Annual report and accounts 2016

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Contents Strategic Report 2 Financial highlights 3 Chairman’s letter 4 Chief Executive Officer’s Q&A 6 Our network 8 Chief Executive Officer’s review 11 Business model and strategy 12 Our strategy 14 Key performance indicators 16 IAG Platform for growth 18 British Airways 20 Iberia 22 Vueling 23 Aer Lingus 24 Avios 25 IAG Cargo 26 Digital 27 Risk management and principal risk factors 33 Financial overview 34 Economic landscape 36 Financial review 45 Sustainability Corporate Governance 54 Chairman’s introduction to Corporate governance 56 Board of Directors 58 Corporate governance 69 Report of the Audit and Compliance Committee 72 Report of the Nominations Committee 75 Report of the Safety Committee 76 Report of the Remuneration Committee Financial statements 100 Consolidated income statement 101 Consolidated statement of other comprehensive income 102 Consolidated balance sheet 103 Consolidated cash flow statement 104 Consolidated statement of changes in equity 106 Notes to the consolidated financial statements 154 Spanish Corporate governance report 216 Group investments Statement of Directors’ Responsibilities Independent Auditors’ Report Additional Information 222 Glossary 224 Alternative performance measures 227 Sustainability indicators 228 Operating and financial statistics IBC Shareholder information Management report IAG is required to prepare a Management Report in accordance with Article 262 of the Spanish Companies Act and Article 49 of the Spanish Commercial Code. Pursuant to this legislation, this management report must contain a fair review of the progress of the business and the performance of the company, together with a description of the principal risks and uncertainties that it faces. In the preparation of this report, IAG has taken into consideration the guide published in 2013 by the Spanish National Securities Market Commission (CNMV) which establishes a number of recommendations for the preparation of management reports of listed companies. The Management Report is contained in the following sections: 11 Business model and strategy 12 Our strategy 14 Key performance indicators 16 IAG Platform for growth 27 Risk management and principal risk factors 35 Financial overview 36 Economic landscape 38 Financial review 45 Sustainability 58 Corporate governance 154 Spanish Corporate governance report
Strategic report “2016 was a challenging year but we’ve delivered a good result. There’s still more that we can do, and quite honestly, the best is yet to come. There are still improvements that we can make and efficiencies that can be delivered.” Willie Walsh Chief Executive Officer Strategic report Corporate governance Financial statements Additional information The strategic report that follows contains a fair and balanced analysis, consistent with the size and complexity of the business in accordance with the expectations of the regulations of the Companies Act 2006.
Page 1: INTERNATIONAL AIRLINES GROUP The be
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 and 18: 15 The performance indicators prese
Page 19 and 20: 17 IT This year significant work ha
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
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51 Air quality - electric tug trial
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“2016 has really tested the Group
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55 I think we can be very proud tha
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57 James Lawrence Non-Executive Dir
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59 The Group operating companies Av
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61 The Board Secretary is Álvaro L
Page 65 and 66:
63 Induction programme New director
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65 Other statutory information Dire
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67 The significant shareholders of
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69 Report of the Audit and Complian
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71 ICFR, which is a Spanish Corpora
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73 The Committee’s responsibiliti
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75 Report of the Safety Committee D
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77 Despite a growth in share price
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79 The table below summarises the m
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81 Malus and Clawback Provisions Th
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83 Service contracts and exit payme
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85 Annual Remuneration Report Commi
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87 Additional explanations in respe
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89 IAG PSP Award 2014 The IAG PSP a
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91 Statement of Voting The table be
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93 IAG’s total shareholder return
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95 The second performance condition
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97 Incentive Award Deferral Plan Th
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Strategic Financial Statements Repo
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101 Consolidated statement of other
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103 Consolidated cash flow statemen
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105 Consolidated statement of chang
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107 the Income statement. All other
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109 b Other interest-bearing deposi
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111 Employee leaving indemnities an
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113 IAG has initiated a project to
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115 For the year to December 31, 20
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117 7 Auditors’ remuneration The
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119 For the year to December 31, 20
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121 c Reconciliation of the total t
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123 13 Property, plant and equipmen
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125 16 Intangible assets and impair
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127 Basis for calculating recoverab
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129 19 Trade and other receivables
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131 2 Floating rate euro mortgage l
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133 depending on whether the employ
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135 At December 31, 2016 the Group
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137 27 Financial instruments a Fina
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139 The carrying amounts and fair v
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141 December 31, 2015 Financial ins
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143 31 Other reserves and non-contr
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145 Defined benefit schemes i. APS
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147 d Fair value of scheme assets A
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149 e Present value of scheme liabi
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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
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161 C.1.3 Complete the following ta
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163 Individual or corporate name of
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165 When reviewing board appointmen
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167 C.1.10 Indicate what powers, if
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169 Selection of directors In ident
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171 C.1.20 ter List any business re
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173 C.1.31 Indicate whether the con
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175 C.1.36 No Outgoing auditor Indi
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177 C.1.42 Indicate and, where appr
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179 C.2 Board committees C.2.1 Give
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181 f. To establish the appropriate
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183 F. Other responsibilities: a. T
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185 c) Steps taken during the year:
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187 C.2.2 b) Functions The main fun
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189 D.4 List any relevant transacti
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191 E.2 Identify the bodies respons
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193 Main risk Government interventi
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195 Audit and Compliance Committee
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197 The financial risk assessment i
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199 F.3.2 Internal control policies
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201 F.4.2 Mechanisms in standard fo
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203 6. Listed companies drawing up
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205 21. The board of directors shou
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207 37. When an executive committee
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209 52. The terms of reference of s
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211 IAG Remuneration Policy complie
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213 Director Enrique Dupuy de Lôme
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215 Strategic Report Corporate Gove
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217 Name and address Principal acti
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219 Associates Name and address Han
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221 Strategic Report Corporate Gove
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223 Operating margin Overall load f
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225 In 2015, the definition of inve
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227 Sustainability indicators Indic
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Shareholder information Registered
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Annual report and accounts 2016

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