive about the outlook. Certainly, Luis has already commented on the transformation program. That's delivering and going well. But we do need to go further to get to this group 12% to 15% operating margin, and we're all very focused on that. Cost reduction is a major part of the transformation and we accelerated that cost reduction program.

To get to your question around capacity. You would have seen, part of the impact in Q1 2026 was the closure of Manchester. Now Manchester was profitable, but it wasn't profitable enough to get to the 12% to 15% operating margin overall for Aer Lingus. So that's why we took that decision to close the base. So what we're looking at now is what's the right size of network for 2027, particularly given we expect some of this fuel price increase to continue into next year. And importantly, it's how do we tackle the seasonality. We can make good money in the summers, but we're a very seasonal country. And as we carry cost through the winter, that's increasingly a problem with this fuel price. So the more we can reduce our cost profile as the year goes on, the more we can keep our planned program intact.

Your next question comes from the line of Stephen Furlong from Davy.

Two questions. Just on, first one, short-haul. I mean, you obviously stated that the short-haul market remains competitive. So just on the general pass-through comment of 60%, I mean, is the short-haul almost close to 0? And is it just too many seats in that market?

Second question on LatAm and Iberia. Certainly, nothing really changes in terms of your view on that market in its entirety. I'm thinking of the [indiscernible] one or other will acquire a minority stake in TAP, does that change anything at all for Iberia's excellent performance and brand et cetera?

Just on the short-haul, we are getting some pass-through on short-haul, but you are right, it's towards the lower end, it's not at the 60%. The other thing on short-haul, of course, you get a shorter booking curve. So we get less visibility going forward. So it's harder to call what that will look like overall. But as Luis said earlier, you're getting much more traction on pass-through on the kind of higher premium, particularly on the North Atlantic overall.

And on LatAm -- well, first, on the short-haul, there is a portion of our short-haul, which is the domestic space, which is having an evolution in itself. You have seen that in Q1, our overall domestic performance has been very strong with an increase of, in constant currency, 18% of the RASK. And that is driven by 2 main factors in the domestic. One is the fact that the train disruptions have generated increased demand that we believe is going to be structural towards the flight traffic. And in the second place, we've also seen some increased demand after the disruptions in the Middle East that seem to indicate that there is also an increase in demand following people that are moving away from other Mediterranean areas to, in particular, the Spanish Islands.

Going to LatAm, we continue to see a very, very strong evolution of the market. So no any significant changes. There are some elements that are reinforcing this. For instance, we've been commenting how Madrid is evolving as a new Miami. We are now having another 0.5 million people that are moving, in 2026, their residence to Spain and Madrid in particular. So continuing the same trend that we've seen in 2025. And to be honest, we don't see any influence of our planned [indiscernible] and to take that to 2030 flight plan due to the TAP possible evolution. As you remember, the TAP interest for the group was specifically for the Brazilian market. It is one where IAG and Iberia are not particularly present. So therefore, our potential development in the region remains independent from the group decision on TAP.

Your next question comes from Harry Gowers from JPMorgan.

First question, I mean, there might be some bad math involved. But I think when I back out your kind of revenue pass-through comments, it might imply that pricing might be similar to the Q1 rate for the rest of the year, the plus 3.5%. So is that what you're implying with your pass-through figures? Or should we be assuming that RASK will accelerate into Q2, given that's what some of your peers have been highlighting?

And then second question, I just wanted to follow up on Jaime's question earlier, just on the stickiness of higher prices and whether you are seeing any kind of less willingness, as time goes on, for passengers to pay elevated ticket prices in any long-haul markets?

Yes, your calculation on the first question is about right, roughly, if you do the math on it. So not as bad math. So I missed the second question actually.

Yes. So can you repeat the second question, please?

Yes. The second one was a follow-up on Jaime's question earlier, just on the stickiness of elevated ticket prices and whether you are seeing kind of less willingness as time goes on for passengers to pay elevated ticket prices in any of the long-haul markets?

No. To be honest, for the time being, what we see for the second quarter and the third quarter is that the trading remains positive across the group and very strong with resilient demand. So we don't see any weakness for the time being. So we are going to continue with the current schedule level there.

Your next question comes from the line of Savi Syth from Raymond James.

For the first question, I was just wondering how much of 2Q and 3Q were sold prior to kind of the crisis and the increasing prices. And just curious what the kind of the post-crisis RASK trends are that's showing up in the kind of the new bookings. And then for the second question, I was just kind of curious on your South Atlantic, what your point-of-sale mix was and what the impact of kind of some of the strengthening Latin American currencies might mean for revenue and demand?

So just on the first question about what was presold, I think when we did our February results, we said that Q2 was about 40% sold overall. Now it's 80%. I don't think we gave a number for Q3 overall, but we're about just under 40% sold currently.

And on the South Atlantic, you've seen in Q1 that despite the currency effect, the RASK of South Atlantic has been incredibly strong. We have an increase of 9.2%. And there is a track record of resilience of demand in travel in South Atlantic market despite the volatility of the local currencies. This is something that we have seen all along the last decade. So in fact, we are not seeing any impact of demand related to that at this stage.

Your next question comes from the line of Ruairi Cullinane from RBC Capital Markets.

The first question is, is there any reason why Q2 should diverge significantly from the 60% fuel recovery rate in full year '26 as a whole? And then secondly, how have you approached hedging since the war? Have you been still opportunistic given the volatility, or followed your policies as usual?

Just in terms of kind of the pass-through, I think a lot of people recall actually, it's kind of lowered in Q2, because you had that 40% already booked. So it's more like kind of 50% for kind of Q2 overall, and then it grows as you go through the year. In terms of hedging, it's quite difficult to be opportunistic at the moment, because it can fluctuate by plus or minus 5% during the day, and what you look at on the screen isn't necessarily there when you come to buy it. So it's much more volatile than that. So we're really just continuing with the kind of existing policy that we have slowly as you go, continuing to hedge and not taking any kind of big calculated risks or opportunities either way.

Your next question comes from the line of Andrew Lobbenberg from Barclays.

And Nicholas, it's been a blast working with you. Thank you. What can you tell us about the back of the bus? Obviously, the front of the bus on long-haul is good and it's all very constructive. But just how weak are things in the back? How does it compare North Atlantic against South Atlantic? And what are the levers you've got to try and improve potentially the performance in the back? And then otherwise, what can you tell us about trading on holidays? Obviously, the likes of TUI, J2, and Easy have all been somewhat cautious on holidays. I think BA Holidays was a really nice momentum driver. How is that holding up in the current strange situation?

Okay. So first of all, about the back of the aircraft, as I said before, we continue seeing strong demand there. We don't see any weakness for the time being, but maybe, Sean, you want to comment?

Yes. I think long-haul economy and long-haul World Traveller Plus are performing robustly. I think, again, the fact that we have a greater mix of premium economy versus economy is also helping with stickiness and pricing. And we do see that across all of our main markets. And as Nicholas, I think mentioned in the intro, the fact that people haven't been traveling as much over the Gulf has been benefiting the economy cabins where BA is providing an alternative. And as we said, the North Atlantic has been robust as well.

And same applies for South Atlantic. I mean, if you look at the tourist data for Q1 and, in particular, to Southern Europe and to Spain, we have an increase in tourists from the U.S. to Spain of 11% in Q1 and 9% from LatAm to Spain, so extremely solid.

And about Holidays, maybe Adam, do you want to comment?

Sure. Yes. So I think on the Holidays side, I think we're seeing a mixed performance. We're clearly seeing weakness in the Middle East. Dubai was our #2 destination. So that has clearly had an effect. But we're also seeing some strength elsewhere as customers change their travel plans, particularly places like the Caribbean and the Indian Ocean are particularly strong. And we are seeing customers book later as well. That's a trend I think that the market is talking about, too. One thing I would say is that we're seeing more revenue growth from our BA Club members. and they're booking higher average revenue per booking. So that's helping us through this. And you'll see more initiatives this year coming to encourage our BA Club members to book with BA Holidays.

Your next question comes from the line of Gerald Khoo from Panmure Liberum.

Two for me. Firstly, can you explain how fuel self-supply works? Who are you cutting out? What advantages does it give you? And how does it work when you're presumably still using common infrastructure at the airport? And secondly, on RASK, you've given a sort of constant currency number. But are you potentially able to separate out the uplift from mix as well to illustrate how much premium is helping you, please?

Okay. About your first question, we have, in U.K. and Ireland, our own supply of fuel and our own inventory at the airport that helps to the situation. It's different in Spain. But in Spain, we don't have a problem, because we have a lot of refineries. So BA, for example, has a license to put fuel in, in Heathrow. We also have long contracts with the different providers and I think that gives a lot of stability.

I don't know if you want to...

Yes. Look, I think we've got 2 or 3 benefits. One, we do strategic contracts with big providers, which gives us supply certainty. Two, it's more efficient actually in terms of self-supply. And three, it allows us to forward buy opportunistically when we have constraints in the market like we have today. And the fact that we're able to have more control over our supply situation with volatility in the market is a big advantage that will play out for us over the summer.

It's a big investment as well. We've got port at the Isle of Grain. We've got trains that come twice a day at Heathrow. So it's something that's difficult to replicate.

And it's been something we've been working on for 10 years.

And I'd just also comment that we have the ability to supply on the Isle of Grain and then cross into Dublin as well.

Just you asked a question, Gerald, about kind of RASK and splitting it out. I'm afraid we don't normally do that actually overall. So I probably won't go into that detail overall, I'm afraid.

Your next question comes from the line of Muneeba Kayani from Bank of America.

So I wanted to follow up actually on the previous question where just to understand what sort of RASK trends have you seen on bookings kind of post the start of the war and the fuel price spike, because what we've heard from others is a big increase in fares. Your peer talked about 14% on average increase. And your partner, American, talked about like 25% increase on fares to London. So kind of what are you seeing on that fare increase?

And then kind of related to that, on your fuel recapture and maybe you talked about it earlier in the call, because I joined a bit late, like your 60% seems to be lower than what others are talking about, both in the U.S. and Europe. So what do you think is driving that? And do you think fares will come down? Is that what you're assuming, because fuel prices will -- based on the forward curve, fuel prices are expected to come down. So if you can give a bit more color on that 60% for the rest of the year.

I'll probably combine those 2 questions together, if that's okay. It's difficult for us to comment on other airlines. We are not quite sure what their assumptions have been. What we're just thinking is just what we're seeing at the current moment. As we said, we've got good visibility through Q2 and a little bit into Q3. Visibility into Q4 is fairly limited at the moment. So I wouldn't kind of comment too much on that at the moment overall. I mean, in terms of the 60% pass-through, if you do the math, it means you've got to get a 4%, 5% uplift in your kind of yields and load factors overall going through. And you'll see, as we said earlier, you're seeing that slightly different across the different routes. We're seeing it strongly across the North Atlantic. The South Atlantic is good, although you've got a bigger mix of economy cabins, as we just said, and it's a bit harder to pass through in Europe at the moment, because it's quite competitive overall. So it's a mixture of those overall.

Your next question comes from the line of Conor Dwyer from Citi.

First question I had was around consolidation. You spoke a little bit about being approached. And I'm obviously not going to ask you for any names, but more so, if we think about what exactly would you be looking for as the perfect fit? Is it something to bolster your share in a particular long-haul market? Is it perhaps to bolster your feeder traffic into your hubs? What are the kind of attributes of a company that you would be looking for?

And then secondly, around the commercial transformation, it's been mentioned a couple of times on this call for BA. So from Sean, really, what I'm looking for is a bit of an update there in terms of how far along are we on that? How much has been spent, how much is still to be spent? And when we would expect the meaningful benefits to flow through for that business, if not all, already? And finally, Nicholas, it's been a pleasure. All the best in the future.

Thank you. So about the consolidation. So what we say is that the current environment may create consolidation opportunities. But you know that in IAG, we are always highly disciplined about these opportunities. Recently, for example, we withdraw from the TAP binding, because we thought it was not going to deliver value for our shareholders. So when we analyze the different options that we can have for the future, and we are always screening the market, we look for opportunities where we can apply the model that we have at the group. We can improve the performance of the different companies. And also, for sure, they can benefit from the strength of the group, having the objective that we always said a margin between 12% and 15%, and a ROIC margin similar. So I think that's the screening that we do. And if we see an opportunity, we will explore it, but it's not a must for us to have more companies in the group.

And on the commercial transformation, I suppose there's many dimensions to it. I think last year, we rolled out a new payments platform. And over the summer, we rolled out a new revenue management system. And I think we're very happy with the results that we're seeing. We have a lot more dynamic pricing, particularly across our long-haul network, which gives us shorter step-ups in terms of trading up. And also, we're seeing much better ability to manage what we call O&D flows across connecting markets. So that's working well. Payment platforms are working very well.

If you look at ba.com and the replatforming of that estate, the selling element of that is more or less there. The vast, vast majority of all of our bookings now are going through the new platform. And we're seeing increases in look to book, increases in average revenue, big increases in CSAT. And again, we kind of tipped over a critical point in the January sale, and we've scaled the penetration of that platform from a selling perspective over the quarter.

Where we're at on the servicing side is we're very close to getting our app out there. We've got about 12,000 users on the beta version at the minute. Again, that's working very well in terms of trials from a servicing perspective and really, really big increases in CSAT. I think that will make a big impact on the servicing side of things, but a lot of the selling benefits from the new platform, we're already unlocking. And again, we're kind of very encouraged with where we're heading. I think going forward, we will do a lot more on the shop order settle product management kind of vision as we work to kind of roll out Nevio between '27 and 2029. So a lot happening, but some big milestones to drop as well in the coming weeks.

Your next question comes from the line of Jarrod Castle from UBS.

Nick, from me, thanks for over a decade, I guess, as the CFO at companies that I have followed. Just in terms of buyback, you seem to be going at a very good pace. I mean, you talked about finishing by the end of the year, but it looks like you'll finish sometime during the summer. With potentially limited opportunities for M&A, should we expect that you give a bit more back to the market, let's say, with the Q3 reporting?

And then maybe one for Sean, but can you just give an update in terms of conversations with the pilots on pay and how far away are you in terms of whatever the terms are that you're willing to offer versus what they want?

So on the share buyback, we're coming up to finishing the current tranche of EUR 500 million in the next couple of weeks. So as soon as we finish that, we'll get on to the work to see if we get on to the next tranche as well, which we're looking forward to as well, especially with the share price where it is today as well. So a good opportunity as well. So we've said today that we'll get on with the next billion, and that's what we're focused on at the moment. We'll keep you informed. But I can't think why that would change at all.

Yes. In relation to the pilots, look it was obviously a very close [indiscernible], and we're now just surveying feedback from the community. I don't think it's just as binary as something like value in the deal. I think we were looking to modernize and transform a number of elements, and we're just reflecting on how various parts of the pilot community are feeling about those changes. And look, timing is everything as well. We were running an engagement over the course of some turbulent times, and we have to factor that in. So look, we're regrouping. We're engaging with our representative bodies, and we'll take stock of the feedback we get and sit around the table again.

There are no further questions at this time. I would like to hand back to Luis Gallego for closing remarks.

Okay. So thank you very much, everybody, for being here today. As you have seen, another strong first quarter. As we said before, we have started this crisis in one of the best situations in the market. And we are sure that we are going to continue navigating the crisis, and we are going to be stronger at the end, taking the opportunity of all the transformation initiatives that we are having in the business. So thank you very much, and see you for the second quarter. Bye-bye.

Good morning, ladies and gentlemen, and welcome to the International Airlines Group Full Year 2025 Results. [Operator Instructions] I would like to remind all participants that this call is being recorded.

I will now hand to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead, sir.

Thank you very much. Good morning, everyone, and welcome to the IAG 2025 Full Year Results. As usual, I'm joined today by Nicholas Cadbury, our CFO, as well as the other members of the IAG Management Committee.

I'm pleased to be announcing a record set of results today, highlighting the excellence of IAG's performance in 2025. We are delivering for our customers as our investments in operational and customer-related performance have led to another year of improving punctuality and customer Net Promoter Scores. We are delivering record operating profit, operating margin and return on invested capital. And we are delivering for our shareholders through the increased dividend and the new excess cash returns of EUR 1.5 billion. This is a significant increase on the EUR 1 billion buyback we announced last year.

We continue to see a supportive demand environment that encourage our positive outlook. And as a result, we are planning further excess cash returns in the future. And we look to the future with great confidence as we continue to leverage our business model and execute our strategy, which will create value for our shareholders in the long term.

In 2025, we have delivered world-class financial performance in each of our key metrics, continuing our track record over the past few years. We continue to grow revenue with robust demand for travel in our markets. Our operating profit and operating margin are now both at record levels, and our earnings per share has increased by over 22% this year. Our balance sheet is now in a very strong position. This has benefited from the strong free cash flow that we are now consistently generating despite a big step-up in CapEx during the year. And for our shareholders, we are creating significant value by earning an excellent return on invested capital of 18.5%.

The fact that we are delivering strong results is not an accident, starting with the fundamental premise of IAG. Our group structure promotes excellence and accountability whilst providing the group-level support and direction that individual businesses benefit from. Our portfolio contains a diversity of markets, brands and business models that continually increase the resilience and sustainability of our performance through the cycle. Bringing this together is the secret sauce of IAG and sets us apart from any other airline group.

Moving on to our strategy and targets. We are sticking to what makes us best-in-class. Our 3 strategic imperatives are designed to make our business stronger, more resilient and less cyclical. We have set out margin and return on invested capital targets that are appropriate for the group through the cycle, and we believe support a more sustainable long-term future. We are pleased to be delivering results that are at or above the top of those ranges, and we will continue to target the full potential for all of our businesses through our transformation program and capital allocation process. Ultimately, we want to create value for shareholders by delivering sustainable profitability and accretive growth in the long term.

Over the past couple of years, we have highlighted 3 major areas where we could create significant value, and we are delivering on our commitments. British Airways has already reached its 15% margin, but still has more to deliver on its transformation program, including the commercial platform and fleet deliveries.

Iberia is well on the way to its EUR 1.4 billion profit target, with an exceptional margin last year of over 16%, and we will continue to grow profitably in its core markets. And we will tell you more about the Loyalty's exciting potential at our Investors Day in June, both as a business in its own right as a significant contributor of value to the overall group performance.

And on that note, I will pass over to Nicholas.

Thanks, Luis, and hi, everybody. I'm pleased to share our full year results. This first slide shows our very strong operating profit and margin performance. We've delivered a record operating profit of EUR 5.024 billion, up EUR 581 million versus last year. This is driven by strong passenger revenue growth and also good other revenue growth from loyalty, maintenance and also sustainability incentives and supported by the lower fuel cost.

Our cost performance was in line with expectations and with the guidance previously provided to the market. I'm pleased with our margin performance, which continues to rank among the best in the industry, at 15.1%. It sits at the top end of our target range at 1.3 points higher than last year. On the right side, you can see how our strong markets, hubs and brands drove this exceptional performance in all our businesses, which we will detail in the next slide.

All our operating companies delivered excellent results this year, building on the strong performance also achieved last year. Aer Lingus delivered a strong improvement in 2025, increasing its operating margin to 11% with operating profits at its second best level on record. The airline was affected by industrial action in a base last year and managed to hold unit revenue flat while growing capacity. This was despite a very tough competitive environment in Dublin, particularly from U.S. carriers that is ongoing. Alongside this, Aer Lingus has delivered strong cost discipline, supported by its transformation program.

British Airways delivered an excellent margin performance at the upper end of the group target range. This was supported by strong premium leisure and improving corporate demand with cost performance reflecting investments in the business alongside its transformation program.

Iberia also had a tremendous year, reaching a record 16.2% operating margin. The airline made excellent progress against its Flight Plan 2030, delivering EUR 1.3 billion of operating profit this year towards its EUR 1.4 billion ambition, driven by the strong revenue performance, particularly in Latin America. Iberia's costs were particularly affected by engine availability on both long haul and short haul, extra disruption and resilience costs. The cost increase also includes the cost relating to its growing MRO business that was particularly strong in the first half of the year.

Vueling delivered a robust set of results, generating an operating profit of EUR 393 million and a 12% margin, among the strongest in the European low-cost sector. Revenues reflected a softer summer travel environment in parts of Europe, particularly Northern Europe, partially offset by the continuing strength in the Spanish domestic market. What really stands out, however, is Vueling's strong cost performance that Luis will touch on later.

And IAG Loyalty, including Holidays, continues to deliver high-quality, high-margin earnings. The business yet again delivered the 10% margin growth ambition we set for it, reporting GBP 469 million of profit and an 18% margin, excluding the impact of the VAT dispute with the HMRC, which is subject to ongoing litigation, and we -- and we still feel confident the operating profit would have reached over GBP 500 million.

Turning now to our revenue performance in more detail. Overall demand for travel remains strong throughout the year, underpinned, as just mentioned, by the diversity of our network and of our strong brands. Capacity grew by 2.4%, in line with our guidance that we gave at Q3 results, and we delivered an increase of 1% in passenger unit revenue at constant currency and flat on a reported basis, a solid outcome against a record 2024.

If we look at the performance by region, we are pleased with the North Atlantic performance, where we grew capacity by 1.4%, with unit revenues up 1.5% at constant currency and importantly, showed an improving trend as we went through the second half with Q4 unit revenues up 1.8% at constant currency. Underneath this trend, were consistent with what we highlighted throughout the year, with good premium demand, partially offset by some softness in U.S. point-of-sale economy leisure demand and continued impact from U.S. direct capacity growth into our hubs in Dublin and Madrid and secondary European markets. BA drove the Q4 performance with unit revenue at constant currency increasing strongly year-on-year, driven by strong premium cabin and business travel demand, particularly from the U.S. point of sale despite a tough comparator last year.

Latin America and [ Caribbean ], strongest performer in the network. Our capacity increased 3.3%, with unit revenue at plus 3.3% as well at constant currency. Iberia delivered another excellent year and drove the Q4 performance with premium cabin, LatAm point of sale and business travel, all performing strongly. In Europe, we increased our capacity by 2.2% with unit revenue down 2.1% at constant currency. As mentioned earlier, this reflects the softer demand in parts of the summer and also the additional British Airways capacity. Domestic saw us growing capacity by 2.2% with unit revenues flat for the year, reflecting strong demand, particularly in the Canary and Balearic Islands.

In Africa, Middle East and South Asia, we increased capacity by 2.7%, with unit revenue up 0.8% at constant currency. And finally, Asia Pacific delivered a strong recovery with capacity up 6.4% and unit revenue up 4.2%, supported by a refocus of the network towards stronger performing markets such as Bangkok and Kuala Lumpur and the full year impact of Iberia's relaunched routes to Tokyo. Just turning to this year, we're planning to continue to grow the business in a disciplined way with capacity up around 3% in 2026. And briefly touching on what we're seeing so far this year, we're seeing a strong Q4 -- Q1, sorry, including the North and South Atlantic and some additional benefits from the shift to an earlier Easter.

At this point, I'd just like to highlight the FX has a major factor. Over 2025, we saw the pound weakened against the euro and the dollar weakened against the pound and euro. At these current rates, you will know that there will be a significant FX headwind on revenue this year, particularly in the first half of the year, which we will be reducing progressively into the second half. And of course, this will apply to our cost base in the reverse with a favorable FX impact.

Total unit costs improved 0.4% and non-unit fuel unit costs increased by 2.8% year-on-year, actually in line with our guidance. This full year cost performance benefited from FX movements of 1.3%, although it's worth noting that the increase in costs relating to the growth of other revenue to the MRO also drove around 1.3% of uplift as well. So both the FX and the other revenue costs neutralized each other out.

Employee cost unit costs increased 3.8%, driven by operating investments, operational investments and payments linked to strong financial performance. Supplier unit costs rose by 0.8%, with transformation initiatives helping to offset inflation pressures and support investments in our customer experience. Ownership costs increased 10%, reflecting the new aircraft, cabin retrofits, lounge upgrades and digital platforms, all of which are for the benefit of our customers. Those impacts were partly offset by a 9.1% reduction in fuel costs driven by lower prices and partly offset by an increase in carbon-related costs, both ETS and CORSIA. We remain confident that our transformation program will continue to underpin cost benefits -- cost efficiencies as we move forward.

For 2026, we expect nonfuel costs to be down around 1%, and that includes a benefit of around about 2%. So in other words, they're up 1% on a constant currency basis. Fuel prices have been very volatile. On the 31st of December, our fuel bill based on the forward curve then was estimated to be EUR 7 billion, including a 62% hedge that we have in place. Since then, jet prices have increased following the recent escalations and tensions in the Middle East. So based on the current forward curve, we can see an increase to around about EUR 7.4 billion. We'll have to see how this plays out over the next few weeks and months. This fuel scenario also includes a year-on-year increase from ETS and CORSIA of roughly EUR 150 million.

Adjusted EPS increased by 22.4%, reflecting both the strong performance with the growth in adjusted profit after tax of 17% to EUR 3.3 billion and the share buyback program that reduced our weighted average shares count by 4.3%. Overall, this performance underscores the continued momentum in our earnings and our focus on delivering sustained value for all of our shareholders.

We achieved a free cash flow of EUR 3.1 billion after investing EUR 3.4 billion of capital in the business. This was supported by the positive working capital movement, partly driven by IAG's loyalty and the Amex contract renewal as well as interest paid benefit from the early debt repayment. These benefits more than offset higher purchase of carbon assets ahead of the changes to free ETS allowances and the payment to HMRC relating to the IAG Loyalty tax appeal that were not settled until the earliest of 2027.

I'm pleased to report that our balance sheet continues to be very strong, with net debt leverage of 0.8x and liquidity over EUR 10 billion, positioning us well for the years ahead. Our gross debt benefited from a EUR 1.3 billion favorable FX impact related to the U.S. dollar-denominated debt from the weakening of the U.S. dollar. We aim to keep our gross debt leverage between 1.5x and 2x. To this aim, we finished the year at 1.9x, having repaid EUR 1.6 billion of non-aircraft debt and taking 2/3 of our 25 aircraft deliveries as unencumbered.

We remain committed to investing in our fleet, enhancing customer experience and building resilience. We've shown on this slide the phasing of CapEx over the coming years, which will put our CapEx allocation and balance sheet decisions into context. In 2025, CapEx was slightly lower than planned due to the timing differences and the phasing of some customer-related investments. This year, 2026, we expect CapEx to be around about EUR 3.6 billion with 17 aircraft deliveries, continued cabin retrofits, including British Airways, A380s and 787-9s and ongoing investments in property, especially the improvement to our lounges.

Looking forward, we've been saying for a while now that our CapEx will increase in the coming years as delayed aircraft from the manufacturers start to get delivered and make up for the lower CapEx numbers we've seen over the last few years. For the last 4 years, this increase has continuously pushed to the right. However, we expect to start seeing this increase materialize in the next few years. In 2027 and 2028, we expect CapEx to average EUR 4.9 billion, mainly reflecting the delivery of the Boeing 737s for Vueling and the start of the 777-9 deliveries for British Airways in 2028.

CapEx is then expected to increase further to an average of EUR 5.6 billion for 2029 to 2031 as the 71 wide-body aircraft we've ordered in 2025 and the previously delayed wide-body aircraft deliveries start to materialize, with around about 70% of these deliveries being replacement aircraft. Beyond this period, we'll return to our normalized CapEx run rate of around about EUR 4.5 billion from 2032 onwards. We're able to do this as we're making good returns on capital and have high disciplined approach to capital allocation to support our ambition to deliver focused capacity growth by 2% to 4% over the medium term.

With this increase in future capital spend, we will still be strong cash-positive throughout these years, and we'll continue strong shareholder cash returns with a higher CapEx delivering higher profits. Given this confidence in our cash generation, the current very strong balance sheet and in preparation for this CapEx trajectory, we've decided to widen our guidance on distributing excess cash returns to 1 to 1.5x net debt leverage.

And finally, our disciplined approach to capital allocation and how we manage our balance sheet, investments and shareholder returns. Firstly, we remain focused on balance sheet strength. Across the cycle, we maintain our net leverage aim of less than 1.8x. This being a proxy for investment-grade rating, which we are with both Moody's and S&P. And as I mentioned earlier, in the near term, we want our gross debt to be 1.5 to 2x, which puts our balance sheet in an extremely strong position. Secondly, as I've just described, how we'll continue to invest in the business, and we'll be doing so at high rates of return on capital.

Thirdly, we're committed to a sustainable dividend through the cycle. For 2025, this equates to a total dividend of EUR 448 million, and our intention is to grow this broadly in line with inflation, while dividend per share will grow faster as we buy back shares. And lastly, we'll continue to return excess cash to shareholders as we've just announced a further EUR 1.5 billion of excess cash returns over the next year. This represents around about 6.5% of today's market capital. And over the 3 years since 2024, we will have distributed just under EUR 3 billion of excess cash, around 13% of today's market cap. Given our financial framework and ambitions, will still allow us to continue significant excess shareholder returns over the coming years while also reinforcing the balance sheet in anticipation of higher CapEx.

Overall, this disciplined approach ensures that our balance sheet remains a source of strength, supporting the business through the cycle, giving us the flexibility to allocate capital where it creates the most value and positioning us to continue investing for the long term while delivering attractive returns to our shareholders.

Thank you. I'll now hand back to Luis to continue with the strategic update about our business.

Thank you, Nicholas. I will now spend a few moments going through the strategy, which has worked successfully for us for a long time now. This will demonstrate how we can sustain this level of performance.

Firstly, the backdrop is compelling. Demand for travel is and has been a long-term secular trend, which, if anything, has increased in recent years. And as Nicholas indicated in his preview of our deliveries over the next 6 years, supply is constrained by the aircraft and engine manufacturers. We have strong positions in highly attractive markets, which are served by more than one airline brand in every market. This diversity is a key component of the group's resilience and helped to deliver such a strong performance in 2025, even whilst the macroeconomic backdrop is not particularly supportive. Nevertheless, we grew passenger revenue in each of our core markets, with all of our airlines contributing to that growth.

We are investing in our brands, which is delivering a better experience for our customers, and you can see in our NPS improvement across the last 3 years. The investment is across the customer journey, so includes on the ground and in the air. We are currently excited about our partnership with Starlink, which will provide high-speed connectivity across the group on every one of our airlines and the first Starlink-enabled aircraft will be operated by British Airways in a few weeks' time. On this slide, we have highlighted some examples of how transformation underpins our margin delivery, supporting both revenues and cost control.

At British Airways, the improvement in on-time performance has been a fundamental driver of margin improvement over the last couple of years. It drives productivity, increases revenue and reduce cost of disruption. It is also the biggest driver of customer satisfaction. In 2025, they delivered OTP of over 80%, the best performance since 2014 and a 20-point increase over 2023.

In the meantime, Iberia remains as one of the most punctual airlines in the world. Also at Iberia, they have focused on transforming their proposition over the last few years, reflecting the more valuable demographic of their customer base, particularly in the South American market. As a result, they have grown the premium customer base, and this has helped to drive their yields in the premium cabins.

Vueling has delivered the best cost control of any low-cost carrier in Europe since pre-COVID. In particular, they have driven lower supply unit cost, which includes both maintenance and airports, which is an exceptional situation in the current operating environment. I will also mention at this point that Aer Lingus delivered a record NPS score and their best OTP since 2016, highlighting their customer focus point of difference in Dublin. All these improvements have been supported by collaboration and sharing best practices across the group, one of the core benefits of our structure and business model.

IAG Loyalty continues to grow strongly as a higher growth, higher margin and capital-light business. Based on the earn and burn model where we incentivized the awarding of Avios by also increasing opportunities to spend them, it increased revenue by issuing 200 billion Avios up to 30%. And at British Airways Holidays, they benefited significantly from the changes to the BA Club with revenue from elite members increasing more than 15x faster than other customers. As I mentioned earlier, Loyalty expects to grow earnings by at least 10% each year and grew profit by GBP 49 million to GBP 469 million in 2025. This profit growth was even higher growth if you put to one side the disputed HMRC tax treatment at over 20%.

The second major strength to our capital-light development is through our airline partnerships, which deliver accretive value without the need for investment in aircraft. We access 3,000 additional aircraft through our partners, which then unlock 2,600 additional markets through a one-stop journey. This allows us to cover 97% of all passenger demand from our home markets, with loyalty scheme benefits, a key factor. This powerful network, the world's largest delivers significant partner-enabled revenue to the group every year.

We made progress with our sustainability road map in 2025. We increased our SAF usage to 3.3% of our total fuel volumes, up from 1.9% in 2024. This also helped to deliver carbon intensity of 77.5 grams of CO2 per passenger kilometer ahead of our target alongside our investment in more than 15 aircraft.

As always, this was all delivered by our people. We are committed to supporting our employees through their careers at IAG. We recruited over 10,000 people in 2025, continue to recruit and train pilots and our dedicated airline academies and continue to develop pay structures with all our collective groups that benefit both parties. This includes an agreement 2 weeks ago with Iberia's ground staff. I would like to take the opportunity at this point to thank all of our employees for their hard work during the year.

Over the last 3 years, we have created significant value for shareholders. Firstly, we have a portfolio of markets and brands that is unrivaled anywhere in the world and is valued by our customers. This drives attractive revenue growth. Secondly, our execution every day is delivering best-in-class margins and earnings growth, significant free cash flow and high return on invested capital. And thirdly, this creates value for our shareholders through the dividend and our program of historical and prospective buybacks. This is world-class shareholder value creation.

So in summary, the market remains compelling. We will continue to execute on our strategy and deliver world-class margins and return on capital. We are rewarding our shareholders with a strong earnings per share and dividend per share growth as well as EUR 1.5 billion in excess cash returns. We plan to continue to return more excess cash to shareholders. And we are confident that we will create significant value for our shareholders in the long term.

And now we open the line to your questions.

[Operator Instructions] Your first question comes from the line of Jaime Rowbotham of Deutsche Bank.

Two questions from me. Firstly, the transatlantic unit revenues at constant currency were negative 3-point-something percent in Q3 but back to positive. I think it was 1.8% in Q4. So very encouraging. Could you talk a bit about the outlook for the transatlantic in summer '26? It feels like there's quite a few moving parts. Those economy cabin weaker trends in '25 become a soft comp, but at the same time, I don't know if you anticipate any disruption from the Football World Cup. And to what extent do you expect the premium cabin trends to remain strong? Any comments, please, on summer transatlantic unit revenue progression in 2026?

Second question, Slide 17, very helpful in terms of laying out the medium-term vision on the CapEx. Could you just help us in terms of actual aircraft deliveries? Is there a particular year, 2029, 2030, when you expect to be at peak deliveries? And could you just tell us roughly what that might look like? Is it 40, 50 aircraft? What's the split between narrow-body, wide-body in a sort of peak delivery year, please?

Thank you very much. So North Atlantic, as you said, since the third quarter last year, we saw a rebound. We had a positive increase of unit revenue in the last quarter of the year at constant currency. And now what we see is an improvement in the trend over the last few months, in particular, in the case of British Airways, where even the non-premium leisure revenue has been booking well, U.S. point of sale, in particular, strong. And this is in contrast with what we saw in the third quarter of 2025. Business demand is also booking really well, both U.S. and U.K. point of sale. And premium leisure continues strong.

So in Iberia and Aer Lingus, we also expect demand to remain strong, but they are having more increased competition in their hubs. But maybe, Sean, you can add some comment about British Airways.

Yes. I think we've got a couple of things which have been very encouraging in Q4 and in Q1 as well as the business demand. So we're seeing strong demand out of the U.S. point of sale and pretty robust demand out of U.K. point of sale. And I think we've seen recently as well the kind of market out of U.S. point of sale to Europe more broadly is resilient. Like one example, to be honest, was the Winter Olympics, where we saw really strong demand out of the U.S. into markets like Italy, and we were able to capitalize on that over our hubs. So we're seeing that in the fourth quarter, and we see it in the first quarter as well.

Marco, do you want to comment?

Well, in terms of the performance in Iberia, also, we have seen very strong business evolution there. And it's true that in terms of our yields in economy, we have seen some pressure related to the increased competition, but that has applied primarily in Q3 that you saw reflected in last year, that you saw reflected also in the overall performance of the group. But in Q4, that strong increase has softened. And as a result, also, we saw an improvement of performance.

Just on the CapEx numbers, we'll come back to Jamie at a later date and give you kind of more kind of precise kind of delivery time, what's been delivered by little bit later. I mean what I would say is, in 2027, we're, of course -- at the back end of this year and into next year, we're, of course, starting the refleeting of Vueling into the 737. So that starts ramping up from '27 onwards. And that takes around about 6 years to do as well. And then in '28, you get -- start getting the deliveries of the 777-9s into British Airways. And then you get -- the planes that we ordered in March, really start to get delivered from '29 onwards over those kind of 4, 5 years. So we'll come back and probably give you a bit more detail later.

Your next question comes from the line of Alex Irving of Bernstein.

Two for me, please. The first one is on distribution. Specifically, how are you approaching the decision about whether and how to sell through large language models? Would you plan to engage directly with LLMs through an API or to rely on existing structures, GDSs, travel agents, continue to pay commissions? When do you think you will sell your first trip and ticket through an LLM?

Second question, also on tech, specifically for BA. You're about 2 years into the implementation of Nevio. We've seen Finnair suggesting they're seeing a 4% uplift in pricing, 10%, 15% uplift in ancillary sales from its implementation. Is that sort of result achievable at British Airways? Or more broadly, how do you see the RASK impact of your IT transformation from a move to a modern retailing platform?

You want to comment, Sean?

Yes. We are seeing -- we are now selling the vast, vast majority of our direct sales through our new platform. In fact, 95% of our volume went through new ba.com in the January sale. And I think the numbers we're seeing are encouraging. One is CSAT is much higher. I think two, things like look-to-book conversion has improved and we've also seen better trade-up and better average unit revenues coming through. That's kind of the first real sort of significant test that we've put the volumes through, but the numbers are encouraging.

I think Finnair may be a little bit more advanced in adoption of Nevio compared to where we are. So we work with them across the joint business, and we do see some significant improvements that they're demonstrating on ancillaries. And that would have been part of the kind of business case that we would have put together a couple of years ago when we embarked on this journey. So encouraging signs both on CSAT and revenue conversion trade-up and ancillaries.

Moving on. Your next question comes from the line of Stephen Furlong of Davy.

I guess 2 questions. Can you just talk about why the -- again, the excess cash below net leverage target has been widened. Is it to do with just the delivery or the CapEx step-up? Or is it to do with one eye on TAP?

That's the first question. And maybe for Sean, just on -- I mean, obviously, BA is performing well in terms of margins. But I know from the Insight Day, I thought it was 2027 maybe when some of the investments come through that the underlying business probably feel that the, let's say, more resilient by then, maybe just the market is good right now or the way the dollar has gone and stuff like that. So just talk about more the resilience of BA and when do you think it's kind of in full bloom, as a word, that would be great.

Just starting on the kind of guidance on the distribution of excess cash, we widened the guidance to 1x net leverage to 1.5x. We've had fantastic results last year, really strong cash generation, and that gives us real flexibility to both distribute what we think has been a good return on capital in a 9% yield this year in terms of what we're returning to shareholders at the same time and strengthen our balance sheet further and invest heavily in the business. I guess the main thing for that, though, is we've got our eye on the increase in CapEx that comes in the next kind of -- next few years overall.

So it's really making sure that we lock in the benefit we've had of the really strong year this year to really make sure that, that continues and that we're in a strong place to make sure we continue to give good shareholder returns and distribute excess cash. So we've used this kind of really strong opportunity to set the balance sheet for the increasing cash and those future shareholder returns.

If I pick up on the BA question, Stephen. Yes, look, I think we have delivered the 15% 2 years earlier than we set out about 14 months ago. I think, as you said, some of the dynamics have probably worked in our favor, but I think we are seeing the benefits of transformation already. I think Luis mentioned the operational performance transformation, the benefits that gives to Net Promoter Scores and CSAT, but also the benefits it gives in terms of reducing nonperformance-related costs such as disruption. So we expect that to kind of flow through and carry on.

Number two, I suppose, is the investment we've made in technology and new platforms. I think we are very excited about the new digital capability. It's performing well, but we have more to come in the coming months as we roll out more of that functionality. We have a new revenue management system, again, which is showing encouraging results. We have a new payments platform, which is increasing optionality and also increasing conversion. So I think we will see more value accretion coming from those levers as we look into '26 and '27.

I think the other angle, I suppose, which we're excited about is growth. Nicholas mentioned CapEx, but we will see more long-haul aircraft come back into BA. Today, we're still a bit smaller than we were in 2019, and we feel we have a lot of opportunities to grow long haul, which again helps with margin growth and also helps with things like seasonality because it works very well in winter with a number of markets that we could serve.

And finally is the onboard product. We will complete the rollout of the club suite. We're about 76% now at Heathrow. The 789s are going in this year, the A380 start, and we see really strong commercial and customer performance on the back of completing those reconfigurations.

So I think we've made a lot of progress on what we said we would deliver on 15 months ago. But I'd agree there is still a lot of transformation that we will unlock in the next couple of years.

Your next question comes from the line of Savi Syth of Raymond James.

Two questions from me. Just first, I was wondering if you could give a bit more detail on what you're seeing on -- in terms of engine durability, maybe supply chain and cost escalation. Just wondering across those 3 things, are things improving or not much changing or getting worse?

And then second, I know you mentioned it was strong, but I was wondering if you could give -- please give a little bit more color on like corporate and premium trends across the airlines.

Okay. The first question about the supply chain. I think we talk about aircraft, the plan is that we are going to receive 17 aircraft this year. And we are pretty sure that the manufacturers, they are going to comply with this plan. In any case, we'll have some buffers in case -- we could have some delay.

We continue with the issue that everybody has with the engines. We are having problems with the GE engines, in particular, in Iberia, where they are suffering the lack of spare engines in the 330s. We are having the problems with the GTF in Vueling. As you know, they have on average like 16 aircraft grounded because of this situation. And also in the case of BA, they still have 787 grounded because of the growth issue. We hope that in the case of BA, this situation is going to be recovered in May, but that's the plan that we have right now that we continue working with the different OEMs to try to improve the situation. But I would say it's improving, but slowly.

Yes. The second question was about corporate demand. We're trying to move away from comparing ourselves to 2019. We think that's kind of ancient history now. So all we can just say is actually, we've seen corporate demand be strong in Q4, and in the first early days into Q1, it's been good as well. Of course, that helps the yield curve, which is -- so it's been good. It's been strong across all kind of sectors, not just finance. So been good so far.

And in particular, let's say, the Latin American premium market has evolved, came very, very strongly. For instance, comparing to last year, the business market has increased in revenue 7% versus last year. And it's a bit like what we have been sharing with you when presenting our Flight Plan 2030. So there is, Madrid converting into the new Miami, seems not only to indicate an increase in overall traffic, but particularly, premium traffic from Latin American countries.

Your next question comes from the line of James Hollins of BNP Paribas.

Nicholas, one for you. On the unit cost guidance of minus 1% in 2026. If we reference Slide 13, you give a little bit of detail on the puts and takes across employees, suppliers, ownership. I was wondering if you would be willing to flag maybe how you expect those to move in 2026, if there's anything particular that you would see nicely down? Obviously, FX is the big help. And seasonally, I assume H1 better than H2 because of FX. Any other seasonality you might want to flag?

And secondly, on Vueling, please. I know that IAG obviously has a policy of asking CEOs to beg for growth. And clearly, Carolina has won the battle. I don't know if Carolina is on, but I'd love to hear a bit more about the planned 50% passenger growth over the next decade in Vueling, whether it's -- where it is outside Barcelona? If there is, I assume there must be. Clearly, what happened internally to secure that investment? And maybe a bit more detail on what I think is called Rumbo 2035?

Yes. So this last year, we finished with nonfuel unit cost up 2.8%. We've always said that, that would moderate. And actually under a constant currency, it's up 1%. So it's doing exactly what we said it'll do. It's moderating. We have got a benefit, though, as you say, of around about 2% benefit from FX. So that's why it's down 1% overall. I think if you just -- just for information for everyone, if you look at the FX impact through this year coming, you're going to get a benefit in nonfuel CASK and you're going to get a headwind on revenue of around about -- in Q4, of around about 4%; in Q2, about 3%; and in Q3, of about 1%, and that should be -- hopefully should be flat in Q4. So that's the kind of shape of it. If you look at the nonfuel CASK, just the way it's phasing, you'll see there's a bit more of a kind of headwind in Q1 and probably Q3 overall, if you go to phase it across the year on a constant currency basis.

Vueling? Okay. On Vueling plan, what we have presented is a plan for the next 10 years, with 20 million passenger growth. So the geographical focus is clearly Barcelona, domestic Spain, where we are leaders, we have over 1/3 of the market of Spain domestic and connecting Europe with Spain fundamentally through the 11 bases we have, Barcelona and plus other 10. This plan is very linked to the refleeting, which will restructure our cost base. Also, it will give us more gauge, and this is extremely important, especially in the case of Barcelona. You know Barcelona is a constrained airport with expansion plans in '31 and '32, but we will have a 14% gauge increase with the new fleet in average.

Your next question comes from the line of Jarrod Castle of UBS.

I just want to come back to AI, but now more on the opportunity for taking out costs because obviously, we're starting to see companies at least announce large job cuts, today, it was Block. But I'm just wondering what are your plans to achieve efficiencies through AI adoption? And kind of related to headcount, are there any staff negotiations outstanding as well?

And then secondly, just on the 3% capacity deployment, obviously, very useful Slide 36. But can you give some just regional color in big pictures where that 3% gets deployed?

Okay. So artificial intelligence, you know that in our transformation, 80% of the projects are linked to technology and artificial intelligence for sure, is critical. So we have projects, for example, in the area of maintenance where artificial intelligence is going to help us to be much more efficient. We have developed some tools, for example, in order to improve the planning that we do with our engines or our fleet. Artificial intelligence is going to help and is helping us also in the customer experience. And also, we are analyzing ways to be more efficient, but the objective is not to reduce the headcount, it's more how we can use artificial intelligence to improve customer experience and to improve also the efficiency of all of our workforce.

So again, all the plants are based in technology. Artificial intelligence opens a big range of opportunity, and we are exploring all of them.

Just on the capacity 3%, you've got -- we've given you in the appendix where it's going to be by airline overall, so you can take a view on that. But if you look at North America, it's roughly in line with that, better than 3% overall. It's a bit better that even again on Latin America, where we're looking at kind of 4.5% plus capacity on South Atlantic, and it's pretty flat across Europe. It's up in Asia Pacific and base, but of course, it's a low base so.

And labor negotiations? Sorry.

We're in a relatively good position on labor negotiations.

Your next question comes from...

We're in a relatively good position on labor negotiations.

Your next question comes from the line of...

Could you introduce the question again, please?

Apologies. Your next question comes from the line of Harry Gowers of JPMorgan.

First question... hello? Can you hear me?

Yes.

Hello? Can you hear me?

Yes, we can hear you.

Yes, yes. Okay. Sorry. So first question, I mean, you talked about strong bookings in the Q1 in your outlook. So maybe like a little bit more color on what that might mean in terms of booked revenue or pricing? I mean, can we see the same group ex-currency RASK in Q1 that we saw in Q4?

And then just second question on EBIT margins by airline. Just wondering what's the full potential for some of these businesses? I mean when I look at your Slide 11, the margins are already very high. Aer Lingus is at 11%; BA, 15%; Iberia, 16%; and Vueling, 12%. So maybe where do you see the margin upside by individual airline going forward?

Okay. So I think what we see now for a year, I think we have a lot of visibility for the first quarter. We are, for the first half, in line with the plan. It's true that the first quarter, we are going to have the benefit of the Easter that is helping. But when we look at the summer, Q2 and Q3, we only have about 30% book. So what we see is, in general, positive. Business traffic is growing and is helping the near-term bookings.

And when we look at the different geographies, we talked before about North Atlantic, but LatAm also remains strong for Iberia. And also, we see a healthy performance in the Caribbean for BA. Europe also booked well. We see also a strong business demand in the case of BA. And the only region where we see some softness is Africa and Middle East. So I think in general, we are on plan, and we are confident for this year.

Yes. Just in terms of kind of full potential, of course, if very strong demand, you get low fuel price, of course, you can maybe go higher. I guess where we're focused on is delivering in the range we've already set out, the 12% to 15%. Our view is if we can keep towards the top end of that range and keep delivering at 15%, grow at 2% to 4% ASK that is incredibly strong performance overall generates huge amounts of cash, great shareholder returns overall and allows us to invest in the business. So that's where we're going. If the benefits go move in our favor and we get above that, that's great. But that's our aim, is to be kind of keep delivering out at that top end of the range.

Your next question comes from the line of Conor Dwyer of Citi.

First question is around that margin question. Obviously, last couple of years, you've been at the upper end of that 12% to 15% range. We're obviously still talking about more transformation at BA, Loyalty will be growing above the rest of the group, and obviously, the trends in Iberia are very strong. So just wondering is there any scope for that kind of 12% to 15% to be moved up or even the lower end of that to be moved up?

And then on the second side, just around free cash. Obviously, at the moment, the outlook for that looks super strong, but CapEx is rising towards the end of the decade. And obviously, you'll be intending to grow your top line. I'm just kind of wondering, do you envisage a scenario that in that higher CapEx environment, free cash is still able to be in and around the current level. Obviously, some investors will be somewhat worried that we have a couple of years here of super strong free cash generation in the 5, 6 years out, maybe that kind of normalizes.

Just in terms of the margin targets, we've got -- we're very comfortable where our margin targets are through the cycle at the moment. As I said earlier, kind of if we keep growing at 2% to 4% ASKs and hit 15% margin, I can't think of any other airline that's going to be able to do that as well over time. So that's a really great performance overall. So we're very comfortable with that as well overall.

Just in terms of the free cash flow, I mean, we kind of said -- I said in my script, actually that you've got the kind of CapEx going up over time. Higher CapEx when you're delivering good margins, means higher profits at good returns. So it should continue to be strong cash generation overall. So actually, with the higher CapEx, actually should give you, over the longer term, even more confidence in our cash generation.

Your next question comes from the line of Muneeba Kayani of Bank of America.

Actually, I just wanted to talk about your range again. Like maybe I don't understand how -- what do you really mean by through cycle? Like what's the definition of that? And ROIC is clearly well above your target at this point. So both on margin and ROIC, if you can talk about what you mean through cycle? And into your growth algorithm, which you touched on in the slide, historically has been strong, but how do you think about that growth algorithm into the medium term? That's the first question.

And then secondly, just going back on Loyalty. You talked about the Amex contract renewal had a positive impact on working capital. Can you give a little bit more details on what this renewal was? And how do you think about getting to that 10% growth?

Yes. I'll start with the Loyalty-Amex question. Yes, we're really pleased that we've signed it [indiscernible], which really underpins the profitability of our Loyalty business overall, and that's been one of the great sources of growth, is our partnerships, particularly on the kind of financial partnerships. And we'll talk a little bit more about that on the 3rd of June overall. We've got -- it's commercially sensitive in terms of how much -- how much it benefited our working capital, but we just thought it was worth calling it out overall.

Definitions of through the cycle, good question. I guess it mean -- through the cycle just means that we think with normal kind of cycles of ups and downs in the economies and GDPs, of course, it doesn't mean if you get another COVID event or something like that. But we just think through that kind of normal GDP fluctuations that you get over a kind of 10-year cycle. That's what we're trying to aim our targets to be.

And the growth algorithm?

I didn't quite follow your question on the growth algorithm, sorry.

So as you think about the growth algorithm in the medium term, so you talk about the 2% to 4% ASK growth and margins kind of remaining at that stable level. So that drives kind of 2% to 4% EBIT growth, is how to think about it? And then you get the strong cash generation and buybacks driving EPS growth of high single digits. Is that the way to think about it?

That's a nice way of thinking about it.

Your next question comes from the line of Ruairi Cullinane of RBC Capital Markets.

Congrats on the strong year. So firstly, how do you view the capacity backdrop on IG routes this summer? It looks pretty constrained to me on the Atlantic overall, but I think Nicholas also commented on elevated capacity growth from Dublin. And then secondly, domestic RASK was up over 8% in Q4 after declining in Q3 on trimmed capacity. So what drove that?

So the plan that we have for this year is to increase capacity by 3%. When we look at the capacity that we are going to have in the different markets, for example, North Atlantic, the capacity that we see out of London is going to continue benign, and we are going to have a flat environment. Madrid is going to be different. We expect significant increases, although it's true that part of this is driven by Iberia because they are adding capacity in North Atlantic. Also, they have now the new 321 Extra Long Range, and they are putting capacity there. Dublin is going to be a competitive market also, and they are going to have a growth close to 10% during the summer.

South Atlantic, a little different. Capacity out of Madrid, we expect growth between 5% and 6% for the summer. If we look at intra-Europe, for example, the capacity out of London on IAG route is expected to be down in the first quarter but up to between 2% and 3% in the second and third quarter. Barcelona is also a place where we see we are going to have growth in the summer, around 5%, 6%. And where we see more capacity is in places out of Madrid and Barcelona in Spain. But this is the global picture that we see.

And talking about the domestic and in particular, domestic Spain, it's true, it has been very strong along the past years. And it's true that you have seen in Q4, in particular, an additional increase which is relating to the fact that both with Iberia Express and with Vueling, we have strengthened our relative position into the islands in particular. And at the same time, Ryanair in the winter reduced capacity to the island. So the combination of these 2 factors made our position even stronger. And that will continue. You will see it continue in 2026.

In Q1, for instance, is already producing itself with an additional element, which is that you have seen the very -- the tragedy of the train accident in Spain, and that has led some corporations, for instance, to change their travel policy in domestic traffic and in general, consumers to shift more to train -- to flights. Therefore, you will see an underlying very strong demand throughout 2026 in domestic.

Next question comes from the line of Gerald Khoo of Panmure Liberum.

If I could start with the sustainability of margins and return on invested capital. How sustainable do you think they are at these levels? It sounds like you are very comfortable about that. But what pushes you towards the middle of that sort of through-the-cycle range? Is it just an economic downturn? Should we expect return on invested capital to moderate as the CapEx ramps up? What impact does that CapEx ramp-up have on margin?

And Secondly, you talked about the strength of premium leisure. I was just wondering how does the booking profile of premium leisure differ to sort of the network average and to non-premium leisure in particular? Does it book earlier? Does it look later? Is the sort of duration of stay longer or shorter?

Yes. I mean the sustainability of the margin, good question. I think there's lots of areas. You could say the short-term downturn in the market. You can say if there's increasing tension across the Middle East, what happens then as well. I mean just the example we called out on the call though as well that I think most of you consensus at EUR 5.2 billion, and that includes a kind of EUR 7.1 billion of fuel in there, and the fuel has got up to EUR 7.4 billion in the last few weeks as well. Now hopefully, we can pass some of that on to investors. I think we'll still retain our strong margins, but you got lots of kind of external variables that kind of impact that overall.

But I think we're focused on making sure we commit to our transformation, commit to our growth plan, our disciplined growth plan as well and that kind of all, whatever circumstance just towards the most competitive margins that we can get overall.

And the second question, premium leisure, usually, they book in advance. So as we said before that business traffic is recovering. So -- and the pattern of booking of business traffic, usually bookings are late. So in some cases, we are holding the nerve because we know that demand is coming. And in some way, we are trading between premium leisure and business.

But maybe Sean, you can comment with the...

Yes. I think what we have been seeing is strong late in business leisure or business bookings certainly in Q1, and we try and protect inventory to capitalize on that. I think we've done some analysis and interestingly enough, people from our executive who are traveling for premium leisure will be booking 60 days plus in terms of travel plans. Your business traveler will be more like 40 days. So there's kind of a 2- to 3-week difference in the booking profile between one segment and the other.

But as Luis said, it's one of the things that we look into next year to try and optimize because we see that late booking business demand has been pretty robust in Q4, and we're seeing it in Q1 as well.

Sorry. How does premium leisure book relative to non-premium? Is it earlier or later?

I think it has a similar profile actually. I think when people are planning a holiday and they're planning a hotel and planning an itinerary, they'll tend to plan further out. So we don't see that marked a difference between the premium leisure and the non-premium leisure side. We do see premium leisure actually tends to book more directly through our channels. We do work with sort of online travel agents more for the non-premium side.

Next question for today comes from the line of Axel Stasse of Morgan Stanley.

The first one is on the BA and Iberia cost improvement and efficiency program that you guys have announced in the last couple of years. Can you maybe quantify the improvements heading into 2026? What -- are the other improvements done? Is it just about efficiency and therefore, depend on the aircraft delivery? Or is there something else we should be aware of? So that's the first one.

And then the second one, coming back to the working cap effect from the Loyalty, should we expect this to reverse heading into 2026? I understand you're about to tell us more specifics, but how should we model this going forward?

So I think your question -- just on the working capital one. So there were 2 things that happened on the cash flow this year to Loyalty. One is we did benefit from some Amex, the signing of the Amex. We can't quantify that over time. So that gets smoothed across the P&L over the next x years that we signed the contracts for. So it doesn't reverse. You just don't get it again. We did though pay kind of EUR 450 million to the HMRC for this VAT case that we've got with HMRC that we feel very confident on. Actually, that comes into court later this year, but it probably won't get settled until 2027 probably. So you should get a reversal, but it might take a number of years before it does reverse overall.

So just -- I think hopefully that answers your question on that one overall.

Just in terms of the cost improvements, we don't give kind of specific guidance on the kind of transformation savings that we're doing. And we only do that because there's lots of moving parts, both the kind of inflation, the investments we're making, the growth we're having and the kind of transformation. And so it's all moving parts. But you can see that actually, if we're growing our kind of constant currency nonfuel CASK by kind of 1% and if you think kind of inflation is well above that as well and we're making kind of good investments in the company at the same time, you can see there's a high level of transformational benefits that we're putting through the P&L at the same time.

And maybe to give a bit of color of what is to come still in our efficiency programs. Clearly, supplier cost is one where through the strength of the group purchasing, for instance, we are having a lot of value creation in the coming months and years in our transformation plans that you will see coming through. And another key area of value creation there and efficiency is utilization. As you see, we've been evolving a lot through the years in reaching very high utilizations, and we still see room for improvement there. For instance, now we're taking new fleet, we are progressively introducing them, and we could not, of course, maximize the utilization of the new fleet in the first year with all the XLRs. And in 2026, you will see a very significant improvement there in our utilization and productivity.

Our last question comes from the line of Andrew Lobbenberg of Barclays.

I have 2 questions. One on competition on the South Atlantic. Clearly, premium goes really well for Iberia. Can you talk about how competitive that is against the Latin American carriers who are emerging from Chapter 11 and getting their mojo and yet Air Europa is wherever Air Europa is. So how does that go? And actually, in Latin America, you don't have a very wide footprint of partnerships locally. So does that impact your -- the power of loyalty and your ability to attract LatAm Latin originating premium passengers?

And then the second question, at the risk of lighting, an obvious blue touch paper, do you want to talk around the relations with the airports, Aena and their airport charges Heathrow in their third runway and Dublin and its cap, which is on/off, on/off, I struggle to keep up.

That was 3 questions there, Andrew, but -- Marco?

And starting from the first...

I'm not very good with numbers.

No comment.

If you look at our Flight Plan 2030, you would see that our starting point is to have a structural and maintain and foster a structural competitive advantage in cost versus our European competitors. We indicated that we have a 30% almost unit cost advantage versus the Air France and KLM and Lufthansa in Europe. But at the same time, in LatAm, in fact, LatAm carriers are -- have a much more competitive cost position. They have a cost position that is similar to ours. In some cases, even some corridors slightly better than ours. But we have a structural revenue advantage over there.

We are the only carrier to Latin America that has, for instance, business class with full-flat position and doors. So we are the only one having 4-Stars Skytrax, all the others are 3-Star Skytrax. And we have, therefore, a premium revenue advantage that is also reflected by the fact that we've been building that through network coverage. We are the largest operator to Latin America by far and the one that has the most spread network, 18 countries are covered. Therefore, that competitive advantage in product and network spread is reflected into a premium advantage that is remaining. And in fact, we're building -- or what we are sharing is that our RASK in premium, you saw the comparison of our RASK in premium in 2019 and today is 34% higher.

So this is a competitive advantage that we are building, strengthening and making stronger in time. Now certainly, as you mentioned, the Loyalty program is a key driver of that. We have mentioned, for instance, how much our top tier customers have increased in the year. So maybe, Adam, you can give some color there.

Yes, sure. I think it's interesting that South America is particularly strong in the Loyalty space in terms of Loyalty businesses, and we are seeing significant growth, not only in terms of the membership, both in British Airways and Iberia, but also in terms of the deals that we're doing now there on the currency side, with financial services and elsewhere. So definitely, South America is a very bright spot in terms of the loyalty business and in terms of the collection of the currency and the drive to deliver or achieve the tiers. So we're very pleased with what we're seeing down there.

And about your third question about airports. So in general, I think that the approach is the same with the different airports that -- where we operate. So Heathrow, I think we don't want to have a debate about the cost of the project. So what we are saying is that we need to look at the facts, and the facts are that Heathrow is the most expensive airport in the world. You need to pay 2x or 3x more than what you have to pay in other big European hubs.

So Heathrow has announced, it's not our number, they have in their web page, an expansion plan of GBP 49 billion. And we think that if that plan goes ahead, the passengers are going to pay double of what they are paying today. So we have done our internal analysis of the maximum level of investment that we think with the right facing, we can afford, in order to have flat charges for the passenger, and we have reached GBP 30 billion, is our number. And we can be wrong, but that's a reduction of 40% in the investment they are proposing.

But in any case, what we are saying is if Heathrow is sure about what they are proposing and the extra passengers that we are going to have, I'm sure they don't have any problem to put a cap in the passenger charges. That, at the end, is the objective that we have. We have a cap in what they are going to pay, and we don't increase what they are paying today. That I think is enough. Then we support any project.

Aena. Aena, we are working with -- also with the DORA III and it's similar situation. So we support the investment, not at any price. And for sure, the investment brings associated more passengers and more revenues. We hope more efficiencies. And because of that, we are defending that the charges for the passengers cannot rise so much. And in the case of Dublin, good news that the cap has been removed. What we are waiting is for an urgent progress of the legislation.

And that's all. And I think that was the last question?

That was the question.

Okay. So thank you, everyone, for listening today. We are very pleased that we have delivered another great set of results, and we are looking forward in a very positive way for 2026. Thank you very much.

Good morning, ladies and gentlemen, and welcome to the International Airlines Group Third Quarter 2025 Results Call. [Operator Instructions] I would like to remind all participants that this call is being recorded.

I will now hand over to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead.

Thank you very much. Good morning, everyone, and welcome to the IAG third quarter results. Today, I have with me Nicholas Cadbury, our CFO; as well as members of the IAG Management Committee. This has been another good quarter for IAG, and we are on track for another very good year. Our strong fundamentals underpin our best-in-class value creation over the long term. We are continuing to see robust demand for travel across the group.

Our leading network and brands have helped to deliver a strong revenue performance in the quarter with PRASK broadly flat at constant currency against a record quarter last year. Our transformation initiatives are delivering effective cost control, supporting our competitive cost base on which we are delivering market-leading margins at 22% for the quarter and over 15% on a last 12 months basis.

As Nicholas will show you, every single one of our airlines has reported a margin over 20% this quarter. This was also one of the best summers operationally that we have ever had, which is also supporting positive NPS performance.

Our balance sheet continues to be strong, giving us optionality around our capital allocation, whether that is investing in the business at high rates of return or reducing our gross leverage as we take and encumber aircraft deliveries or as we increase our dividends, as we are doing with this set of results for our shareholders. And we intend to announce further returns of excess cash to shareholders at full year results in February. So for the short term, we are confirming that our outlook for this year is unchanged. And in the longer term, we are confident in our strategy to create value for our shareholders.

And on that note, I will hand over to Nicholas to take you through the details for the quarter.

Thank you, Luis. Good morning, everyone. I'm pleased to announce another strong set of results. On the left, you can see the breakdown of the key drivers of the profit increase we've delivered in Q3. These are shown on a constant currency basis, with the impact of FX shown separately. We delivered a passenger revenue increase of EUR 177 million or 2% up. Cargo revenue decreased slightly as we cycled over the elevated yields in the Red Sea disruption in 2024, and other revenue continued to perform well, with the increase including higher IAG loyalty revenues, together with increased third-party revenues from Iberia's MRO business.

As we guided, the performance of nonfuel costs continue to improve quarter-on-quarter, and the increase was partially offset by lower fuel prices. We split out the FX into a separate item, and you can see that we had an EUR 8 million overall headwind from FX and profit, with benefits from the weaker U.S. dollar more than offset by weaker sterling euro in the quarter. Overall, we increased profit by EUR 40 million on the record performance in Q3 last year.

By OpCo, Iberia, Aer Lingus and Loyalty showed strong profit growth, whilst BA and Vueling profits were slightly down year-on-year. BA is shown in euros here, and so it was impacted by the depreciation of sterling against the euro, driving a larger reduction in euro terms than in sterling terms.

Now let's look at the operating company's performance in more detail. Aer Lingus increased its operating profit by EUR 31 million to EUR 170 million, and its operating margins by 3 percentage points to 21.6% despite competitor capacity growth in Dublin. Q3's performance was driven by the expansion of its networks, particularly on the North Atlantic and the impact of the industrial action of approximately EUR 30 million in Q3 last year.

British Airways saw its operating profits declined slightly by GBP 18 million, and its operating margins remain high at 20.2%. Unit revenues fell 1%, driven by the expected softer trading in U.S. sold North Atlantic economy leisure and by 7% capacity growth in European short haul. Nonfuel unit costs increased by 3%, driven by employee pay deals and resilient costs not being fully offset by the transformational benefits.

Iberia continued to report strong results with operating profits increasing EUR 56 million to EUR 510 million, and its operating margin increasing 2.2% to 23.7%. Iberia also saw softness in the North Atlantic driven by competitive capacity into Madrid. However, it was fully more than offset by the continued strong demand in the South Atlantic routes. Nonfuel costs increased by 2.2% primarily due to resilience costs and higher ownership costs from the new aircraft.

Vueling operating profit was EUR 20 million lower at EUR 272 million, but at a high operating margin of just over 25%. Good nonfuel unit cost performance was offset by a decline in unit revenue driven by slightly weaker demand, particularly in Benelux and Germany and the U.K. as well as the effect of investing and strengthening some of its core markets, which was not fully offset by the strong demand in other markets.

IAG Loyalty reported GBP 141 million in operating profit, up GBP 16 million year-on-year at a margin of nearly 19%.

Moving on to our revenue performance in more detail. Overall demand for travel continues to be strong, driven by demand for our network and our strong brands. The performance was in line with the guidance we gave in an outlook at the interims. We grew capacity by 2.4% with unit revenue declining by 2.4% and around 2 percentage points of which was due to currency movements, so only marginally down on underlying basis against a record quarter last year.

If we look at the performance by region, North Atlantic capacity increased by 2.9% with unit revenue decreasing by 7.1%, it's really important to note that around half of this was due to currency headwinds from both weak U.S. dollar and sterling against the euro. The trends were similar to those we reported at the interim results. We continue to see some softness in U.S. point-of-sale economy leisure and an impact on our transfer flows of U.S. direct capacity growth into secondary markets in Europe. Premium demand held up well.

South Atlantic continues to be the star performer in the network. Unit revenue increased 0.6% on a capacity increase of up 2.9%. Iberia's performance continues to be strong with the routes to Argentina continuing to perform well, along with routes to Venezuela, Ecuador and Colombia. Europe unit revenues decreased by 6% on a capacity increase of 2.4%. I've already mentioned weak demand for Vueling, weaker demand for Vueling and the additional capacity from British Airways. In addition, there are FX headwinds from the weak sterling euro, representing about 2 percentage points on unit revenue impact with Iberia and Aer Lingus performing better.

To finish off, Asia Pacific performed well and Africa and the Middle East and South Africa, partly saw the impact of additional capacity to Saudi Arabia and South Africa.

Just turning to Q4. So far, we are pleased with the revenue performance with passenger route revenue held positively year-on-year, including the North Atlantic. We did have a particularly good month -- good in-month booking in December last year following the elections, so we do have some tougher comparatives over the next few weeks. Despite this, we are confident about the long-haul market in particular. And while it's a bit further away, H1 is so far looking positively.

Just to note, as you've seen the currency impact on PRASK in Q3 was minus 2%. In Q4, we currently see higher adverse FX on revenue of around 3.5 percentage points, most of which is usually the average sterling to euro rate, which was about EUR 1.2 last year. And this year, it looks like it will be around about EUR 1.15. Clearly, the majority of the translation FX impact on revenue is offset by a favorable impact on costs.

I guided last quarter that the increase in our nonfuel unit costs this year will be weighted to the first half of the year, and I'm pleased that we're broadly flat in Q3 compared to plus 4.6 increase in Q2. This is a good performance overall and in line with our expectations. Currency benefited the unit costs by about 2%. Employee unit costs increased 2.9% due to agreed salary increases, which were only partially mitigated by productivity benefits for more punctual operations.

Supply and cost inflation was more than offset by procurement-driven transformation initiatives, part of our wider transformation program. Ownership unit costs increased by 9% driven by investments in new aircraft products and IT. Fuel unit costs reduced by almost 11%, driven by lower commodity prices and the fuel consumption savings from the new generation aircraft we're investing in.

We continue to expect nonfuel unit cost to increase around 3%, in line with the guidance I gave you at the last quarter. And likewise, on fuel, we continue to expect fuel costs to be around EUR 7.1 billion.

This slide shows our financial results for the 9 months down to net profit. Operating profit increased by around 18%, and pre-exceptional profit after tax increased by approximately 20% to EUR 2.7 billion, which, in addition to a lower share count from our share buyback program drove a 27% increase in adjusted earnings per share.

I'm pleased to report that our balance sheet continues to strengthen, gross leverage reduced to 1.9x, down from 2.6x at this time last year, driven by the regular maturity of our aircraft financing and paying down IAG bonds. Net debt was relatively flat year-on-year despite the shareholder returns and net leverage decreased to 0.8x due to the year-on-year profit improvement.

We still plan to give approximately 2/3 of our expected 25 new aircraft deliveries unencumbered, and we still expect to spend approximately GBP 3.7 billion on CapEx this year.

This is my final slide. I want to remind you about how we think about capital allocation, which is core to how we create long-term value for our shareholders. Our first priority is to make our balance sheet strength targeting net leverage below 1.8x through the cycle, which is a proxy for investment grade.

Our second priority is to invest in the long-term strength of the business at high rates of return with a focus on rebuilding our fleet, improving our customer experience and enhancing our digital capabilities and advancing our sustainability agenda. We're, of course, committed to a sustainable dividend return, and I'm delighted to announce an interim dividend of EUR 220 million. This represents approximately 50% of the anticipated annual total dividend, and as with the earnings per share, the dividend per share will also benefit from the share count production.

Furthermore, with the current GBP 1 billion share buyback program nearly completed, we intend to announce further returns of excess cash to shareholders at our full year 2025 results at the end of February. We are confident of the strong end to the year and feel that this is a more appropriate time for the Board to make the decision in line with pre-COVID practices.

And on that positive note, I will now hand back to Luis.

Thank you very much, Nicholas. As usual, I would like to remind you of our strategy that focuses on 3 strategic imperatives. Firstly, our strong core. We are deploying our capacity in a disciplined focused way to leverage our market-leading positions. And we are building our brands by investing in new, more efficient aircraft and better cabins and services alongside more efficient operations.

Secondly, we are building up our complementary capital-light businesses, in particular, IAG Loyalty. And thirdly, we have a robust financial and sustainability framework. We consistently executing these imperatives we can deliver and maintain targets that we think are both best-in-class and appropriate for our business through the cycle. As I mentioned earlier, we have now delivered a 15.2% margin over the last 12 months which is market-leading. Fundamentally, we believe that delivering earnings growth at these levels of margin and return on capital will create substantial value for our shareholders.

As usual, there are a lot of things going on around the group, and we have highlighted a few initiatives on this slide. Our network strategy is to focus on our core markets with increasing scale in our tax, we offer our customers more choice of destinations and frequencies. We focus on delivering improvements to the customer journey in our aircraft and on the ground and through a combination of the human touch and digital innovation.

A good example of this is our announcement yesterday that we are going to partner with the Starlink to provide high-speed connectivity in all of our airlines with the rollout likely starting early in 2026, and our punctuality, as a driver of both customer satisfaction and efficiency is amongst the best in the world, and in particular, has been excellent over the summer despite many external headwinds.

On-time performance improved across all airlines with British Airways achieving the best OTP at Heathrow since 2012, up by 10 points year-on-year. And NPS also continues to improve around the group with Vueling NPS hitting a record high this summer.

Finally, we are pleased to announce today that IAG Loyalty has signed a multiyear partnership extension with American Express.

Moving on to our outlook, our expectations for the 2025 full year are unchanged. As Nicholas has explained, we are booked positively so far for Q4, including the North Atlantic, so we are on track to deliver another very good year of revenue and earnings growth, margin progression and strong shareholder returns. Demand for travel is strong and our fundamentals are proven. We have leading market positions, a great network, powerful brands and an attractive customer base.

Through the transformation program, we are delivering the margins that we are reporting today. And we still have a significant number of initiatives to roll out gross revenue, costs and operations. So we believe that we can continue to deliver strong value creation for our shareholders through the cycle.

So I will finish by summarizing those key elements of that business model and our long-term investment case, strong markets, strong execution and strong value creation.

And on that note, we will turn the call over to Q&A.

[Operator Instructions] Your first question comes from the line of Alex Irving of Bernstein.

Two for me, please. We heard from -- first of all, we have some of your peers about a less peaky summer, but with the summer extending into Q4. Does that match your assessment? If so, is that a 2025 factor or a lasting change? And what does that mean for how you manage the business?

Second, on the North Atlantic, we saw Alaska launch in Heathrow. Do they get that slot in your existing joint business? If so, why? And should we see that as a precursor potentially adding them into the business?

So for the Q4 and Q1, we currently have about 80% of the Q4 book. The overall revenue performance is good and the passenger revenue is held positively versus last year. And we need to take into consideration that last year was very strong with total PRASK up 3.1% in general and in North America was up 14%.

So performance is different by region. We see improving trends in North Atlantic. And currently, revenue is quite positive. We see also a strong October and November in North Atlantic. South Atlantic, as we said in the presentation, continue to be strong. And in Europe, we continue seeing some softness in intra Europe. But with lately, we have seen improving. Rest of World is also positive.

And what we can see for Q1 right now with revenues around 30% the levels of revenue that we have are also above last year. So in general, the trend that we see is positive. So Q3 was a little weaker. As we said North Atlantic point of sale, nonpremium and transfer traffic had an impact in that. But we see that the situation is improving since then. And about Alaska, maybe you want to comment, Sean.

Yes. Look, I think Alaska a very important partner to American and BA and we have a very good connecting partnership over Seattle and to places in the West Coast where they've developed the network over recent years. It would be premature to talk about entry into any joint business, but we work with Alaska on a very constructive basis, and we would have helped them through the kind of slot process in advance next summer.

Your next question comes from the line of James Hollins of BNP Paribas.

One for Sean, please. Maybe if you could give us a quick update on the very sort of current news on the U.S. shutdown. And clearly, international flights are protected, but whether you might perceive there's a little bit of reticence on late bookings on your transatlantic network. And while you're on, maybe update on your BA digital transformation, I think we're getting into the upcoming?

And then for Nicholas, full year cost, I -- let me put it this way, is there a good chance you beat the 3% guide, particularly with FX and obviously, the performance you've had so far? Or is there anything specific on costs in Q4 that would mean you don't beat 3%?

Just on shutdown, I think it's early stages. But right now, we're not seeing any impact. And I think one thing I would say is, we have -- it's November. So there's lots of kind of ability to reaccommodate across networks if there is an impact. We flight to 27 points directly in the U.S., and we work with American closely and start selling over those networks. So I think right now, it's business as usual, and we're not seeing any effect.

But I think our direct network out of London, if there is any marginal impact on connecting traffic, we'll have plenty of capacity to kind of reabsorb any rebooking that we need to do. In relation to digital transformation, yes, we are entering an exciting phase. About 50% of our bookings on dotcom now are going through what we call our new booking flow, and that's showing very encouraging results. We're happy with conversion. We're happy with the performance, and we're very happy with the CSAT.

We'll begin to scale the number of bookings we put through that platform as we head in towards the December, January sale period. So the vast, vast majority of bookings heading into next summer will have come through that new booking flow. And we're in a position that we start rolling out the app phasing element of the digital transformation early in 2026. So yes, it's exciting, and we're very encouraged by what we're seeing.

Yes. Just on the cost side, James, we've got all the MC here. So thanks for putting them under a bit of pressure overall. We're sticking with our kind of 3% guidance at the moment. You can see FX is moving around quite a bit at the moment overall, but we think that's still -- we're holding on for that at the moment. But we're pleased with the progress we've made, particularly with supplier costs overall, particularly the kind of process improvements we're putting and the kind of procurement savings we're doing. So we're pleased with how that's going.

Your next question comes from the line of Stephen Furlong of Davy.

Maybe for Luis, just talking about or thinking about into next year, even into next summer. I'm just thinking about the competitive environment, maybe you could talk -- maybe go through the regions again because I'm thinking about things like, let's say, in LatAm, is there any change? Obviously, you have Turkish investing in Air Europa. I don't know on the other side. In the U.S. or North Atlantic I'm thinking about like United or I think it's delta expanding a lot of capacity. And then for yourselves in terms of capacity, maybe you'd be able to grow a bit more at Heathrow, if there's a bit of an improvement with the trends, et cetera. So just talk about the competitive dynamics as you see over the next 12 months in general terms.

So I can't comment on the capacity that we see for the next quarters. We need to take into consideration that still the people they are working in the programs for summer next year. But what we see for example, for Q4 and first quarter of 2026, is that capacity from London Heathrow, North Atlantic, London Heathrow is going to decrease in comparison to previous year. So that's going to help.

We see that the other hubs, the traffic with North Atlantic are going to be more difficult. So Dublin, for example, the people, they are adding a lot of capacity in winter that is not usual. So we see in the Q4, an increase of capacity of around 16% and in the first quarter, 15%. So we are going to have a very tough competitive environment there. Madrid North Atlantic, Q4, we are going to have an increase in capacity of around 5% and the first quarter, 10%. So it's true that Q3, the increase of capacity was higher and other people they are moving capacity from Madrid to other regions in Spain.

If we look at Latin America, from London, we see a decrease in capacity in the last quarter and also in the first quarter. Madrid is going to have an increase of around 4% in the Q4 and around 7% in the Q1. So -- but even with this increasing capacity, we are seeing strong yields and strong load factors. And the intra Europe is different in the different subs that we have, Heathrow Europe is going to be almost flat. Madrid Europe is going to be around 7%, Barcelona Europe around 4%. And Dublin Europe, again, high increase of capacity of around 12% in the fourth quarter and 15% in the first quarter.

So the competitive environment, North Atlantic, we see positive trend, it's true that others are adding capacity. But in the joint business, we keep our market share and also in number of premium seats we continue with a very good position. And the other topics that you said, for example, Turkey with Air Europa, I think is going to be an investment of 26% in the company. I suppose they will try to develop the business, but we don't see an impact of that in the short and medium term. I don't know if there was another question.

Your next question comes from the line of Jaime Rowbotham of Deutsche Bank.

Two from me, please. First, almost certainly for Nicholas on buybacks. On Slide 11, you reiterate the plan to return cash to maintain leverage of 1.2x to 1.5x net debt to EBITDA. It's obvious question, but if we assume you're still at 0.8x by year-end, it would imply a quite staggering EUR 3 billion to EUR 5 billion of potential headroom. Is it as simple as that, Nicholas, and presumably, at the lower end of that range, you could leave some buffer for potential M&A opportunities like TAP?

Second question is just really on short haul. Could you remind us what the plan is for Vueling next year? I think there were some clues there in what Luis said about capacity out of Barcelona. It seems like the short-haul environment is a little bit tougher for you. You talked about weaker demand, Benelux, Germany, U.K., not offsetting strength in other areas. So some comments, please, on short-haul outlook and the plan for Vueling.

Yes. So I'll just start with shareholder returns. So this year, we'll have returned by the time we get to the year-end, we returned GBP 1.2 billion of share buybacks and GBP 400 million of dividends over GBP 1.6 billion in total. We haven't quite finished the share buybacks, so we'll finish that over the next month or so overall. We've kind of held back kind of doing the next shareholder return to year-end. Just to get it back into a normal process. We did was an exceptional one that we did last year was because it was the beginning of the process, but we'll just get back into the normal swing of it. It's a normal year-end decision that we have overall.

But hopefully, we've kind of said in our statement that we're confident in going to give you share -- further returns later on in the year overall. Just in terms of the kind of way we think about it, as you said, we've got that range of 1.2x to 1.5x net leverage below that overall. I think kind of right at the moment, we've got some increasing capital coming over the next few years. And as you say, the TAP, so we'll probably manage more towards the bottom end of that range rather than the top end of that range overall, but that still gives us kind of quite a lot of flexibility overall.

We've had 1 or 2 analysts kind of saying that not giving shareholder buybacks for this quarter may show kind of lack of confidence in the kind of future trading, I think, kind of after the strong quarter we just had and the fact that we've just said that we're booked positively for the year-end as well and kind of confidence in our overall strategy, we kind of find that that's obviously a personal statement, but it's doesn't reflect the confidence we have in our own business.

About the short-haul and maybe Carolina can expand on the Vueling. But the Q3, the point-to-point traffic was okay. We suffered in the transfer traffic, as I said previously. In the Q4, what we see is that competition is high. In Q4, intra-Europe capacity is going to raise around close to 6%. But we have different performance in different countries. For example, there are markets that are working very well for us. We need also to take into consideration the impact of the FX in the Q4 that is going to be relevant. But maybe Carolina, if you can comment on Vueling.

Sure. If we look at Q3, I think it's a mixed bag. There are different things. So some markets work very well, domestic worked very well for us. As Nicholas said before, we had some specific markets with a weak performance. Germany, U.K., Netherlands, Netherlands very linked to the tax situation there. But we have a very strong position in Barcelona, and we offer from there over 100 routes, it's a constrained airport, and we have 1/3 of domestic traffic. So we are very used to face strong competition, but we are positive about our ability to compete.

If you look at our RASK, A good part of that is self dilution. So we have decided cautiously to invest in some markets, Canary is a good example. We have grown over 30% in Canary but we are already seeing the results of that investment. So although you are right, it's going to be very competitive, I think we have a good position to compete in our core markets.

Your next question comes from the line of Savi Syth of Raymond James.

Maybe for Nicholas, I'm not looking for guidance or anything like that, but I was wondering if you could talk a little bit about as you look out to 2026 just across the kind of the main cost items. Just generally, what you are expecting in terms of inflation and anything, any kind of offsets or headwinds or tailwinds that we should think about?

Yes. We're not giving guidance for 2026 overall at the moment. I think all I'm going to say just on the cost base as well, we've given kind of clarity for the last kind of 2 quarters on this year, which we're confident delivering. We've just delivered a good quarter on the cost base overall. So that will be up about 3% year-on-year on nonfuel cost. I'm expecting kind of the transformation program and also with kind of some -- hopefully, some kind of easing inflation overall that, that kind of number should moderate into next year overall.

That's helpful. And if I may just also ask just on the demand side, if you could kind of give a little bit more color between just kind of corporate versus premium versus kind of maybe the economy leisure.

Yes. I think that if we look at the business traffic, year-to-date, we have volumes around in total at group level of around 70% of the volumes that we had in 2019 and revenues close to 87%, so situation is improving but slowly and with a very different performance in the different airlines. So for example, in British Airways 62%, 63%, 82% in revenue, in Iberia, close to 80% in volume and above 100% in revenue and in Aer Lingus close to 100% in volume and similar in revenue. So with this, we expect to finish 2025 with business revenue above what we had last year.

If we look at the volumes in Q3, we saw a decline in comparison with last year. But what we see now in the Q4 is positive, for example, in British Airways, we are seeing now growth in North Atlantic, both U.K. and North Atlantic point of sale. So we think that this is going to help to that recovery. But in any case, as I said, in some way, we are in a stable situation and the improvements slowly.

In any case, when the COVID started, we said that we were expecting to come back to levels of revenue of around 85% of the revenues we have in 2019, and we are above that. And the good news is that we are delivering these strong results with this percentage of business traffic. What it means that our model is very -- is working very well also with the premium leisure traffic.

Your next question comes from the line of Harry Gowers of JPMorgan.

Two questions, if I could. The first one, just if I could ask on your positively booked revenue comments for Q4, if you could maybe clarify how positively booked we're talking? And could we end up seeing RASK higher year-over-year for Q4 versus last year? And then the second question, I was just wondering if you could go into some color on the U.K. point of sale on transatlantic and also U.K. point of sale on short haul as well and if we're seeing any demand weakness or price sensitivity?

Yes. So just -- Harry, I'd love to give you more detail, but that's about as much as we can give you that it's booked positively overall. I mean, we're currently -- we've had a good October and November, particularly we've seen actually point of sale in North America being good on both sides, actually from U.K. and from the U.S. as well and actually the U.S. leisure point of sale in the last few weeks has been a bit better as well, which is good to see.

The only thing we're just calling out is we had a particularly strong December last year across the Atlantic. After the Atlantic, it was a bit of kind of pent-up demand. And if we saw it very strong. So we're just about to enter those weeks, but we're feeling pretty positive about it overall. So I think that's all we can say overall. And ASK is going to be up about 2.3% in the quarter as well.

Yes, just on the U.K. segments in terms of the booking profile, Q3, we were positive across both business and premium and non-premium leisure and Q4, it's a little bit more positive, but we don't commit to the specifics. So yes, we're seeing stable demand is the best way I would describe it, and that's relevant, I think it's prevalent in both Europe and/or our U.S. markets, as Nicholas said.

Does that answer your question, Harry?

Yes.

Next question comes from the line of Conor Dwyer of Citibank.

I'd like to come back a little bit to the buyback question. Nicholas, you obviously already talked a little bit about managing towards the lower end of that range of 1.2x to allow for some potential M&A, things like that. But obviously, that still implies basically you can pay out more than your free cash over the next few years. Is that really how we should be thinking about this? Or are there other things in there that might, let's say, move that leverage number away from that kind of level?

And second question was actually on the Loyalty. So growing revenue by about 7%, obviously, that growth has been extremely high in recent years. I'm just kind of wondering, are you now kind of viewing that business as a bit more mature now? Should we be really kind of thinking that as a kind of mid-single-digit percentage growth business?

Just on the share buyback. I mean, we set out the guidelines on where we want to manage our balance sheet to overall. And I think when we did that, we kind of said the things that we'll be looking out for it's a forward-looking thing rather than a backwards necessarily. So we'll be looking forward to how does the outlook look. We're feeling pretty positive about that at the moment. We also looked at what M&As on the horizon, TAP maybe potentially overall. And there's also kind of CapEx, what's our CapEx commitments looking forward as well.

Now CapEx, as we know, is about EUR 3.7 billion this year, next year, probably more about EUR 4 billion, but we know over the next few years after that, it starts to ramp up, and that's why we could be managing towards the bottom end of that and making sure we've got some good headroom and ready for that overall.

On the loyalty side, just to come back on that specifically, yes, we are continuing to see -- if you look at the year-to-date performance because there are some specifics around promotions around particularly on issuance of the points. So if you look at it across the year, we're still seeing double-digit growth in terms of the currency that's being issued and there or thereabouts on usage of those points and how those points redeemed. So I think we're seeing a continued growth and the continued double-digit growth that we've seen over the previous years.

Your next question comes from the line of Ruairi Cullinane of RBC Capital Markets.

First question on Cargo revenue decline. Should we expect similar dynamics in Q4, given another strong prior year comp? And then just sort of coming back to the unit revenues. Do you think North Atlantic trends you've seen is suggestive of the Liberation Day headwind, which may now be fading, given the improvement looking forward?

Yes. On Cargo, yes, you're right. I think we're seeing actually the supply, the demand for Cargo is still relatively good. And you can see that our weight we're carrying is still up overall. But we're just seeing some softness in yields. And as we said in the call, that's really based on the fact that we're anniversarying the high yields we had as there was a lot of disruption over the Red Sea last year overall. And that's just the supply chain around that is just kind of normalizing overall, and you'll see that probably into Q4 as well. North Atlantic, I'm not sure we can -- anything else we can really say about that overall. I mean, Liberation Day was in April, overall.

Yes, as we said in Q3, we were below what we expected. But since then, we see a recovery. And as Nicholas said before, we see an improving trend, which is strong October and November, and we are booked positively. So I think the effect of the Liberation Day is, by far away.

Your next question comes from the line of Andrew Lobbenberg of Barclays.

Can I ask 2 questions. One on what labor relations lie ahead? I think there are some at BA, but perhaps you can correct me on that and whether there are any elsewhere in the group? Second question, I'd quite like to hear your thoughts around the situation at Aena, where I mean, obviously, you want lower airport charge, I can imagine. But it appears that the airport companies becoming something of a political football in Spain, and its plans to develop the infrastructure are potentially being threatened. So where do you sit, obviously, you do want beautiful facilities for very low cost. But how do you think about your key partner providing infrastructure in Spain being such a political football?

So about the labor situation, I think we have closed the most important agreements at group level. We are still negotiating some places like Iberia, with the ground staff. Maybe, Marco, you can comment on that later. We have now a situation -- a difficult situation in Manchester, where, as you know, we have a strike and it's probable that we are going to continue with a strike. And in Aer Lingus, they need to negotiate agreements with different collectives and in Vueling also, some of the agreements they expire at the end of this year and they are negotiating. So maybe you can comment maybe, Lynne, the situation in Manchester.

Yes. The -- just about Manchester in context, first of all, it takes 2 aircraft in Manchester base applies transatlantic. We're mounting through the strike. We've been accommodating -- we are accommodating more than 90% of our customers in strike date so far. We reached agreement with United on 2 separate occasions, and they've got the recommended deal for their members, which the members rejected. So we've benchmarked there. We've been working through ACAS.

I think the key thing here is we need to be cost competitive, Manchester needs to be able to perform financially, it needs to justify its asset allocation. We're part of a group where capital is constrained and distributed where returns can be made the most and I'm very conscious of that when we look into our industrial relation situations.

Okay. Maybe, Marco, you want to comment on the ground staff.

Yes. Indeed. In terms of the labor relations in Iberia last year, there was a major milestone that was achieved. It was to set the new collective agreement with our pilots that, as you know, is a system where we share the benefits of and the results of the company, not only linking the pay evolution and the one-off evolution and a payment to the EBIT results of the group, but also to the productivity of our staff to the NPS and the OTP, so the capability to deliver to our customers.

And the same has been achieved this year with our cabin crews. And we're just starting now the process of opening the negotiation with our brand personnel, and we are confident that the same scheme and system, of course, with the nuances for the specific collectives can be applied also there. It's very beneficial also for the people. And one remark, as you know, we also introduced the possibility for people to buy shares and become shareholders. And more than 1,000 of our staff currently have subscribed to that. That is another element of sharing the benefits of the resource of the company.

And maybe a comment in terms of the Aena situation. Of course, our strategic plans implied the necessity of an alignment with Aena, and we have a common view of bringing to the full potential of the Spanish both operating companies and infrastructure. Of course, that needs to be done at an affordable price, it's the same view that the group has with regard to the U.K. So and we are in close contact with Aena to ensure that, that will happen.

Can I just check? Is everything done and dusted on CLAs at BA? Or are there any...

Yes. our collective agreements go to the end of '26 and mid- '27, so we concluded those over the last 18 months.

Your next question comes from the line of Patrick Creuset of Goldman Sachs.

Just coming back to your comments on Q4 trading, please. When you say booked passenger revenue for Q4 is up year-on-year including on the Atlantic. Just double checking that, that is after the FX headwind that you flagged or is this constant currency? And then secondly, if we look at your ASK guide of 2.3% for the quarter, again, coming back to your comment on increasing passenger revenue overall, and that would imply RASK at least somewhere around flat year-on-year, consensus standing at minus 2% for the quarter.

So is that a fair interpretation? And then on the basis of that, looking at consensus expectations of somewhere around EUR 5 billion -- just shy of EUR 5 billion of profit for the year. Do you sort of feel comfortable with that?

Just you're right. The guidance we've given on the positive booking includes the FX. So it's not in constant currency overall it takes account of the currency impact as well. I'm afraid I can't give you -- I'm not going to give you PRASK guidance for -- with North Atlantic for Q4 overall, exactly, I think we said we were positive overall. I mean that's taking account the ASK growth as well, but we've got positive momentum on that overall. And so the last question on consensus, yes, you're right, consensus is just under GBP 5 billion. And if we weren't happy with that, we would have to say something, and we're not saying anything.

Your next question comes from the line of Muneeba Kayani of Bank of America.

I just wanted to touch on this new Amex partnership extension. How should we be thinking about it in terms of impacting the loyalty, top line margins? And then just related to that, overall margins into next year, you're very much at the top end of your midterm guide. You talked about positively unit cost inflation being better next year, you're seeing good demand trends. Like how are you thinking about that margin into next year, please?

Yes. Just starting on the Amex agreement. Yes, so we're very pleased that we've reached an agreement with a -- long-term agreement with American Express. That continues the good work that we've done previously in terms of that. That agreement includes the British Airways co-brand, the Membership Rewards business and the acceptance of Amex across the different airlines this time to include LEVEL as well. So we're delighted that we have this multi-year agreement, and that will help the loyalty business as we go through the next few years to have that agreement in place, and we look forward to working with Amex in the years to come.

Yes, just on guidance, we're not giving guidance next year, but I mean I think kind of with the dynamics that we're seeing, we still see strong demand for travel, we still see a constraint in supply of aircraft into the market next year. Overall, we've got our transformation program, which is both driving our own revenues and also the kind of costs under control, which I said should moderate overall. So if you put those dynamics together, there's no reason why we shouldn't be at the top end of our guidance and sustain there overall. Of course, it depends on where fuel is and inflation ends up overall. But I think we're feeling confident in that.

Your next question comes from the line of Gerald Khoo of Panmure Liberum.

One, if I can. There's been a lot to talk about the sort of ongoing strength in premium leisure. I was just wondering whether you could give an indication as to the relative importance of premium leisure within the Premium cabin. I know you probably won't give an exact figure, but just something to give a rough indication of how important that is proportionately?

And what -- in terms of that trend of growth, what could derail it? What could cause that premium leisure strength to reverse or soften? And certainly, I think there was some talk about strong short-haul capacity growth at British Airways. So I just wanted to kind of understand where that was and why that was done, please?

Yes. Just in kind of premium leisure, yes, we don't disclose the kind of precise mix we've got on premium leisure Premium seats. If you look at it, it's different by different airlines, of course, if you look at British Airways, we've got about 45% of our seats are Premium overall, but a significant part of that is leisure. We've got about 20% of our overall customers and corporate customers. And more of that when you look at SME businesses overall, but they're important part of our growth.

And you can see that in terms of corporate customers overall, they're still down year-on-year, but actually that's been filled very successfully by the demand for leisure, particularly at the front end of the plane. So it still continues to be strong. In terms of derailing one of the concerns we had as you get up to the -- we're approaching the U.S. -- U.K. election, which feels like it could be targeted more at the -- our customers at the wealthier end of the line. So you would expect maybe some slowdown, but we're seeing the opposite of that at the moment as well. So the people have got money, they've got money at the moment.

In terms of short-haul capacity, there's probably 2 dimensions driving it. One is we have been replacing A319s with A320s and 321s at Heathrow. So that's a chunk of gauge. We've also been reorienting the network to fly to probably more of the Southern European leisure markets, which gives us a stage of that effect, which increases ASKs. And we've been continuing to build back our Euroflyer businesses at Gatwick. So that's operating kind of 25, 26 aircraft, which is probably where it was back in 2017, '18. So there are kind of 3 drivers of that capacity increase. And we've had some gauge benefits as well at London City, where again, we're adding some ASKs, but again, primarily into longer sector leisure markets, which were robust over summer.

Your next question comes from the line of James Goodall of Rothschild.

So just firstly, following up on Muneeba's question on Amex. Has there been any changes in commercial terms with Amex as a result of the new agreement? And how should we think about the cash remuneration element going forward? And then secondly, just given the strong on-time performance in all entities in Q3. Can you quantify what the benefit was to both revenue and costs from lower disruption in the quarter, please?

Yes. I mean the Amex card, it's a commercial sensitive agreement, so we can't really give any details in terms of the specifics overall, both in terms of, kind of, be it margin and cash, I don't know if you want to add anything.

No, I just have to say, I think that's right. But clearly, we're very happy with that agreement. It works for both our South American Express, and we're very pleased to have extended it for the long term.

And about disruption cost, in the case of BA this year, the costs were almost half, 45% less than the growth that we had last year.

Your next question comes from the line of Jarrod Castle of UBS.

Two as well. It seems like the MRO business is doing pretty well. So if you could just give a little bit more color in terms of pipeline of work and what you're seeing there? And then just secondly, I mean, a lot of attention to Loyalty. And obviously, the changes happened, I think, it was April this year. Loyalty members, they're going to get their tier status. I would imagine sometime in March next year.

Just interested, within the different tiers, gold, silver, bronze at BA, has the mix changed, i.e., or some of the gold members as a percent of total mix slipping down or some of the silver going up? And what are signings like into the loyalty program at the moment. So any color on how you see that evolving going into March?

Maybe, Marco, you want to comment on MRO, mainly the engine business.

Yes. The engine business is still cycling over the post-COVID phase. So indeed, as you say, is recuperating, you see that a lot of the non-airline revenue growth has been driven by the growth of maintenance. So it's coming back to pre-COVID levels of profitability, and we are currently in the phase of setting the stages of the next longer-term view of the strategic opportunities there. So I think we will come back in time on that.

In relation to the club and the relaunch, I think it's performing as we would expect, I think the tier sizes are broadly tracking the way they were last year. But we are hearing anecdotes of people who are higher-value customers getting their tier quicker. So we don't expect to see so much movements in terms of tier sizes. But we do think that the club tiers will be rewarding our higher revenue customers more quickly and more fairly.

Yes. And I think I'd add to that, just in terms of the club, you asked about where the numbers are, we are still seeing some good growth in terms of people joining the club, both in terms of BA Club and Iberian Club. Active members, so that's somebody who's done something in the last 12 months is up double digits. So we're seeing a lot of activity. And we're also starting to see, which we talked about last quarter, people increasingly using their holiday as a method of obtaining tier point. So that's another trend that we're seeing.

Your next question comes from the line of Alex Paterson of Peel Hunt.

Yes. So just continuing that theme of holiday sales to BA club members. Has that really benefited the third quarter? And if I look ahead, your -- the number of ATOLS that you have paid for is flat year-on-year. So if I think about then where is the growth in IAG Loyalty going to come from? If it's not from the number of holidays? Is it -- are you going more upscale? Or is it the growth is going to come from more Avios issuance?

Yes, thanks for that. Yes, in terms of club members, we are seeing more revenue coming from club members, that's up on where we were in terms of if you look at it year-to-date. And we are expecting that to continue. So -- and you're right in thinking that the quality of revenue that come from those members tends to be strong. And so that's definitely where we're seeing some of the growth.

In terms of ATOLs, I've always said that ATOLs are bit of an art rather than a science. And so we certainly plan to grow the business into '26. And in Q3, we definitely saw that growth in a lot of areas, I would highlight Greece is probably the region that's had its strongest summer certainly for us. So yes, that growth continues.

There are no further questions. I will now hand back to Luis Gallego for final remarks.

Okay. So thank you very much. Thank you very much, everybody, for being here today. As we said at the beginning, a strong set of results, positive trend in bookings for the third quarter and first quarter. So we continue -- we are going to continue executing our strategy that is delivering better results than average. Thank you very much.

Good morning, ladies and gentlemen, and welcome to International Airlines Group Half Year 2025 Results. [Operator Instructions] I would like to remind all participants that this call is being recorded.

I will now hand over to Luis Gallego, Chief Executive Officer, to open the presentation. Please go ahead.

Thank you very much. Good morning, everyone, and welcome to IAG's half year results for 2025. As usual, I have Nicholas Cadbury with me, our Chief Financial and Sustainability Officer; as well as other members of the IAG Management Committee.

I would like to remind you of the key elements that make IAG a world-class investment case. Firstly, our fundamentals are strong. We have unique strengths in our network, our hubs and our brands. Our customer base is strong and resilient across all of our airlines. And we are growing our earnings opportunity through IAG Loyalty and our global partnerships.

Secondly, our execution is strong. We are consistently delivering world-class margins through our transformation program, powered by our talented employees across the globe.

And thirdly, we are creating substantial value for our shareholders through sustainable earnings growth, robust free cash flow generation and significant shareholder returns.

We have had a strong first half of 2025. Revenue grew by 8%, reflecting continued strong demand for our network and brands. Operating profit reached almost EUR 1.9 million (sic) [ EUR 1.9 billion ], up 43.5% year-on-year, with Q2 delivering EUR 1.68 billion, an increase of 35.4%.

Our transformation program supported a 2.9-percentage-point increase in operating margin to 11.8% as we improve our customer offering and our operations. We are investing in our digital and technology capabilities and are driving efficiency throughout the group.

Our balance sheet remains strong, with net leverage of -- at 0.7x, giving us flexibility on capital allocation.

And we continue to create significant value for our shareholders. We have grown adjusted EPS by 70%. And so far, we have announced EUR 1.5 billion of cash that we are returning to shareholders through dividends and share buybacks.

I will now pass over to Nicholas for his review of the numbers.

Thank you, Luis. Good morning, everyone. I'm pleased to announce another excellent set of results for the first half of 2025. This slide breaks down the key drivers of our profit improvement, highlighting our strong performance and the benefits from fuel and FX tailwinds in addition to our transformation program, which continues to deliver benefits across our businesses.

Total revenue grew around 8% to just under EUR 16 billion, reflecting strong demand for our network and brands. Passenger revenue grew 5.6%, with capacity up 2.7% and yields up 3.9%, which more than offset the small decline in overall load factors. We delivered good growth in our Cargo business, the IAG Cargo team prioritizing premium products and high-yield regions such as Asia Pacific and India. Our third-party MRO business saw particularly strong revenue growth alongside our growth in Loyalty and Holidays.

The revenue performance more than offset increase in nonfuel costs, which were, as we expected and as previously highlighted, weighted to the first half. We've split out the FX in a separate item, and you can see we benefited from the depreciation of the U.S. dollar in the first half and the lower effective fuel prices. Putting these together, we increased operating profit by EUR 569 million to EUR 1.878 billion.

Now let's look at how our operating companies performed in more detail. I'm very pleased that most of the operating businesses have delivered an improvement in operating profit in the first half.

Aer Lingus increased its operating profit by EUR 71 million to EUR 80 million, and operating margin by 6 percentage points to 6.8% in the first half. H1's performance was driven by the record second quarter operating profit, with strong unit revenue across long and short haul, disciplined cost control and a benefit of EUR 20 million from the annualization of the pilot strike last year.

British Airways' operating profit increased GBP 260 million (sic) [ GBP 269 million ] to GBP 824 million, with margins improving by 3.5 percentage points to 11.7%. This was despite EUR 50 million impact of the 1-day closure of Heathrow in March that we've already mentioned. The improvement in profit was driven by strong demand in the North Atlantic market and lower fuel prices and favorable FX.

Iberia continued its excellent trajectory, delivering EUR 202 million increase in operating profit to EUR 564 million and a 14.5% margin, which was up 4 percentage points. Strong demand, especially in South Atlantic, continues. And again, we benefited from the lower fuel prices.

Vueling's operating profit margin was broadly flat in the first half, with a favorable fuel and FX and good leisure demand being offset by the weaker demand in some markets such as Germany and the Benelux.

IAG Loyalty reported GBP 191 million profit -- operating profit, broadly flat year-on-year, but this now reflects the required adoption of HMRC's view of account for VAT on the issuance of Avios, which the group strongly disputes. Excluding this change in treatment, IAG Loyalty would have reported a 9% improvement in operating profit to GBP 210 million, with an operating margin of just over 17%.

Moving on to our regional performance for the quarter in more detail. Overall, we continue to see strong demand and unit revenue in our core markets during the second quarter. We grew capacity by 2.2 percentage and delivered a unit revenue increase of 2.6%. This performance was driven by high yields and helped by a small currency tailwind of 0.4 percentage points.

If we look at the performance by region, the North Atlantic unit revenue increased by 0.6% in the second quarter on a capacity increase of 1.8%. Although this was lower growth in Q1, we were very pleased with this result given the level of uncertainty in the market. And as previously indicated, we also had easier comparatives in Q1 2024. Similar to Q1, our premium cabins performed well and mitigated some softness in U.S. point-of-sale economy cabin leisure demand.

Latin America and Caribbean continues to be one of the star performers in the network. Unit revenue growth increased 5.1% on broadly flat capacity. Routes to Argentina, Peru, Colombia and Ecuador performed particularly well.

Europe unit revenue performed well for tourist and leisure destinations. And I've already mentioned that we saw some weakness in Northern Europe markets overall.

And to finish off, Africa, Middle East and South Asia also performed well despite the impact of the conflict in the Middle East.

As noted last quarter, we guided that the increase in our nonfuel unit costs for this year will be weighted to the first half of the year. Nonfuel unit costs increased by 6.6% in H1 with the 4.6% increase in Q2 in line with our expectations.

Three factors contributed to the increase. Firstly, approximately 0.6 percentage points, which were attributable to the negative impact of foreign exchange, primarily caused by the strength of sterling against the euro. Secondly, approximately 3 percentage points was driven by the nonairline business of the group, particularly MRO, but also Loyalty and Holidays. And in particular, you can see the related revenue benefit for MRO in the increase in our other revenue. And thirdly, about 0.5 percentage points was due to the negative impact of the 1-day closure of Heathrow in March. So this leaves an underlying airline nonfuel cost increase of around 2.5 percentage points.

Fuel unit costs reduced by approximately 10%, driven by lower commodity prices, and we continue to benefit from the fuel-efficient new generation aircraft that we're purchasing. We now expect nonfuel cost to increase around 3% compared to previous guidance of 4%. We have a small increase in underlying costs compared to our previous guidance due to lower capacity growth and slightly higher resilience costs, with FX now expected to be a small tailwind in the second half at current exchange rates.

On fuel, we are approximately 77% hedged for the remainder of the year and now expect fuel costs to be around EUR 7.1 billion at $700 million -- $700 per metric ton.

This slide shows our financial results down to net profit. Pre-exceptional profit after tax increased approximately 60% to EUR 1.3 billion in the first half, which in addition to the lower share count from our share buyback program, drove a 70% increase in adjusted earnings per share.

The 60% increase in profit after tax was driven by an operating profit increase of approximately 44% as well as net finance costs -- lower net finance costs, primarily due to the reduction in gross debt as well as FX retranslation benefits. This was partially offset by the increase in tax, which has now broadly normalized this year against the credit that we received last year stemming from the Spanish Constitutional Court decision.

We generated EUR 2.1 billion in free cash in H1. Operating cash flow was EUR 3.8 billion in the first half. Although this was incredibly strong, this was a decrease compared to the first half of last year. Whilst we generated EUR 560 million more in operating profit, there was a reduction of EUR 427 million of working capital, mainly due to foreign exchange impact on the ongoing -- and due to the impact of the -- ongoing impact of VAT payments on our Loyalty program.

CapEx was EUR 1.7 million, an increase compared to H1 2024, but in line with our guidance, reflecting the delivery of 13 new aircraft. We also made a net EUR 447 million payment to HMRC to appeal the VAT ruling in IAG Loyalty, which again, as we say, we strongly dispute.

I'm pleased to report that our balance sheet continues to strengthen. Gross debt reduced EUR 2.5 million (sic) [ EUR 2.5 billion ] compared to the end of last year, benefiting from EUR 577 million bond buyback in January and the maturity of EUR 500 million of unsecured bond in March 2025, and we also benefited from the FX benefits of about EUR 1.3 billion. Gross leverage reduced to 2x.

Net debt has decreased to EUR 5.5 billion, down from EUR 7.5 billion at year-end. The net leverage now at 0.7x, benefiting from the strong results and the seasonal working capital inflow, which we expect to predominantly unwind by the year-end.

We still plan to keep approximately 2/3 of our 25 expected aircraft deliveries this year unencumbered. And just to note, the BA NAPS defined benefit triennial valuation has now been agreed on pension fund, with a scheme having a surplus of GBP 1.7 billion, an improvement from the deficit of GBP 1.6 billion in 2021, which confirms we do not have to make any deficit reduction payments.

As a reminder, during the business -- ensuring the business is approximately invested in is a priority for us. This slide shows our CapEx guidance for the year, which remains at around EUR 3.7 billion. We now expect to take 25 new aircraft deliveries this year, 1 aircraft fewer compared to the 26 deliveries we expected at quarter 1, with 1 A321 XLR delivery slipping into next year. And as a reminder, this is our gross CapEx expenditure before any sale and leaseback transactions.

And finally, for me, I just want to remind you about how we think about our capital allocation, which, as you know, is core to creating value for all of our shareholders. Our first priority is to maintain our balance sheet strength, targeting net leverage below 1.8 through the cycle, which is a proxy for investment grade.

Our second priority is to invest in the long-term strength of the business, with a focus on rebuilding our fleet, improving our customer experience, enhancing our digital capabilities and advancing our sustainability agenda.

And of course, we're committed to a sustainable shareholder return, firstly, through ordinary dividends, which has been set to be sustainable through this cycle, with the interim dividend announcement moving back to our historic quarter 3 cadence; and secondly, by returning excess cash to shareholders. We started to do this with EUR 300 million -- EUR 350 million share buyback program that we launched in November last year. And we are approximately 2/3 the way through our EUR 1 billion share buyback program we announced in February of this year, which is expected to complete this November.

And on that positive point, I will now hand back to Luis.

Thank you, Nicholas. The foundation of this strong set of results is based on the relentless execution of our strategy to deliver world-class margins and returns. As I mentioned at the beginning, the 3 strategic imperatives to deliver these are strengthening our core businesses, accelerating capital-light earnings growth and maintaining a robust financial and sustainability framework.

Our medium-term ambition is clear: operating margins of 12% to 15%, return on invested capital of 13% to 16% and net leverage below 1.8x through the cycle.

This time last year, we presented this next slide to highlight the 3 biggest near-term drivers to achieve our ambitions. Last November, we told you how we are transforming British Always, taking it from a 10% margin business in 2023 to 14.2% last year. And we are making good progress towards delivering its 15% margin target by 2027.

Last month, we told you how Iberia has transformed from losing EUR 1 million per day in 2012 to annual operating profit of just over EUR 1 billion in 2024 to a business that is targeted to deliver EUR 1.4 billion of operating profit at a margin of between 13.5% and 15%.

And next year, we will give you more detail on how IAG Loyalty plans to deliver higher margin, cash-generative, capital-light earnings growth for the group from just under EUR 500 million in profit last year.

We have a diversified portfolio of leading positions in our core markets. In the North Atlantic, London to the U.S. is the world's largest premium air travel market, and British Airways is the market leader. So it is continuing to build its presence in this highly attractive market. At the same time, the delivery of the first Airbus 321 Xtra Long Range to Iberia and Aer Lingus is opening up a highly profitable fly-in through frequency, seasonality and point-to-point network opportunities that rely on the unique positioning of IAG's hubs.

Next, Spain to Latin America is a fast-growing and highly attractive market, with Iberia investing in frequencies to core cities.

Thirdly, the intra-European market, including the Spanish domestic market, is one of which IAG's airlines have strong and focused positions. Vueling is strengthening its market share at its Barcelona hub, and Iberia is enhancing its short-haul feeder traffic. As well in Europe, Aer Lingus is having leisure routes, and British Airways is building its point-to-point leisure markets through Euroflyer and Cityflyer.

The biggest driver of customer satisfaction and efficiency is on-time performance, which has improved significantly in the last couple of years. British Airways delivered a 10.6-percentage-point increase in on-time performance in the second quarter, driven by its new Heathrow operating model, supported by digital and artificial intelligence-driven tools to speed up and improve decision-making.

Aer Lingus also saw a strong improvement also through ground operational initiatives and technology support while Iberia and Vueling remain among the most punctual airlines globally. This is all despite ongoing challenges from air traffic control as well as the Heathrow closure in March and geopolitical disruption in the Middle East and Ukraine.

For our customers, we are investing in strengthening our ramp-up of propositions at every stage of the travel journey. On this slide, we have given you a small selection of examples. But in reality, there are thousands things that we are doing everyday to make our offerings the best for our customers. These investments are designed to make their travel experience more personalized, seamless and resilient. As a result, customer NPS is strong across the group, up by 6 points in the year-to-date, particularly driven by improvements at British Airways.

Cost transformation remains central to our strategy as we look to deliver our businesses to their full potential. This is through initiatives to deliver efficient and productive operations, use our economies of scale to get the best deals and to reduce overheads.

On this slide, we have given you some examples across each of our airlines where we are combining our expertise in the airline sector with a better, leaner processes and leveraging the development of digital technology. This is also an appropriate point for me to mention that today, we are announcing that we have allocated the 50 Boeing 737s that we have ordered to Vueling. They will be delivered from late 2026 onwards. All of these initiatives are a fundamental part of growing our earnings, margin and returns in the medium term.

IAG Loyalty continues to grow strongly as they expand their airline and nonairline partnerships. We have recently launched a partnership with LeShuttle, which has seen 15 million Avios issued as well as announcing tier point earnings with American Express. In the first half, Avios issuance was up 17%, redemptions up 15% and active customers up 9% year-on-year. British Airways Holidays also performed well, with revenue up 8% and beach destinations growing 18%.

Underpinning all the above initiatives, our people are at the heart of our success. We created around 2,500 jobs in the first half of this year, which will help to deliver improvements in customer service, resilient operations and transforming the business in the long term. We continue to invest in their skills, development and careers, which is reflected in the awards that we win. And we have reached multiyear agreements with most of our teams, including new deals with BA's nonpilot group and Iberia cabin crew.

We are continuing to make good progress on sustainability. We have secured over 200,000 tonnes of sustainable aviation fuel for 2025, 25% more than last year. We signed a landmark Scope 3 agreement with Microsoft and continue to lead policy development through initiatives like the U.K. SAF Revenue Certainty Mechanism. We remain committed to advancing SAF policy and reducing our environmental impact.

Looking ahead to the rest of this year, we expect to deliver good earnings growth and margin progression, which is delivering strong shareholder returns whilst being mindful of ongoing geopolitical and macroeconomic uncertainty. Demand remains strong across our core markets and brands, with premium cabin strength partially offsetting some softness in U.S. point-of-sale economy leisure.

As of 29th July, we are around 57% booked for the second half of the year, in line with last year. And we remain confident in the longer-term outlook for our business.

And on that note, we will move now to the Q&A session.

[Operator Instructions] We will take the first question from the line of Andrew Lobbenberg from Barclays.

Congratulations on the super numbers. Can I invite you to talk to us about the headlines of the day out of Heathrow and how you expect the process to move forward with the Heathrow proposal and indeed the competing Arora proposal that, I think, you're more supportive of?

And as a second question, could you update us, please, on what's happening with the revitalization of the app and web at BA because it looks like that time line seems to be slipping? But yes, where are we going with that at BA?

Andrew, thank you for your questions. About Heathrow, we are going to work with both parties to understand their cost proposals better. They have just submitted 2 credible proposals. And we are open to different options to reduce the cost, to reduce the investment and to reduce the complexity. The good thing is that we are sure that competition is going to be good to improve things. We have seen in commercial aviation how competition has helped to have better price and better products, and we are sure this is going to happen also at the airport.

But in any case, this is a huge investment. We continue saying that we need a change in the regulatory model in order to have a runway that can be affordable. Today, Heathrow is the most expensive airport in the world. And if we don't have control about the level of investment, we can duplicate what the passengers are going to pay. And then this growth that all of us we want, we have the risk that this is not going to happen.

So as I said, we are pleased that there are 2 proposals, and we are going to work to see how we can help in this.

And about the second question, Sean?

Yes. Andrew, if I give you a broader context about some of the digital transformation we're undertaking, there's a couple of key enablers of the transformation that are now live. One is the new rev man system, which went live 2 weeks ago, and that's a pretty critical interface with the new digital experience.

The second migration we've undertaken in the last couple of weeks as well is moving to a new check-in system. So we've decommissioned our old Fly system. We're now on Amadeus [indiscernible].

And the third thing we have rolled out is the new payments platform, which is live on NDC. So they are critical sort of enablers of the broader digital transformation.

In terms of dot-com, about 25% of our revenue and about 85% of our routes is going through the new dot-com booking flow. So we're able to analyze a control group of the new experience versus a controlled group of the old experience, and that's pretty exciting.

And in terms of the app, as I was saying, we -- with so much change going on in other modernizations, we weren't going to roll the app out for peak summer, but we're looking at Q4, Q1 to get that fully operational in the network.

So broadly speaking, we're on track. We're very happy with the rollouts that we've implemented. And in terms of our kind of expectations versus our original plan, we're where we need to be.

Your next question comes from the line of James Hollins from BNP Paribas.

Two for me. Just on the U.S. point-of-sale economy leisure, clearly, your statement was almost verbatim, what you said at Q1. I was wondering if there had been any sign of economy leisure, U.S. point of sale getting any better or indeed any worse and whether there's any sign of weakness the other way around. Clearly, you've not flagged it, but just wondering if you had a view there.

And secondly, on the other revenue, again, Nicholas, you talked about that, I think, normalizing to about 20% after going nuts in Q1. I think Q2 is still up 30%. Maybe give us a feel for what it might be doing in H2. I know it's quite short term in maintenance, but any guidance would be useful.

Okay. So thank you. So about your first question, in North America, we had a strong first half, as we have seen in the presentation. When we look at the second half and the bookings that we have, we still see some softness in the U.S. point of sale in economy leisure, but it's true that this is partially offset by the strong premium cabin.

What we see is a trend that is slowing -- slowly improving, but we have volatility, to be honest. This week, we are following carefully what is happening because we don't see a clear trend.

And maybe about the second question?

Yes, just on kind of other revenue as well. You can see it's been a very strong half for other revenue. And it was -- it wasn't just maintenance as well. It was our Holiday business and our Loyalty businesses, which were up strongly as well, but particularly strong from our maintenance business overall, which, I think, was up about [ 40% ] in the first half of the year. I think that kind of reflects that kind of all the airlines having to work harder on engines and get them ready for the summer overall.

So as we said at kind of Q1, we would expect that to moderate through the year, and we expect kind of total other revenue to roughly be around about 20% up for the year -- for the full year.

Your next question comes from the line of Stephen Furlong from Davy.

Yes. Maybe 2 questions, but I think they're probably for Nicholas more maybe. It's topical in the IT sector at the moment, but the level of investments that are needed over the next couple of years. So the airline industry, obviously, has been delays in deliveries. So CapEx is going to step up over the next couple of years. So just -- can you just talk about that again and how that helps your franchise?

And then just related to that, just seems to me that the market seems to underestimate the level of free cash flow in the business. So I guess generally or generically in the future, I mean, I assume the biggest driver is the operating performance. But is there stuff going on in the next couple of years below that line? Maybe people are underestimating working capital or cash taxes or lack of restructuring provisions or something like that, that would be great.

That's right. Yes. Just in terms of CapEx, what we said for this year, we said we would give about EUR 3.7 billion of CapEx next year. Then we said for the next 2 years, we would expect it to step up to around about EUR 4 billion, maybe a little bit short of that next year overall.

And just we kind of do remind everyone that once you get to 2029 to 2030, that's when you start hopefully getting the big kind of step-up in Boeing and Airbus' delivery and production facilities. So that's when you do get a step-up in CapEx overall. So kind of we gave guidance overall for the next 2 years to put kind of EUR 4 billion into your models overall.

As we've said historically, we're kind of spending about EUR 1.8 billion a year on nonfleet kind of CapEx, and that's particularly around IT, around property, around kind of lounges and refurbishing of that. So we think that kind of level of spend will continue for the next couple of years, but we think that will give us a long-term benefit and payback kind of over time. So we think that's the right thing to do.

I think your kind of comment on free cash flow, I think you're right. And as you know, we did a teach-in last year on free cash flow. I think we still got some way to go. I think people are getting a better understanding of it, I think, overall, particularly when we speak to investors in terms of our cash flow. But I think you're right to kind of keep probing that. But I think we've got a positive working capital flow overall. So it always depends on which way FX is going. We've got our kind of -- our tax, as we just kind of said, is normalizing over that time. But despite that, we're a strong kind of cash flow business.

I think the bit the people are probably underestimating is the kind of consistency of delivery, but we're delivering on our EBITDA actually overall. So I think that's a bit that's probably missing overall. But that strong kind of cash flow give us a strong balance sheet, which is giving us real flexibility about how we invest in the business, how we continue to strengthen our balance sheet, but actually also shareholder returns as well.

Does that answer your questions, Stephen?

Yes, that's great.

Your next question comes from the line of Alex Irving from Bernstein.

Two from me, please. First of all, to come back to Sean on the new RM system at BA. How is this performing so far? And what sort of RASK improvement are you hoping for versus your previous RM system when it's all bedded in?

Second question, we're a few months on from some of the changes to the Exec Club from earlier in the year. Is this having a discernible impact by now, either positive or negative, on unit revenue? What impact do you expect it to have over the next couple of years?

Yes. If I could just replay, it's how the new rev man system is going is the first question. And the second question is about the changes to the club.

Is that right, Alex?

Yes, it's...

You're right. So the impact of a better rev man on both of those.

Yes, Alex, I think one of the big benefits of new rev man system is our ability to implement what we call dynamic pricing. So historically, airlines are -- would be limited to the number of letters in the alphabet in terms of inventory buckets. And our ability to do trade-up pricing between those selling classes was relatively -- I wouldn't call it clumsy, but limited. Now we can put a lot more step-ups and trade-ups into our pricing ladders. And it's too early maybe to give you an assessment of the impact. We're only trialing it for the last 3 weeks, but my teams are very excited about its potential.

In terms of the club, and we've Adam here as well, we've seen Executive Club, our club revenue perform in line with our broader network. So no discernible difference between the revenue coming through people who are members of the club and the revenue coming through our wider network, and it's growing in line with the capacity that we've expanded the airline by.

I think we are in a transition phase. What we are seeing is people who were booking high-quality revenue in Holidays are getting tiered earlier, and we expect our tier sizes to be broadly at the same level they were pre change, but there will be some people who get in there -- who used to get, and some people will drop out who were in those tiers historically. So that's part of the transition that we are forecasting and expecting.

Yes, I would agree. Adam Daniels here. Just to update, particularly on the Holidays side, we are seeing an increasing number of the BA club members start booking British Airways Holidays, and we're seeing that in terms of the quality of revenue that's coming as a result. So certainly, those people that are doing that are increasing their chances of retaining and, in fact, going to the next tier as well.

Your next question comes from the line of Savi Syth from Raymond James.

Just curious if you could provide an update on what you're seeing on the kind of corporate and premium leisure side across the various kind of geographic areas. And then if I might also on the -- yes, on the -- just a little bit of a longer-term question. Taking a step back...

Savi, you're breaking -- Savi?

Yes?

Savi, you're breaking up. Sorry, your second question, we haven't got your second question right. Can you repeat it?

Sorry, yes. So my first question, just if I might, on the corporate, just what you're seeing on the corporate as well as premium leisure size across the various entities.

And then second, maybe on the -- just a longer-term question. Just on the price-sensitive segment, kind of your view on what -- in intra-Europe and domestic Europe, like what the impact of these rising kind of taxes and fees and SAF requirements might mean for kind of price-sensitive demand, especially as you're looking to kind of invest even more in Vueling.

Thank you. So about the business and corporate traffic. So IAG business passenger volumes dropped in the second quarter, close to 8%. It's true that when you look at revenues, it was a -- sorry, it was our connection, I think. It was a smaller amount, minus 1%. The biggest decline in volume was in Iberia. That was close to 12%. But the decline in revenue was less than that, around 7%. And in the case of British Airways, we have a decline in volume, but in revenue, we were almost flat.

So North America point of sale, following the announcement of tariffs from U.S. government, we see -- we saw some volatility. And in British Airways, the corporate revenue in the second quarter was minus 3% in comparison with last year, with a huge impact in April, but mainly because the Easter this year was in the second quarter. But we maintain, in the case of British Airways, the target to improve the business revenue for this year, even driven by North Atlantic that we see is recovering.

In the case of leisure traffic, the premium leisure revenue in the second quarter, in the case for example of British Airways, was 7% above what we had last year. So things are doing well.

And I don't know if you want to add something else, Sean?

Yes. I think the Easter effect is one thing to bear in mind, but we are seeing North Atlantic revenue. If you look over the half, our business revenue was up about 4%, and North Atlantic was up about 7% in that context. So that's encouraging.

I think maybe to add just on the Latin America part, that is the part that really is performing very strong. So we are ahead both in revenues and volumes, not only from 2024 last year, but even compared to pre-COVID. In terms of revenues, we are 8% ahead of last year and 38% in the first half compared to 2019.

I think your second question was about the impact of kind of taxes in Europe. I think you're probably referring to kind of the taxes we've seen in Schiphol in Amsterdam. So Carolina, do you have -- can you give a flavor on what we're seeing in Vueling?

Of course. So in the Netherlands, we've seen last year a 19% tax increase. It has had an impact. So although we had yields going down, we couldn't get to the loads we wanted. And the result of everything together was we couldn't pass the taxes through. So this is having an impact on demand clearly.

Do you see that as a longer-term issue? Just I mean -- just looking just multiple years, I mean, is this a concern where maybe the price-sensitive pie is going to shrink over time?

I think we've always said just in terms of our kind of approach to Europe, that it's a very positive market for us. We're very strong in kind of leisure destinations and city destinations. We're quite cautious in terms of what the impact of kind of the EU's kind of approach to what sustainable aviation fuel headwinds are going to be. So we're kind of cautious about the amount of growth we put in there overall.

We've always prioritized our long-haul growth given the kind of margins we made in there, particularly across the South and North Atlantic as well. But we do see a kind of specific opportunity, particularly in Vueling, to growing that kind of leisure destination, and particularly with the excitement of getting the new 737s, which is going to make it more efficient business, help improve its margins overall, which will really give kind of great kind of benefit to our kind of customers and to the business.

Your next question comes from the line of Jarrod Castle from UBS.

Very strong set of results. I don't know how much color you can give, but just wanted to see if you could say anything on where things stand with you and the TAP process at the moment.

And then secondly, we've got the U.K. autumn budget coming up. Again, I don't know how much you can say, but any conversations you're having with the Transport Minister especially in the light of Heathrow and how potentially that could affect your business, I guess, in October.

Okay. So about the first question about TAP. So you know that the government, on the 10th of July, they announced that they were going to privatize part of the company. In a first phase, they announced 49%, but that includes 5% right for employees. We are waiting that they sign this and then we have clear indications about how the process is going to be and the conditions.

And we said in the past that we are interested to see if it's something that can be good for the group. And we think that the best place to develop TAP is a group like IAG. We have shown how the different airlines that they joined the group, they improve their performance. And also, we see that we have very complementary networks. And also, we have a location -- Atlantic location. And I think that's something that is good for development of TAP.

But as I said, we need to wait to see the conditions. And we cannot obtain the margins that we have in the group between 12% and 15% in the different airlines if we don't have the freedom to do the right thing to develop the business. So that is going to be the main concern for us in this process.

And about Heathrow, we talked before. We support the expansion of Heathrow, but, and if, we have the right regulatory model. With the current regulatory model, to be honest, I think it doesn't matter the proposal because at the end, the customers, they need to pay almost double of what they are paying today. And today, Heathrow is the most expensive airport in the world. But we agree with the agenda of growth, but what we don't want is a new terminal empty. So what we need to work together is to define the best proposal, the most efficient proposal and affordable to develop the business.

I don't know, Sean?

Yes. Just a couple of topics in relation to the open statement. I think -- if we think about the things we are doing with the Department of Transport, we welcome the progress on sustainability and the move to enact revenue certainty mechanic for SAF production. I think that's a very positive development. Also, the speed at which we're moving forward on aerospace reform, which will be critical to enabling the expansion that we foresee on the ground.

At the same time, like every other business, we've got to make sure about the burden on the businesses that we're already bearing, whether it's National Insurance and the inflationary effects of some of the policies we've seen that need to be tempered, but we are working well with the Department of Transport on issues like aerospace and sustainability, which we welcome.

Your next question comes from the line of Harry Gowers from JPMorgan.

First question, just on the -- on your revenue comments for H2. You say the booked revenue is in line with last year. Can I ask, within that, what are you currently expecting or seeing in terms of the FX impact on that revenue over the second half?

And then second question, just on the lower capacity guidance for this year, I'm actually a bit more interested in 2026. So do you think that lower capacity that you've guided to is more structural? Or will that just be added back next year? And then just maybe whilst we're there, how much capacity growth are you actually penciling in for 2026 at the moment?

Okay. So maybe I can start with the second one, and then Nicholas, you can talk about the FX in the revenues.

So this year, we are reducing the capacity for the full year from 3% that we said to 2.5%. And I think one important part is related to the resilience that we are building. You know that we have also issues with engine availability across the group. Also, conflicts around the world, particularly in the Middle East, we needed to reduce flights. And ATC across Europe and, in particular, France that the situation is even worse every summer. So we build resilience in the different airlines, and we are delivering good results when we look at the punctuality, but we need to come back to a normal situation in the future, and then we will add more capacity.

And how about the revenues, Nicholas, and the FX?

Yes, just on the FX, it's probably about kind of 1%, 1.5% kind of headwind for the second half at the moment. But as you know, FX has been moving around a bit. So it gives us slightly -- a little bit favorable on the costs and a little bit of headwind on the revenue.

Your next question comes from the line of Jaime Rowbotham from Deutsche Bank.

Just one from me. I wondered if you'd be willing to talk a bit more about the North America PRASK. So obviously, it slowed from 13% to 1% in Q2. I just wondered how negative you think that could go in Q3. I suspect the trough then will come Q4, Q1 when the comps get very tough, and then we might see an improvement when we're comping the current quarter this time next year. But maybe just some thoughts on the shape of that, especially as you said, you've been seeing some slow improvement in transatlantic demand in recent weeks.

Thanks, Jaime. I liked your heading of your note this morning, still delivering. That was straight on, right on target. Thank you for that.

So just in North America, we did see a slowdown from Q1 to Q2. I'd just remind you that in Q1 2024, which was kind of just the beginning of the kind of conflict in the Middle East, we did -- we had seen a kind of soft period. So we saw a particularly strong -- kind of slightly easier comps for this year overall, which is why you saw very strong comps in Q1 this year overall.

We're probably not going to go into too much detail overall. We've got capacity in the North Atlantic, continues to grow around about kind of 2% overall. And as Luis said, overall, that it's going to slightly down overall revenue kind of year-on-year at the moment. So -- but as you said, it's been quite volatile. It's been improving slowly over the last few weeks rather than deteriorating, which is positive. But as I say, it's quite volatile. So we kind of don't call that a trend yet.

And at the same time -- this is Marco speaking. We do see continuing the strength in South America. You have seen that in H1, we've had a RASK improvement over capacity increase, both of our sales and the market, and we do see the positive trend to continue.

Your next question comes from the line of Muneeba Kayani from Bank of America.

Firstly, just wanted to ask on your thoughts around the buyback at this point. The current one ends in November. Leverage is well below 1.2. Kind of how is your thinking for another buyback in November potentially?

And then secondly, just a bit more on capacity. What are you seeing from the industry capacity across your main market? You've talked about strong demand and some of these improving trends. Do you think there could be more capacity coming back on the transatlantic? So just what you're seeing on that.

Okay. So I'll start with the second one, capacity. What we see for the third quarter and the fourth quarter is Europe to North America capacity in Q3 and Q4 is going to increase around 3% versus last year. But when we look at our hubs, in the case of Heathrow, it's going to be a capacity almost flat. We see an increase -- important increase again this summer in Dublin. American carriers, they are adding capacity there. And we have an increase in Dublin of around 9% in comparison to the capacity that we had last year.

In case of Europe, Latin America, we see also an increase in capacity from 3%. And in the case, Madrid, Latin America, the increase is similar. It's around 3%. We see that the American carriers in general, they are moving capacity from the north to the south hubs, and then we have places like Fiumicino, Lisbon and Madrid where they are allocating more capacity. But in general, North Atlantic, except the situation of Dublin, we see a good environment for the last quarter.

Yes. On the share buyback, kind of just our approach to it overall, we finished the quarter with 0.7 leverage, which is a good position, and it came from a strong operating performance, also helped as well by a little bit of FX as well. The FX kind of gave us probably about 0.1 to 0.2 kind of benefit over that period as well. And I think as I said, the consensus for the full year is around a kind of 1 to 1.1 overall.

So that kind of puts us in a -- it's a really nice place to give us kind of flexibility and gives us options overall. I'll leave it to discussions we're going to have at the Board in Q3 about how much we give back and in terms of share buyback and dividends.

But I think our overall approach to it has always been we want to make sure that the dividend is sustainable. So I think you'll see moderate increases in dividend in kind of Q3 overall. And although we've had a really good rise in our share price over the last year, we're still in a P/E ratio of kind of 6, 6x overall, which if you look at our long-term average of kind of 8x and if you look at where the U.S. carriers are, 8, 9x at the moment and we're serving similar markets that we still think that actually the right thing to do is to prioritize the share buyback program going forward. So I think that we're going to leverage, and that kind of mentality gives us kind of good opportunity -- positive outlook on where we should be going in -- over the next year.

Your next question comes from Guilherme Sampaio from CaixaBank.

So the first one on ex fuel unit costs, you have a relatively benign environment for the second half of the year. The comparison basis is going to be inflated for the early part of 2026. So is there any initial thoughts that you could provide us on your expectations for ex fuel unit cost evolution in 2026?

And secondly, on Vueling, I appreciate your comments on the B737 allocation. Is there an initial idea that you could provide us on where are these aircraft being -- going to be allocated?

Yes. Just on the Vueling, we've got about 3 aircraft being kind of allocated in 2026.

Yes. It starts in 2026. We're going to work on the plans and give more information later. But the first planes will come to Barcelona.

By the end of the year overall. On ex fuel pricing for next year, we'll probably give you a bit more kind of color on there over the next 6 months rather than give that now. We're focusing on making sure we deliver about 3% that we've committed to you today, so -- overall.

Your next question comes from the line of Gerald Khoo from Panmure Liberum.

A couple for me, if I can. Starting with the 737s going to Vueling. Am I right to say that's going to leave Vueling with a mixed fleet, at least for the time being? And what's your plan to firstly mitigate the cost and complexity from having a mixed fleet? And secondly, is that likely to stay a mixed fleet in the long term?

And secondly, on BA Holidays, I think you talked about beach holiday -- beach destinations being strong. Can you just clarify, when you say beach, do you basically mean Mediterranean? Or does that include Caribbean? And more broadly, what's the shape of the destination mix for BA Holidays between sort of long-haul, short-haul beach or nonbeach? I mean can you just give us some color in terms of what the important destinations for that business are, please?

Okay. So about the first question about the Vueling fleet. So what we have announced today is that 50 Boeing 737 that we have firm orders, we are going to allocate in Vueling. The intention for sure is that at the end of the process, we replace a whole fleet of Vueling with Boeing product, but that is going to be dependent on the performance of Vueling for sure. If Vueling complies with the plan that we have, then the intention is to replace the fleet and to reduce in a -- reduced period of time, understanding that this is going to be a long period because we are talking about a lot of aircraft. So we are talking about maybe 6 years of replacing aircraft if we can comply with the plan.

Yes. And about, of course, having a mixed fleet for some time creates inefficiencies. We have a very strong plan to minimize those inefficiencies, of course, you have with crew, with training and everything. But we have plans to mitigate that. And this is for Vueling, I have to say, great news because Vueling has been in a strong transformation process. You can see the results on our nonfuel CASK evolution in the last 2 years. And this will be absolutely key to help us along with transformation to restructure our cost base and amplify the growth opportunities for Vueling.

And about BA Holidays, Adam, please?

Yes, sure. So in terms of when we're talking about beach and the link, that's primarily focused about short-haul beach. So we are seeing some good strength there, particularly in places like Corfu, Greece, generally. Málaga is very strong. But we are seeing also some strength in other beach destinations. So certainly in the Indian Ocean, Dubai. And Caribbean is certainly coming back, I think, as well. So that's where we are in terms of beach destination. Short-haul beach is our biggest segment and performing well.

So we look forward to seeing your holiday booking coming through, Gerald.

Your next question comes from the line of Ruairi Cullinane from RBC Capital Markets.

I did miss the beginning of the call, so if this has already been addressed, please ignore me. But in the last 12 months, you've delivered a 15% EBIT margin, so you're slightly overearning relative to the midpoint of your medium-term margin targets. Would you accept that? Or are your targets now a bit conservative?

We just finished the quarter at kind of, let's say -- kind of just under 12% margin overall for the half year overall. So good progress year-on-year overall. We've got our margin at 12% to 15% target. We've kind of reiterated that in March. So early to kind of go on top of that.

I think you've seen kind of -- there's a few things. We're seeing a strong market at the moment. You're seeing a kind of favorable fuel price. You're seeing favorable FX. And there's always opportunities at the top end of those range at the moment. But we think the best thing to do is kind of keep it, that guidance, at the moment.

Okay. Yes, it was the last 12 months was the 15%.

There are no further questions. I will now hand back to Luis Gallego for closing remarks.

Okay. So thank you very much, everybody. I think to wrap up, we have seen another strong set of results. We are operating with very good brands in very robust markets. And I think the most important thing is through our transformation program and the execution that we are having, we are delivering what we are promising to you every quarter. We are going to continue working hard to achieve the results that we want for the rest of the year, and I wish you, everybody, a very good summer. Thank you very much.

Good morning, everyone. I'd like to thank you for attending this General Shareholders' Meeting for the International Consolidated Airlines Group S.A. I'd also like to thank the members of the Board of Directors for attending. So let's start the session shall we.

I'd like to make you all aware that the Board of Directors has required the presence of a notary, Ana Fernández-Tresguerres García, who is seated at the desk at the side of the auditorium here, who will be minuting the proceedings.

I'd also remind you that any shareholders who wish to participate must have first identified themselves and registered on entry into the auditorium, and you have to hand over the written account of your comments if you wish to be recorded verbatim in the minutes.

Shareholders attending online who wish to participate must have sent them in sending them over the online platform as indicated in the call notice.

Finally, I inform you that the period for voting over the online platform for those shareholders attending remotely will remain open until the end of this shareholders' meeting. So I give the floor to the Secretary.

Good morning. To comply with the legal formalities, it is hereby placed on record that in Madrid at Edificio Mutua, Mutua Madrileña Paseo de la Castellana, 33, with the possibility of online attendance at 12 noon on the 19th of June 2025, a shareholders' meeting of International Consolidated Airlines Group S.A. is held on second call, having been called pursuant to the Board resolution of 8th of May 2025.

The call notice was duly published in the newspaper, La Razón, on the 12th of May 2025, on the website of the Spanish National Securities Market Commission by means of an other regulated and corporate information announcement on the 12th of May and on the corporate website, where it's appeared without interruption since the 13th of May 2025 and is therefore deemed to have been read for all purposes.

This AGM is chaired by Javier Ferran as Chairman of the Board of Directors. And the Board Secretary, Álvaro López-Jorrín acts as meeting Secretary. The governing panel, therefore, is composed of these 2 persons and the directors in attendance. An attendance list has been drawn up according to which there is sufficient quorum to validly constitute the shareholders' meeting on second call and to transact all the business on the agenda.

Detailed information on the quorum will be provided once the list of attendees has been closed and definitely prior to the shareholder speeches.

So briefly, the agenda for the meeting contains the following items: number one, approval of the 2024 financial statements and management reports of the company and its consolidated group; two, approval of the consolidated nonfinancial information statement and sustainability information report for financial year 2024; three, approval of the management of the Board of Directors during the 2024 financial year; four, reelection of KPMG Auditores S.L. as auditor of the company and of its consolidated group for 2025 plus delegation of powers.

Five, approval of the proposal for the allocation of 2024 results; six, 2024 final dividend approval; seven, reelection for the 1-year term stipulating the bylaws of Javier Ferran, Luis Gallego, Eva Castillo, Margaret Ewing, Maurice Lam, Bruno Matheu, Heather Ann McSharry, Robin Phillips and Nicola Shaw and the appointment for the 1-year term stipulating the bylaws of Simone Menne and Päivi Rekonen; eight, consultative vote on the 2024 annual report on directors' remuneration; nine, approval of the directors' remuneration policy; ten, approval of a reduction in share capital by means of the cancellation of up to 426,206,309 shares, which is 8.57% of the share capital; delegation of powers for the implementation thereof.

Eleven, authorization for the derivative acquisition of the company's own shares by the company itself and/or by its subsidiaries; twelve, authorization to the Board of Directors with express power of substitution to increase the share capital pursuant to Article 297.1 b of the Companies Act; thirteen, authorization to the Board of Directors with express power of substitution to issue securities, including warrants convertible into and/or exchangeable for shares of the company, establishment of the criteria for determining the basis for and the terms and conditions applicable to the conversion or exchange.

Fourteen, authorization to the Board of Directors with the express power of substitution to exclude preemptive rights in connection with the capital increases and the issues of convertible or exchangeable securities that the Board of Directors may approve under the authorities granted under Resolutions 12 and 13; a, up to 10% of the share capital on an unrestricted basis; and b, up to an additional 10% of the share capital in relation to an acquisition or a specified capital investment; fifteen, approval of the proposed purchase of 21 Airbus A330-900neo family aircraft and 32 Boeing 787-10 family aircraft; sixteen, delegation of powers to formalize and execute all the resolutions adopted by the AGM.

The proposed resolutions prepared by the Board of Directors on the above items and the relevant reports have been made available on the corporate website from the date of publication of the call notice and are therefore also deemed to have been read for all purposes. Thank you.

Dear shareholders, it is a pleasure to welcome you to the 2025 IAG's Annual General Meeting on behalf of the entire Board of Directors. 2024 has been a very good year for the group, a year in which we have achieved very solid results and the market has responded favorably.

In these initial remarks, I would like -- I would therefore like to thank on behalf of the Board, the work of more than 74,000 people who form IAG, whose commitment and involvement in the group's transformation plan have been key to making this year a successful one.

The strength that our business have demonstrated during 2024 is a result of the dedication of everyone who makes up this industry-leading group. I would also like to thank you, our shareholders, for your trust and continued support. In 2024, we continue to fulfill our purpose of connecting people, businesses and countries.

We are proud that aviation is an engine of economic -- for economic and social prosperity, enabling people to travel, to make business, to study, see friends and family around the world or discover new ideas, places and experiences.

Our airlines and the hubs in which they operate are part of the essential infrastructure that facilitates connections and promotes wider economic growth. Aviation is a key driver of economic activity through direct investment, employment and supply chain. In terms of financial results, as I mentioned earlier, 2024 has been a very good year for IAG.

The results have allowed us to strengthen our balance sheet, reinvest in the business and also resume remuneration to our shareholders, you. In September last year, we distributed an interim dividend of EUR 0.03 per share. And today, we are putting to the vote the payment of a final dividend for EUR 0.06 per share, thus totaling remuneration of EUR 435 million for 2024.

In addition, in November 2024, we launched a share buyback program worth EUR 350 million. And in February this year, we announced our intention to return up to an additional EUR 1 billion of excess capital to you within a maximum period of 12 months through a buyback.

Our results are proving that the strategy we updated in 2023 is a successful one. In 2024, we continue to be guided by 3 strategic imperatives: to strengthen our core through the growth of our leading brands, to drive growth through the complementary business and alliances with other airlines and to operate under a robust financial and sustainability framework. As a result, we grew revenues by 9% to EUR 32 billion, increased our operating profit before exceptional items by 26.7% to EUR 4 billion and our margin by 1.9 percentage points to 13.8%.

We generated free cash flow of EUR 3.6 billion and with a strong balance sheet delivered on our commitment to shareholder return. In 2024, we maintained our leadership position in the most valued aviation markets, serving 122 million passengers worldwide.

We saw strong travel demand and our group capacity exceeded pre-pandemic levels, highlighting that travelers continue to prioritize travel, experiences and in-person connections. Travel demand remained strong throughout the year, particularly in our core markets of the North Atlantic, Latin America and Europe.

We took delivery of 19 new aircraft as part of the continued investment in our fleet, and Iberia was the first airline in the world to operate the Airbus A321XLR. As well as reinforcing our airline leadership positions, IAG Loyalty is an increasingly attractive part of our portfolio with the addition of BA Holidays this year.

Therefore, I reiterate that our personal -- that our operational, commercial and financial results demonstrate that our strategy is working. Sustainability is also a part of IAG's strategy. We have demonstrated our industry leadership by being the first airline group globally to commit to a goal of zero net emissions by 2050.

In addition to our investments in more fuel-efficient and therefore, lower emission aircraft, we are investing in lower carbon fuels and technologies, prioritizing sustainable aviation fuel known as SAF. But we face regulation, including SAF mandates that will increase cost for airlines and their passengers. That is why we are working to bring all stakeholders in the aviation ecosystem together to enable the transition to a low-carbon economy while maintaining the competitiveness of the industry in Europe.

In terms of governance, I would like to mention that we are saying goodbye to 2 of our Board members this year, Peggy Bruzelius and Emilio Saracho. I would like to thank them both for their outstanding commitment and contribution during the years of service at the IAG Board. I would like to thank them both for their outstanding commitment and contribution during the years of service at IAG Board and its advisory committees.

To fill these vacancies, we are pleased to propose the appointment of Simone Menne and Päivi Rekonen. As you have the opportunity to consider the information relating to these appointments and the selection process, allow me just to emphasize how strong these candidates are. I'm very pleased to have them both on our Board, and I'm sure that they will measure up to the highly professional individuals to whom we're saying goodbye today.

In terms of compliance with our relevant corporate GAAP governance standards, I would like to highlight that in 2024, IAG adhered to all the applicable recommendations of both the CNMV's Good Governance Code and the U.K.'s Corporate Governance Code.

Despite the good results, we're mindful of the geopolitical instability and challenges facing the industry. Even with this in mind, we are confident we're hitting our medium-term financial targets. Our outlook for 2025 is unchanged from what we shared in February.

As a group, IAG is resilient, thanks to our group model and scale, our valuable core markets of North America, Latin America and Europe and the diversity and strength of our brands. All of this is underpinned by a disciplined and ongoing transformation program, which manages costs and captures future innovation and opportunities.

Looking ahead to the ongoing year, we will remain true to our strategy of pursuing sustainable growth and profitability while making a positive contribution to the economies and communities in which we operate.

IAG's purpose means economic, social and cultural development. That is why we should be proud of the positive impact our activity has on the people, businesses and countries in which we operate. Thank you very much.

So now we give the floor to the CEO.

Thank you, Javier. Shareholders, good morning, and thank you for attending this Annual General Meeting. I'd like to start this speech by underlining what the Chairman has already pointed out. 2024 has been a very positive year for the whole group, a year in which we reported sound earnings and an excellent return on invested capital. In 2024, the group maintained its purpose of connecting people, businesses and countries.

More than 122 million people flew with our airlines to 259 destinations in 91 countries. What we collectively achieved has only been possible, thanks to the talent and dedication of our employees in all our operating companies. So I want to start by thanking them for their commitment.

Furthermore, thanks to our strategy and the transformation program we're implementing throughout the group, we're not only achieving industry-leading results, but also becoming a business at the very forefront of innovation for a more sustainable future.

So let me now move on to the financial highlights of the year. In 2024, we met our medium-term financial targets. IAG achieved an operating profit before one-offs of EUR 4.4 billion. Now that's an improvement of EUR 936 million compared against 2023.

Our full year operating profit before one-offs was 13.8% compared to 11.9%, which is what we obtained in 2023. We generated EUR 3.6 billion of free cash flow, which is EUR 2.2 billion more than in 2023. And this after having invested EUR 2.305 billion in renewing our fleet. Net debt at year-end stood at EUR 7.5 billion with a leverage ratio of 1.1x.

In addition, thanks to our strategy to reduce gross debt in 2024, we were able to do the early redemption in the first months of the year of two EUR 577 million bond issues maturing in 2027 and 2029. Thanks to our capital allocation framework, our strong free cash flow and financial position, we've been able to continue to invest in the business.

We took delivery of 19 new aircraft, including the first Airbus 321XLR, of which Iberia was the first airline in the world to operate. Thanks to our strong margin and balance sheet, we've been able to accelerate the return on capital to our shareholders. We began by announcing an interim dividend of EUR 0.03 per share in August 2024, followed by a proposed final dividend of EUR 0.06 per share, which we are voting on today.

In addition, in November, we announced a share buyback of EUR 350 million. And I should also highlight that in February 2025, we announced our intention to return up to EUR 1 billion of capital to our shareholders within a maximum period of up to 12 months, thanks to our significant cash flow generation. And then on our costs, I'd like to point out that our unit costs, that is excluding fuel, remained very similar to 2023 and only slightly increased by 2.6%, which was mainly due to an adverse exchange rate impact.

Also, the unit cost of fuel was significantly lower than in 2023. Our financial performance demonstrates that our strategy underpinned by our transformation program is working, maximizing value and efficiency to create a more profitable business overall.

This year, we continued to build on our 3 strategic imperatives. First, we strengthened our brands, taking advantage of growth opportunities within the attractive North Atlantic, Latin American and European aviation markets. Secondly, we grew our less capital-intensive businesses and our alliances with other airlines. And third, we did so in a sustainable manner, both in financial terms and in environmental and social management terms.

In addition, we're making progress in meeting the targets we set ourselves as a result of the strong performance of both our core and ancillary businesses. While our operating margin of 13.8% is in line with our target of between 12% and 15%, we do aim to be at the upper end of this range. Our return on invested capital is 17.3%. That exceeds our target range of 13% to 16%. And as to our airline capacity growth measured by available seat kilometers, our target is an average of 2% to 4% annual growth over the medium term, depending on aircraft deliveries, and in 2024, this growth was 6.2%.

As to the individual airline performance in 2024, all brands experienced a significant increase in profitability with Iberia and Vueling achieving record levels of operating profit. In our core markets in the North Atlantic, Latin America and Europe, we're benefiting from the sustained travel demand, which we are seeing as a long-term trend.

Between IAG and our joint ventures, we operate an average of 273 daily flights from Europe across the Atlantic, carrying 23 million passengers a year. In 2024, Aer Lingus launched a new route to Denver and reopened Minneapolis, while Iberia added more frequencies to key destinations in the U.S. and Latin America.

British Airways maintains its position as the leading airline for flights between Europe and the U.S. with direct flights to more than 30 cities in North America. In addition, the introduction of the new Airbus A321XLR at Iberia and Aer Lingus will give us a competitive advantage to develop our transatlantic network at a lower cost, taking advantage of our geographic location and LEVEL, our low-cost long-haul airline obtained its air operator certificate, so it can now develop its network as an airline within the group.

We're growing through our alliances as well with other airlines and also through our less capital-intensive businesses. IAG Loyalty, for example, delivers higher growth and higher margins than our core businesses as well as sustainable and nonseasonal cash generation.

Customer participation in our loyalty program is showing an important growth with Avios issuance up almost 24% over 2023. The number of Avios partner airlines increased in 2024 and 7 airlines have already signed up to use Avios as a global currency.

Within IAG Loyalty, British Airways Holidays has the potential to develop, building on customer loyalty and increasing the overall profitability of the business. Our strategic airline partnerships continue to be very important to our business. They give us access to a wider global customer base and reward customers with a wider choice of destinations covered by our loyalty programs.

We value our joint ventures and the One World Alliance highly and continue to strengthen them. Another area where we've continued to work during 2024 is the group's transformation plan to become more efficient and resilient for the future. Our transformation is helping us to improve punctuality, intensify aircraft utilization, reduce costs, improve customer satisfaction, increase our revenues and in general, to be more efficient.

Transformation is enabling us to be competitive, innovation is helping us to go even further. To identify areas of collaboration and avoid duplication, we have a central innovation team that oversees all innovation activities across the group. In 2025, we named this team IAGI to be able to accommodate all the innovation that comes from within the group, but also to seek it outside through our business accelerator program and venture capital arm to invest in companies that can improve our business.

Another element within innovation that we're focusing on is artificial intelligence. Many creative forms of AI are already being used in the industry from optimizing flight routes to finding personalized travel itineraries. Our size and diverse mix of operating companies allows us to invest far more efficiently than any other airline.

Another important focus for 2024 is sustainability. We recognize the need for the industry to develop sustainably, and we are working towards net zero emissions by 2050. That's why this year, we're continuing to make progress along our road map through the use of sustainable aviation fuel, IAG has saved 469,000 tonnes of CO2 in 2024, which is an increase of almost 200% compared to 2023.

In 2024, 1.9% of IAG's total fuel usage was sustainable aviation fuel or SAF, which is in line with leading carriers in the industry. And we continue to work with U.S. producers to ensure our needs are covered, signing E-SAF agreements with U.S. producers Twelve and Infinium in 2024. And in Spain, we reached an agreement with energy company, Repsol for the largest purchase of SAF in Spain.

The industry is focused on its sustainability commitments and is investing to ensure we meet current regulations and SAF mandates in both Europe and the U.K. But we need governments to provide more support for SAF production. And that must include measures to encourage private sector investment and avoid additional regulations that might threaten to make European aviation less competitive than other global competitors.

In 2024, we took delivery of 19 new aircraft with much more fuel-efficient engines and lower emissions as well as providing a better customer experience. 1/3 of IAG's fleet is now new generation, and we're investing around EUR 12.6 billion over the next decade for almost 200 new and more fuel-efficient aircraft. Our 74,400 employees are the driving force behind this transformation.

We're committed to supporting employees at all stages of their careers to continue to develop and embrace transformation. We support careers at an early stage through graduate programs and apprenticeships and our pilot training of academies at Aer Lingus, British Airways, Iberia offer training programs, funding a new generation each year.

Our objective remains to create and maintain a diverse workforce. By the end of 2024, 36% of our senior management positions were held by women. So we recognize that there's still work to be done, and we remain committed to our goal of reaching 40% by 2025.

Our employees are working extremely hard. They did so in 2024, which gave us the excellent performance that we reported them. But aviation is an ecosystem, and we are affected by wider challenges in the industry. There is continued macroeconomic volatility and geopolitical conflict and uncertainty over potential tariffs affecting aircraft.

Currently, the U.K. and the European Union haven't imposed tariffs on imports of aircraft, but we are monitoring the situation closely, just in case the air traffic control situation in Europe continues to be difficult, exacerbated by weather-related disruptions and congestion due to war-related airspace closures.

Aircraft delivery delays, while not significantly affecting IAG in 2024 are nonetheless an ongoing concern in terms of limiting future growth. Supply chain issues have had a significant impact, particularly in terms of maintaining British Airways' long-haul fleet.

We're protecting our customers insofar as we can from the impact of these problems, and our airlines are taking measures to ensure that the system remains resilient. In the U.K., the government has made the construction of a third runway at London Heathrow Airport, a key priority for its growth agenda. In IAG, we're supporting this, but subject to a change in the regulation that will create an affordable and sustainable plan.

And what about our future plans? Well, I'd like to highlight the recent announcement we made in May regarding the order of 53 new Airbus and Boeing aircraft for our long-haul fleet, comprising 32 Boeing 787, 10 aircraft for British Airways and 21 Airbus A330-900neo aircraft, which can be used by Aer Lingus, Iberia or LEVEL.

So today, you're voting on the acquisition of these aircraft, which will enable IAG Airlines to grow and replace long-haul fleets between 2028 and 2033 with modern, fuel-efficient aircraft that will improve the onboard experience of our customers.

2024 has demonstrated what IAG can achieve as a group through collaboration and sharing best practices and thanks to the diversity of our businesses and the strengths that the group can provide, we can transform ourselves and become more competitive now and in the future.

Our strategy and transformation are delivering sound results and give us confidence in what we can achieve in 2025. We remain committed to executing our strategy and our transformation and delivering a sustainable business for our people, customers and shareholders. We'll continue to maintain our strong balance sheet, generating significant free cash flow and rewarding our shareholders as every year.

It only remains for me to thank our employees for your commitment, to thank our customers for traveling with our airlines and to thank you, our shareholders, for your support.

I reiterate what I said at the beginning, 2024 has been a very positive year for the entire group, and it's demonstrated the success of our strategy. And this gives us confidence to continue along the same lines in 2025. So I'd like to end by simply saying that today, more than ever, we remain committed to making IAG one of the best aviation groups in the world. Thank you very much.

So I'll give the floor to the Secretary now to report on the final quorum after the attendance list has been closed.

The share capital right now is EUR 497,147,601, represented by 4,971,476,010 ordinary shares, each with a par value of EUR 0.10 belonging to a single class and series. In accordance with the provisions of Article 28 of the bylaws and Article 23 of the shareholders' meeting regulations, an attendance list has been drawn up, according to which there are 158 shareholders here holding 137,881,486 shares that represent a nominal of EUR 13,788,948.6, which is equivalent to 2.77% of the share capital.

And we have 388 shareholders attending by proxy, holding 2,736,019,010 shareholders, which accounts for EUR 273,601,901 equivalent to 55.03% of the share capital. As to the shareholders attending in person, 101 holding 9,703,210 shares have exercised their right to vote remotely.

Therefore, we have with us at the AGM, a total of 546 shareholders attending in person or by proxy, holding 2,873,900,491 shares that represent a nominal of EUR 287,390,049.6, which is 57.81% of the share capital. We hereby place on record that the treasury stock of the company is 293,520,629 shares, which represents 5.9% of the share capital. And this has been taken into account to calculate the percentages required for the constitution of this general meeting.

Although according to the law, the exercise of the voting rights corresponding to these shares is suspended. In view of the data provided by the Secretary and in accordance with the provisions of Article 193 and 194 of the company's law, Article 28 of the bylaws and Articles 22 and 23 of the shareholders' meeting regulations, is hereby confirmed that the necessary requirements for the valid constitution of the shareholders' meeting on second call and to transact the business on the agenda have been met. The notary will now take the floor.

In compliance with the provisions of Spanish corporate legislation, I must ask the meeting now whether there are any reservations or protests concerning the statements of the Chairman and the Secretary with respect to the number of shareholders in attendance and the capital present in person or by proxy.

Shareholders attending online who wish to lodge reservations or protests in this regard may do so using the section of the online platform provided for this purpose so they may be recorded in the minutes. There are no objections. So the valid constitution of the shareholders' meeting on second call to transact all the business on the agenda is hereby confirmed. So now I give the floor to the Secretary to organize the shareholders' interventions.

In line with the provisions of the shareholders' meeting regulations, the floor is now open to speeches by the attendees who so requested. So if it's possible, speakers are asked to ensure that their speeches do not run over the 5 minutes established in the regulations to facilitate the conduct of the meeting. And after they finish, we will try to deal with all the questions. And if we don't do so, we'll get back to you within the 7 days after the AGM. [indiscernible] has the floor.

Good morning, Chairman, CEO, shareholders. After 2 years where I was not be able to attend this IAG meeting, it's a huge pleasure for me to be here in Madrid, celebrating something so important for all shareholders of this company which has risen by, of course, the resuming of the dividends, almost 5 years since we've had a cash dividend since 2019, when we had as shareholders EUR 0.035. Long wait as a result of COVID and its impact, which meant we had to set aside capital for the operations.

I had 1,500 shares back then. I went to the -- I participated in the capital increase, which closed yesterday -- the share value closed yesterday at EUR 3.7. It was a good decision. I have a handsome capital gains and with an increase of 20% in the shareholder and the price actually reaches the level when I actually bought my shares.

So Mr. Chairman, I'd like to congratulate all of you for the fantastic management in the course of the very difficult years. I want to underline this without having -- without needing a bailout from authorities, which means that when you manage risk successfully, one can manage difficult times.

Also, it's important to give investors solid signs of solidity of the company. Now recovering this -- resuming these cash dividends is good. But we need other capitalizers that can bring our shareholder price back to the level prior to the pandemic, right of 8.55%, we dropped, and so my questions regarding these policies is as follows. Are you continuing to reduce the capital with more repurchase agreements and cancellation of shares that in the meantime, can bring us back to the capital prior to the 2020 capital increase?

Are you considering also doing a counter split to reduce the number of shares in listed and strengthen IAG's position in the market? And what are the measures are you managing at Board level to make sure that IAG's consolidation recovers, has greater value in coming years? And once again, congratulations for your fantastic managing.

Thank you, Mr. [indiscernible] for your questions and particularly for your very kind comments and your congratulations to the management team. And we have several of the senior management and other managers here today.

So I'd like to answer your questions in reverse order, starting with the final one. Well, what about the measures then? They're pretty well the same as we've been working on throughout our transformation plan. Our transformation is an ongoing effort. It will never end. Every day, we have to do things better, and that covers revenues, it covers our image, the quality of our service and is directly correlated with the revenues we get, and it also covers costs.

And finding this equilibrium between efficiency and costs whilst maintaining a high-quality product is really important. And that's why we have the demand of our customers met. And then you asked about the possible reduction of the number of shares or the possible increase in the number of shares.

The numbers as such isn't something that will create value for the company. It's just a matter of the stock market value, and that doesn't change the value of the company, the business as such.

We think we're where we should be. We think that we're at quite a high level, which means that individual investors could do things, but we don't have penny stocks as they call them, so that one can be overwhelmed by retail investors without enough institutional investors.

And as to your question about reviewing things, well, in the Board, we are always looking at the structure of the company's capital, what kind of resources we have, what our funding is, and we always want to invest in the business. But we've declared a policy of sustainable dividends, and the dividend, I would say, is one that we hope we're not going to reduce, but rather we'll be able to increase in the future.

At the moment, the buyback policy we have was announced recently, you remember at the beginning of the year, EUR 1 billion. And at the moment, we're implementing it. We think that buying our own shares is the best way of investing, and we will continue to review things in this manner on a regular basis. Were there any more questions, Mr. Secretary?

Many thanks then for taking the floor. And now we'll go on to voting the agenda resolutions as sent in by the director. I give the floor to the Secretary.

Since shares representing more than 50% of the subscribed voting capital are present in person or by proxy, the proposed resolutions will require an absolute majority for the approval of agenda items 10, 12, 13 and 14 on the agenda and a simple majority for the other items. Shareholders may vote for, against or abstain from voting in relation to some or all of the proposed resolutions, for which purposes, they must complete and sign the voting card given to them on entry to the auditorium and hand it in to the notary's desk at the end of the meeting or follow the voting procedure established in the online platform for those attending remotely.

If cards are handed in with some of the voting box left unchecked, the vote will be deemed cast in favor of the resolutions prepared by the Board of Directors. However, if voting cards are not handed in, the shareholder will be deemed to have abstained on all items put to a vote.

I remind the meeting that in line with the provisions of Article 32.2 of the shareholders' meeting resolutions, once the Chairman has a record of the existence of sufficient votes in favor, he will declare that the resolutions have been approved, although, of course, any statements made to the notary by the shareholders will be minuted.

Both votes cast using remote means as well as the direction of votes cast on the different proposed resolutions prepared by the Board of Directors in the case of proxies have been duly processed, the results will be provided to the notary. In light of the available data with more than 95% of the votes counted, it's been checked that the resolutions proposed by the Board of Directors have received a favorable vote of a number of shares exceeding the majority required by law and the bylaws for their valid approval, as has already been explained.

In that case, I can declare that all the proposed resolutions prepared by the Board of Directors have been approved without prejudice to the votes cast at this meeting by the shareholders present, which will be duly counted in the final result of the votes. The notary will now authorize the minutes of this meeting, adding the necessary legal requirements. This shareholders' meeting is therefore adjourned. Many thanks for your attendance.