Annual report and accounts 2016

132
Notes to the consolidated financial statements continued
24 Operating lease commitments
The Group has entered into commercial leases on certain properties, equipment and aircraft. These leases have durations ranging
from less than one year to 14 years for aircraft and less than one year to 22 years for property, plant and equipment with the
exception of one ground lease which has a remaining lease of 129 years. Certain leases contain options for renewal.
The aggregate payments, for which there are commitments under operating leases, fall due as follows:
2016 2015
€ million Fleet
Property,
plant and
equipment Total Fleet
Property,
plant and
equipment Total
Within one year 975 158 1,133 778 179 957
Between one and five years 2,970 233 3,203 2,184 384 2,568
Over five years 1,918 2,060 3,978 1,206 2,456 3,662
5,863 2,451 8,314 4,168 3,019 7,187
Sub-leasing
Sub‐leases entered into by the Group relate to surplus rental properties and aircraft assets held under non-cancellable leases
to third parties. These leases have remaining terms of one to 21 years and the assets are surplus to the Group’s requirements.
Future minimum rentals receivable under non-cancellable operating leases are €12 million (2015: €16 million) with €7 million
(2015: €9 million) falling due within one year, €5 million (2015: €5 million) between one and five years and nil (2015: €2 million)
over five years.
25 Provision for liabilities and charges
Employee
leaving
indemnities
€ million
Restoration
and
handback
provisions Restructuring
and other
employee
related
provisions
Legal claims
provisions
Other
provisions Total
Net book value January 1, 2016 1,013 744 579 235 83 2,654
Provisions recorded during the year 319 172 26 23 101 641
Utilised during the year (141) (206) (24) (8) (94) (473)
Release of unused amounts (23) (18) (1) (60) (5) (107)
Unwinding of discount 3 3 13 1 1 21
Exchange differences 30 (3) – (2) (3) 22
Net book value December 31, 2016 1,201 692 593 189 83 2,758
Analysis:
Current 296 248 65 119 43 771
Non-current 905 444 528 70 40 1,987
1,201 692 593 189 83 2,758
Restoration and handback provisions
The provision for restoration and handback costs is maintained to meet the contractual return conditions on aircraft held
under operating leases. The provision also includes an amount relating to leased land and buildings where restoration costs
are contractually required at the end of the lease. Where such costs arise as a result of capital expenditure on the leased asset,
the restoration costs are capitalised. The provision is a long-term provision, typically covering the leased asset term which is up
to 14 years for aircraft.
Restructuring
The Group recognises a provision for targeted voluntary severance schemes. Part of this provision relates to a collective
redundancy programme, which provides for payments to affected employees until they reach the statutory retirement age.
The amount provided for has been determined by an actuarial valuation made by independent actuaries, and was based on
the same assumptions as those made to determine the provisions for obligations to flight crew below, with the exception of the
discount rate, which in this case was 0.20 per cent. The payments related to this provision will continue over ten years.
During the year the Group recognised a provision of €144 million in relation to the restructuring plans at British Airways (note 5).
The costs related to this provision are expected to be incurred in the next two years.
Employee leaving indemnities and other employee related provisions
This provision includes employees leaving indemnities relating to staff under various contractual arrangements.
The Group recognises a provision relating to flight crew who, having met certain conditions, have the option of being
placed on reserve and retaining their employment relationship until reaching the statutory retirement age, or taking early
retirement. The Group is required to remunerate these employees until they reach the statutory retirement age, and an initial
provision was recognised based on an actuarial valuation. The provision was reviewed at December 31, 2016 with the use of
independent actuaries using the projected unit credit method, based on a discount rate of 1.18 per cent and a 0.02 per cent
INTERNATIONAL AIRLINES GROUP
Annual Report and Accounts 2016