Views
7 months ago

Annual report and accounts 2016

16 IAG Platform for

16 IAG Platform for growth Continually transforming the business In 2016 the Group made significant progress in the development of its global platform while exploiting the opportunities created and advancing new initiatives. IAG’s initial synergy plans included the creation of a scalable platform to deliver IT, procurement and back office support functions, for new and existing airlines. The platform has moved forward with the addition of Maintenance, Repair and Overhaul (MRO), Fleet and Digital providing the Group with further sources of benefits and creating value for our shareholders. The chart on the opposite page shows the components of the IAG platform and the status at the end of 2016. See page 24 for more information on Avios See page 25 for more information on IAG Cargo See page 26 for more information on Digital Global Business Services (GBS) Continuing its journey toward an efficient and competitive platform GBS leads centralised procurement, finance and IT functions on behalf of the Group. GBS aims to deliver services at market competitive costs, embedding innovative working practices and delivering a high quality of service. Following the centralisation of processes and activities from 2013 to 2015, this year marked the beginning of transformational change. The chart below outlines the evolution of the GBS model. Procurement The transformation of Procurement was completed in 2016. The function is well established across the operating companies and Aer Lingus procurement was integrated into the model during the year. Procurement delivered significant supplier savings in 2016 working closely with Digital, Fleet and other parts of the Group. Main achievements: • continued to leverage the scale of the Group including the integration of Aer Lingus in common supplier contracts such as media, on-board advertising and airport suppliers; • continued working on harmonisation of fleet defining the common seat in Airbus A350 economy and premium economy and in Airbus A320 economy; Our GBS journey • used data analytics to optimise catering loading and reduce wastage; and • reduced property costs through increased energy efficiency and harmonisation of back office supplies. Other highlights include: • established brand partnership with Marks and Spencer; • reached an agreement with Gogo and Inmarsat to provide high-speed inflight connectivity on longhaul and shorthaul flights respectively; and • launched the second review of specification for airport groundhandling services. Finance In 2016, GBS finance concluded the centralisation of several functions from the airlines, Avios and Cargo to GBS: • financial planning and analysis migration from British Airways and Avios; • finance processes migration from British Airways and Iberia; • integration of GBS activities in Poland with outsourced service centres in India; and • migration of Group treasury operations and indirect tax following the centralisation of the services from British Airways and Iberia into IAG in 2015. The original plans are 90 per cent complete, delivering a cost improvement of around 35 per cent. Centralise Optimise / Efficiencies Leveraging the GBS platform 2013 – 2015 2015 – 2017 2017 – 2021 Lift and shift procurement, finance and IT Offshore transactional finance Savings, scale and simplification Focus on British Airways and Iberia Benchmark Worldclass Creation of nearshore Kraków Finance and procurement complete Outsource IT towers High cost efficiency On-boarding new operating companies Moving to the cloud Zero-based architecture Nearshore fully optimised Other support systems Offshore fully leveraged Enable operating companies – further value Plug and play platform INTERNATIONAL AIRLINES GROUP Annual Report and Accounts 2016

17 IT This year significant work has been undertaken with the completion of outsourcing the IT operations at British Airways and Iberia and two of following three IT functions at Avios and Aer Lingus: • End user computing (EUC) is a collection of services primarily supporting IT equipment, software, services and systems that are directly used by our employees and our agents throughout our global operations; • Networks includes operational ground to air communications and call centre telecom charges in addition to the more common IT network requirements; and • Service operations is responsible for managing IT services in the Group. This includes issue resolution, introduction of new services and ensuring that the complete IT environment operates as required. The transformation of IT is half-way completed. Post transformation, IT aims to deliver €90 million of costs savings by the end of 2018. In parallel, GBS IT continued to transform the business enabling the modernisation of websites and processes at British Airways and Iberia and upgrading the check-in system at British Airways. Maintenance, repair and overhaul (MRO) Targeting a minimum 11 per cent reduction in maintenance costs by 2020 IAG made significant progress in its strategic assessment of maintenance activities across the Group. The team set up last year and led by Iberia CEO Luis Gallego is finalising the strategy IAG maintenance activities design phase, reviewing all maintenance activities to ensure maximised Group returns. The team have assessed internal competitiveness using market intelligence from existing outsourcing contracts within the Group and ad-hoc tenders. Plans have been reviewed to ensure best in class performance. A new top management has been appointed for MRO. The Group is committed to achieving market competitive costs, delivering substantial savings from productivity, efficiency improvements and footprint optimisation. Activities for which the in-house model cannot ensure competitiveness may be subject to outsourcing. Heavy Major maintenance tasks performed on aircraft temporarily removed from the flight schedule Line Minor maintenance tasks carried out on aircraft during transits or night stops Components and Inventory Off-wing repair of aircraft parts and inventory operations support providing replacement parts during repair Engines Repair in the workshop of engines removed from the aircraft for performance restoration/parts replacement Technical & Engineering Activities required to ensure fleet airworthiness and other support services Specific strategies have been defined for most of the activities and will deliver an 11 per cent cost reduction when fully developed. As the programme moves to execution, further benefits from Group consolidation and supplier spend initiatives will be defined. Fleet The teams have continued to work on the fleet harmonisation in three areas: cabin configuration, avionics systems and emergency equipment. Harmonisation has been extended to all new aircraft, including the incoming Airbus A320neos and Airbus A350s. The goals of the programme remain to lower operating costs through fleet simplification and lean and flexible capital expenditure. Strategic report Corporate governance Financial statements Additional information IAG Platform progress GBS Procurement, Finance GBS IT MRO/Fleet Digital IAG Cargo Avios 90% complete 40% complete (2015) 50% complete 25% complete (2015) 90% defined 1 5% executed 5% completed (2015) 30% complete 5% complete (2015) 95% complete 95% complete (2015) 100% complete 45% complete (2015) 1 Since Capital Market Day presentation on November 4, 2016, there has been substantial progress in the definition of the MRO strategy and is nearly completed at 90 per cent. www.iairgroup.com

  • Page 1 and 2: INTERNATIONAL AIRLINES GROUP The be
  • Page 3 and 4: Strategic report “2016 was a chal
  • Page 5 and 6: 3 Chairman’s letter A firm focus
  • Page 7 and 8: 5 Q A And, importantly, we have to
  • Page 9 and 10: 7 IAG combines the leading airlines
  • Page 11 and 12: 9 Operating highlights British Airw
  • Page 13 and 14: 11 Business model and strategy Maxi
  • Page 15 and 16: 13 4 5 6 Grow share of Europeto-Afr
  • Page 17: 15 The performance indicators prese
  • Page 21 and 22: 19 and additional summer aircraft a
  • Page 23 and 24: 21 This is why we have recently lau
  • Page 25 and 26: 23 Aer Lingus Making the most of ou
  • Page 27 and 28: 25 IAG Cargo Resilient performance
  • Page 29 and 30: 27 Risk management and principal ri
  • Page 31 and 32: 29 Risk Potential impact Management
  • Page 33 and 34: 31 Risk Potential impact Management
  • Page 35 and 36: 33 Financial overview A significant
  • Page 37 and 38: 35 However, continued weakness in t
  • Page 39 and 40: 37 Exchange impact before exception
  • Page 41 and 42: 39 By supplier cost category: Handl
  • Page 43 and 44: 41 Capacity 21% 11% 8% 60% Operatin
  • Page 45 and 46: 43 Cash flow € million 2016 2015
  • Page 47 and 48: 45 Sustainability Committed to our
  • Page 49 and 50: 47 UN Sustainable Development Goals
  • Page 51 and 52: 49 Aspect and link to SDGs Noise Wa
  • Page 53 and 54: 51 Air quality - electric tug trial
  • Page 55 and 56: “2016 has really tested the Group
  • Page 57 and 58: 55 I think we can be very proud tha
  • Page 59 and 60: 57 James Lawrence Non-Executive Dir
  • Page 61 and 62: 59 The Group operating companies Av
  • Page 63 and 64: 61 The Board Secretary is Álvaro L
  • Page 65 and 66: 63 Induction programme New director
  • Page 67 and 68: 65 Other statutory information Dire
  • Page 69 and 70:

    67 The significant shareholders of

  • Page 71 and 72:

    69 Report of the Audit and Complian

  • Page 73 and 74:

    71 ICFR, which is a Spanish Corpora

  • Page 75 and 76:

    73 The Committee’s responsibiliti

  • Page 77 and 78:

    75 Report of the Safety Committee D

  • Page 79 and 80:

    77 Despite a growth in share price

  • Page 81 and 82:

    79 The table below summarises the m

  • Page 83 and 84:

    81 Malus and Clawback Provisions Th

  • Page 85 and 86:

    83 Service contracts and exit payme

  • Page 87 and 88:

    85 Annual Remuneration Report Commi

  • Page 89 and 90:

    87 Additional explanations in respe

  • Page 91 and 92:

    89 IAG PSP Award 2014 The IAG PSP a

  • Page 93 and 94:

    91 Statement of Voting The table be

  • Page 95 and 96:

    93 IAG’s total shareholder return

  • Page 97 and 98:

    95 The second performance condition

  • Page 99 and 100:

    97 Incentive Award Deferral Plan Th

  • Page 101 and 102:

    Strategic Financial Statements Repo

  • Page 103 and 104:

    101 Consolidated statement of other

  • Page 105 and 106:

    103 Consolidated cash flow statemen

  • Page 107 and 108:

    105 Consolidated statement of chang

  • Page 109 and 110:

    107 the Income statement. All other

  • Page 111 and 112:

    109 b Other interest-bearing deposi

  • Page 113 and 114:

    111 Employee leaving indemnities an

  • Page 115 and 116:

    113 IAG has initiated a project to

  • Page 117 and 118:

    115 For the year to December 31, 20

  • Page 119 and 120:

    117 7 Auditors’ remuneration The

  • Page 121 and 122:

    119 For the year to December 31, 20

  • Page 123 and 124:

    121 c Reconciliation of the total t

  • Page 125 and 126:

    123 13 Property, plant and equipmen

  • Page 127 and 128:

    125 16 Intangible assets and impair

  • Page 129 and 130:

    127 Basis for calculating recoverab

  • Page 131 and 132:

    129 19 Trade and other receivables

  • Page 133 and 134:

    131 2 Floating rate euro mortgage l

  • Page 135 and 136:

    133 depending on whether the employ

  • Page 137 and 138:

    135 At December 31, 2016 the Group

  • Page 139 and 140:

    137 27 Financial instruments a Fina

  • Page 141 and 142:

    139 The carrying amounts and fair v

  • Page 143 and 144:

    141 December 31, 2015 Financial ins

  • Page 145 and 146:

    143 31 Other reserves and non-contr

  • Page 147 and 148:

    145 Defined benefit schemes i. APS

  • Page 149 and 150:

    147 d Fair value of scheme assets A

  • Page 151 and 152:

    149 e Present value of scheme liabi

  • Page 153 and 154:

    151 33 Contingent liabilities and g

  • Page 155 and 156:

    Spanish corporate governance report

  • Page 157 and 158:

    155 Indicate the most significant m

  • Page 159 and 160:

    157 Explain any significant changes

  • Page 161 and 162:

    159 B. SHAREHOLDERS’ MEETING B.1

  • Page 163 and 164:

    161 C.1.3 Complete the following ta

  • Page 165 and 166:

    163 Individual or corporate name of

  • Page 167 and 168:

    165 When reviewing board appointmen

  • Page 169 and 170:

    167 C.1.10 Indicate what powers, if

  • Page 171 and 172:

    169 Selection of directors In ident

  • Page 173 and 174:

    171 C.1.20 ter List any business re

  • Page 175 and 176:

    173 C.1.31 Indicate whether the con

  • Page 177 and 178:

    175 C.1.36 No Outgoing auditor Indi

  • Page 179 and 180:

    177 C.1.42 Indicate and, where appr

  • Page 181 and 182:

    179 C.2 Board committees C.2.1 Give

  • Page 183 and 184:

    181 f. To establish the appropriate

  • Page 185 and 186:

    183 F. Other responsibilities: a. T

  • Page 187 and 188:

    185 c) Steps taken during the year:

  • Page 189 and 190:

    187 C.2.2 b) Functions The main fun

  • Page 191 and 192:

    189 D.4 List any relevant transacti

  • Page 193 and 194:

    191 E.2 Identify the bodies respons

  • Page 195 and 196:

    193 Main risk Government interventi

  • Page 197 and 198:

    195 Audit and Compliance Committee

  • Page 199 and 200:

    197 The financial risk assessment i

  • Page 201 and 202:

    199 F.3.2 Internal control policies

  • Page 203 and 204:

    201 F.4.2 Mechanisms in standard fo

  • Page 205 and 206:

    203 6. Listed companies drawing up

  • Page 207 and 208:

    205 21. The board of directors shou

  • Page 209 and 210:

    207 37. When an executive committee

  • Page 211 and 212:

    209 52. The terms of reference of s

  • Page 213 and 214:

    211 IAG Remuneration Policy complie

  • Page 215 and 216:

    213 Director Enrique Dupuy de Lôme

  • Page 217 and 218:

    215 Strategic Report Corporate Gove

  • Page 219 and 220:

    217 Name and address Principal acti

  • Page 221 and 222:

    219 Associates Name and address Han

  • Page 223 and 224:

    221 Strategic Report Corporate Gove

  • Page 225 and 226:

    223 Operating margin Overall load f

  • Page 227 and 228:

    225 In 2015, the definition of inve

  • Page 229 and 230:

    227 Sustainability indicators Indic

  • Page 231 and 232:

    Shareholder information Registered

Annual Report and Accounts 2012 - Speedy Hire plc
ANNUAL REPORT & ACCOUNTS - Somero Enterprises
2011 Annual Report and Accounts - The Group
2004 Full Report and Accounts - DRS
Annual Report Accounts 2012 - Tribal
united-utilities-annual-report-2015
ANNUAL REPORT AND ACCOUNTS 2012 - RSA, Annual Report ...
2008/09 Annual Report and Accounts (1.8Mb pdf) - BA.com
St. JameS'S Place Plc annual RePoRt and accountS 2012
IMI plc annual report 2012
annual report 2014/15
ANNUAL REPORT AND ACCOUNTS 2012 - Royal and Sun Alliance
Annual Report 2016
Ophir Energy plc Annual Report and Accounts 2011
Annual report and accounts - Cattles Limited
Annual Report & Accounts 2005 - Harvey Nash
Annual Report & Accounts 2002 - Harvey Nash
Accounts
redrow-plc-annual-report-2016
Annual Report PDF - Tullow Oil plc