Annual report and accounts 2016

140
Notes to the consolidated financial statements continued
27 Financial instruments continued
The fair value of Level 3 financial assets cannot be measured reliably; as such these assets are stated at historic cost less
accumulated impairment losses with the exception of the Group’s investment in The Airline Group Limited. This unlisted investment
had previously been valued at nil, since the fair value could not be reasonably calculated. During the year to December 31, 2014
other shareholders disposed of a combined holding of 49.9 per cent providing a market reference from which to determine a fair
value. The investment remains classified as a Level 3 financial asset due to the valuation criteria applied not being observable.
d Hedges
Cash flow hedges
At December 31, 2016 the Group’s principal risk management activities that were hedging future forecast transactions were:
• Future loan repayment instalments in foreign currency, hedging foreign exchange risk on revenue cash inflows;
• Forward crude, gas oil and jet kerosene derivative contracts, hedging price risk on fuel cash outflows;
• Cross currency swaps, hedging foreign exchange and interest rate risk associated with lease cash outflows; and
• Foreign exchange contracts, hedging foreign exchange risk on revenue cash inflows and certain operational payments.
To the extent that the hedges were assessed as highly effective, a summary of the amounts included in equity, the notional
principal amounts and the years to which the related cash flows are expected to occur are summarised below:
December 31, 2016
Financial instruments designated as hedging instruments
€ million
Within 6
months
Cash flows hedged
6-12
months 1-2 years 2-5 years
More than 5
years
Total
December
31, 2016
Debt repayments to hedge future revenue 34 77 108 239 361 819
Forward contracts to hedge future payments (65) (76) (73) (4) – (218)
Hedges of future fuel purchases (24) (44) (48) (11) – (127)
Hedges of future aircraft operating leases (3) – – – – (3)
Currency options to hedge future payments (2) (7) (5) – – (14)
(60) (50) (18) 224 361 457
Related deferred tax credit (73)
Total amount included within equity 384
December 31, 2016
Notional principal amounts
€ million
(in local currency)
To hedge future currency revenues in euros €480
To hedge future currency revenues in Canadian dollars CAD 85
To hedge future currency revenues in pound sterling £88
To hedge future currency revenues in US dollars $174
To hedge future operating payments in US dollars $3,037
Hedges of future fuel purchases $4,304
Cross currency swaps:
- Floating to fixed (US dollars) $57
- Fixed to fixed (euro) €17
- Fixed to floating (US dollars) $340
Debt repayments to hedge future revenue:
- US dollars $2,798
- Euro €2,111
- Japanese yen ¥60,577
- Chinese yuan CNY 623
INTERNATIONAL AIRLINES GROUP
Annual Report and Accounts 2016