International Consolidated Airlines Group S.A. (IAG) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to International Airlines Group Half Year 2026 Results. [Operator Instructions] Later, we will conduct a question-and-answer session through the phone lines and instructions will follow at that time. 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 first half 2026 results. A particular welcome today to Jose Antonio Barrionuevo, who has now taken over as our Group CFO. Also, as usual, I have the rest of the IAG management committee with me today. This first slide captures the essence of where we are today as a group. Since its inception in 2011, we have built IAG into a world-class business. So we now have a diverse portfolio to globally recognized brands in large and attractive markets, delivering industry-leading margins and significant free cash flow and creating long-term value for our shareholders. These fundamentals make us well positioned to navigate the current headwinds that the industry faces. And as a result, we have delivered a robust first half performance. We have grown our revenue base and continued strong demand for travel. This highlights the strength and diversity of our markets and propositions. Our disciplined cost control during the half has supported the resilience of our margins, partly mitigating the solid increase in the price of jet fuel. We continue to have a strong and efficient balance sheet, which gives us the ability to manage a crisis like this with confidence. And for our shareholders, we are committed to paying a sustainable dividend and completing the excess cash return. With the actions that we are taking, we expect to deliver an operating margin within our target range of 12% to 15% despite the headwinds the industry is facing. We delivered a good financial performance in the first half with industry-leading margins that again highlight the quality of IAG's business. We grew revenue by 1.0% overall in the first half comprising a strong first quarter revenue growth of 1.9% and resilient second quarter revenue growth of 0.2%. This is despite the effects of the increased prices, which had an immediate impact on our capacity and fuel cost that gave us limited time to respond with mitigating actions. However, we did manage to recover around 60% of the fuel cost increase through our own pricing and cost actions in line with our expectations. This varies across our regions, broadly speaking, our long haul operations were very positive, and in short haul, it was more competitive. IAG Loyalty continues to perform well as our differentiated proposition to our airlines, increasing profit by 25% to GBP 239 million at a margin of 19.3%. So our profit for the first half was EUR 1,757 million, a resilient performance overall. And I will now pass you to Jose Antonio to take you through the numbers in more detail.

Thank you, Luis. Good morning, everyone. I'm pleased to share our first half results with you. And this slide shows the key drivers of our first half performance, both by revenue and cost drivers on the left and my business on the right. We delivered an operating profit of EUR 1.757 billion in the first half of the year, down EUR 121 million from last year, a robust performance despite headwinds from fuel. We delivered an operating margin of 10.9% which is a sector-leading first half -- with the sector first half performance, which is consistent with our confidence in delivering a full year margin within our 12% to 15% target range. Passenger revenue increased by EUR 828 million at constant currency, driven by continued strong demand for travel and our diverse portfolio of markets and brands. Cargo revenue was down EUR 23 million as lower cargo volumes, mainly linked to the suspension of routes from the Middle East were only partially offset by a 3.3% improvement in yields. Other revenue was slightly lower than last year, mainly reflecting a change in how certain ML components in Iberia are now charged directly by the manufacturer to our airline customers which reduces both revenue and cost by an equal amount. I'm pleased with our disciplined nonfuel cost performance as our transformation programs continue to deliver savings. However, our hedging program only partially offset the rising commodity prices leading to a 12.5% increase in fuel unit cost. FX was a net EUR 52 million drag on operating profit in the half with the translation impact of a weaker sterling against the euro, more than offsetting a small favorable transaction impact. And on the right-hand side of the slide, you can see the performance by business. British Airways was 1 of the standard performance growing operating profit by EUR 44 million year-on-year. IAG Loyalty also delivered a strong performance, increasing its profit by EUR 48 million, reinforcing the qualities of this business that we set out at the recent Investor Day. Iberia, Vueling and Aer Lingus also lower profits, mainly reflecting the impact of higher fuel costs. And in the case of Aer Lingus and Vueling, some highly competitive markets in more price-sensitive segments. I'll come back to each of these on the next slides. Turning to the second quarter. Operating profit fell EUR 274 million year-on-year to EUR 1.406 billion with a margin of EUR 15.8 million, a reduction from a 19% margin last year. Passenger revenue increased EUR 318 million, excluding FX impacts, driven by higher unit revenue, although this was not enough to offset the EUR 489 million increase in fuel costs at constant currency, driven by higher commodity prices following the outbreak of the Middle East conflict. This quarter was also negatively affected by the purchase shift of Easter in the first half. Profits from all our airlines were affected by the immediate impact of higher fuel prices, but again, you can see in the slide, the quality of the IAG Loyalty business, which increased its profits by EUR 20 million year-on-year. And now you will take a look at our operating company's performance in the first half of the year in more detail. British Airways delivered an operating profit of GBP 885 million, an increase in margin to 11.9% with a strong first quarter improvement of GBP 90 million, more than offsetting the initial impact of Middle East cancellations and higher fuel costs. Iberia reported an operating profit of EUR 526 million, down EUR 38 million versus last year but delivering a strong 13.5% operating profit margin. Iberia continues to see a strong demand, particularly to Latin America, but the reduction in profit reflected the impact of higher fuel costs and some cancellations linked to additional engine maintenance. Vueling's operating profit was down EUR 49 million year-on-year to EUR 46 million, reflecting, again, higher fuel costs and continued competitive pressure in some markets within the European local segment, which is naturally more price sensitive. Aer Lingus delivered an operating loss of EUR 34 million compared to an EUR 80 million profit last year. This was driven by the combination of higher fuel costs and competitor capacity growth, especially from U.S. carriers. IAG Loyalty continues to deliver high-quality, high-margin earnings with operating profit at GBP 48 million to GBP 239 million, with a margin of 19.3% and up 3.4 points versus last year. Profit growth came mainly from the loyalty part of the business, driven by non airline partnerships with the holidays business affected by the suspension of the routes to the Middle East. Turning to our quarter 2 regional performance. Group capacity was slightly down, below the original plan of around 1% growth that we guided to in May reflecting additional cancellations linked to the Middle East conflict as well as aircraft availability. In the North Atlantic, which represents around 30% of our capacity unit revenue increased 7.3% at constant currency. This was driven by British Airways, which delivered very strong unit revenue growth with strong premium demand and strong corporate demand in all points of sale. Latin America and Caribbean continues to be a strong performer with unit revenue increasing 2.4% at constant currency on a 5.3% increase in capacity driven by Iberia, which continues to grow its capacity to the region, including new A321XLR routes to the city and Fortaleza in Brazil. For Iberia, premium demand continued to outperform with point-of-sale LatAm and Spain performing well. However, in point of sale Argentina and Mexico, Iberia saw a shift in demand due to the World Cup, congratulations to the winning team, by the way, with outbound tourism from these countries shifting from Europe to North America. In Europe, unit revenue increased 1.2% at constant currency. This very strong outperformance compared to the wider European market was delivered to British Airways Heathrow network and premium demand, highlighting its differentiated proposition. The European market remains highly competitive, given significant capacity growth from other airlines which limited our ability to recover the fuel cost increase through pricing. In the domestic market, unit revenue increased 1.7% on a capacity increase of 6.7% helped by disruption to raise services in Spain. And in the Rest of the World, performance was also very strong. In Africa, Middle East and South Asia, capacity was down 17.4% as we suspended more suits to the Middle East at unit revenue on the remaining routes increased 13.2%, helped by customers avoiding traveling via the Middle East, particularly corporate travelers on British Airways. And in Asia Pacific, capacity fell slightly as BA redeployed A380s from Singapore to Johannesburg, which was only partially offset by the launch of Gatwick to Bangkok Rod. Unit revenue performance in Asia was strong, increasing 6.2% at constant currency. Turning to unit costs. Non-fuel cost decreased by 1.3%, including a benefit of 3 points from FX. Employee unit costs increased 2.4%, reflecting paid deals income growth driven by client capacity growth and the increase in employer's national insurance in United Kingdom. Supply unit costs improved 5.4% with our cost transformation initiatives more than offsetting inflationary pressures. Although it's worth noting that FX especially impacts engineering and other aircraft costs, the majority of which are denominated in U.S. dollars. There was also a tailwind from the change in Iberia's MR contract basis that I mentioned earlier. Ownership unit costs increased 8.8%, driven by new aircraft as well as customer focus and digital investments. And fuel unit costs rose 12.5%, reflecting the significant increase in commodity prices from late February following the conflict in the Middle East. And this was only partially offset by our hedging program, which delivered hedging gains of EUR 769 million in the first half of the year. Looking forward, we are around 70% hedged for the remainder of 2026 and around 40% hedged for 2027. This slide -- this next slide takes us down to profit after tax. In the first half, we recognized EUR 149 million of exceptional costs, EUR 140 million at Iberia and EUR 35 million at British Airways related to the transformation and workforce programs. Before these exceptional items, profit after tax was EUR 1.146 billion, down 11.9% year-on-year. So overall adjusted EPS decreased by 10.9%, benefiting from our ongoing share buyback program. We generated free cash flow of EUR 2.905 billion in the first half of the year, EUR 808 million higher than last year. Operating cash flow was up EUR 409 million year-on-year, mainly reflecting EUR 147 million payment to HMRC, which we made last year to appeal the IAG Loyalty VAT ruling. On the other hand, working capital was a smaller inflow compared to last year, mainly due to fuel prepayments we made to mitigate the impact of the Middle East conflict together with lower capacity growth. CapEx was EUR 1.291 billion, down from EUR 1.690 billion last year, reflecting the delivery of just 3 new aircraft in the first half of this year compared with 13 in the first half of last year. We now expect 16 deliveries for the full year, with the majority being delivered in the fourth quarter and 1 delivery now slipping into 2027 compared to the update we gave you in May. Full year CapEx is now expected to be around EUR 3.4 billion, and we expect to continue to take the majority of the remaining deliveries and encumbered. We continue to take action to maintain our balance sheet strength. Net debt reduced to EUR 4.7 billion, down from EUR 5.9 billion at the end of last year. Net leverage also reduced to 0.6x and gross average produced to 1.8x. This was driven by the net impact of the repurchase of the convertible bonds the issuance of new unsecured bonds, the repayment of aircraft financing and EUR 0.5 billion in aircraft lease extensions. And finally, for me, a reminder of how we think about capital allocation. Our first priority is to maintain our balance sheet strength targeting net leverage below 1.8x and gross leverage of between 1.5x and 2.0x. Our second priority is disciplined investment in the business, targeting a return on invested capital of 13% to 16%. And third, we're committed to a sustainable ordinary dividend. In 2025, the total dividend was EUR 441 million with the final dividend of the year of EUR 0.05 per share paid this last June. We will update the market on the 2026 interim dividend at our quarter 3 results. Also, we continue to return excess cash to shareholders with around EUR 800 million already completed of the EUR 1.4 billion program that we announced in February 2026. And finally, I wanted to share some thoughts from my 2 months as IAG's CFO was I've been in the group for 13 years now, experience over the past 2 months has strengthened my view that IAG has the right model, the right strategy and the right execution capabilities. Even though the current situation is highly challenging, we're still generating high margins between 12% to 15%, high return on invested capital and a strong free cash flow, allowing us to continue, a, investing in the business; b, creating long-term value for our shareholders and; c, rewarding them through dividends and returns of excess cash. The conclusion is clear. The model works. We're highly resilient and I have huge confidence in the long-term future of IAG. And on that note, I will hand back now to Luis.

Thank you, Antonio. As usual, I will start with our strategy summary slide, which is how we are delivering our strong financial results. Our first priority is to focus on our strong core which means that we strengthen and grow our global leadership positions through developing our hubs and our networks. We are also investing in our brands with value propositions across different customer segments. Secondly, we are driving capital-light earnings growth primarily through IAG Loyalty. As you have seen, this is going very well. . Thirdly, we are basing this on a robust financial and sustainability framework in which we focus on creating value for our shareholders in the long term. This is designed to drive sustainable profitability and accretive earnings growth. Our strong core of diverse markets and brands is providing its value in the current environment. As you can see on this slide, our resilient performance is being delivered by our leading positions in a number of plants and attracted markets with powerful brands and customer propositions in those markets. I would like to highlight that our different customer segments are making important contributions. We are seeing good revenue growth from business customers, whilst leisure and VFR traffic, particularly premium travelers provide the sticky volumes that provide underlying resilience. Our strong and resilient margin performance is driven by our ongoing transformation program which focus on operational customer and cost improvement. This is a long-term continuous improvement culture that underpins our resilience. BA is seeing the benefits of its commercial transformation through the new revenue management and payment platforms. This is delivering revenue upside, particularly in this dynamic trading environment. BA also recently started to roll out the new app with 93% of sessions now going through the new version with weather experiences for customers across all 4 aspects of its functionality. Iberia continues to implement its strategic medium-term plan well that was announced last year. It is growing its long-haul fleet officially and profitably with the new as well as presenting its workforce to introduce new skills using the latest technology and AI to drive higher productivity. Aer Lingus has recently announced a major transformation plan in which it will make network changes, invest in new cabins and reduce cost with a clear path to position the airline better for the long term. Vueling announced its planned ruble at the beginning of this year, setting out its long-term transformation plan to carry 60 million passengers a year. A fundamental part of this will be the transition to a Boeing 737 fleet that will deliver a significant reduction in cost. In the meantime, they continue to focus on digitalization in the business with respect to both customers and operations. Finally, IAG Loyalty is delivery of this plan to build 1 million, which I will cover in more detail in a minute. We are continuing to invest in the business to drive a better customer experience, resilient operations and long-term earnings growth. Our aircraft are our biggest investment, and we have 16 deliveries coming this year. This includes the final XLR, which is an aircraft that is performing extremely well. We are also looking forward to the first of our 60 Boeing 737 deliveries to Vueling at the end of the year. On board, we are retrofitting aircraft across our network airlines. Most of VA's long-haul fleet will have the new club suite by the end of the year. And the first A318 fleet has just started its retrofit, which will also include the new test as well as Gabe. Both Iberia and Aer Lingus are retrofitting their A330s to deliver a more premium proposition with both business and premium economic gains. As mentioned earlier this year, we have started the installation of Sterling across the group. This is driving significant customer satisfaction increases on flights where it is available and take-up is very high. We have 353 devices connected on 1 flight, which was more than 1 per passenger. We have spent 50% of our non-haul fleet to have star linked by the end of the year and Vueling will be the first low-cost carry in Europe to have star link, which will be fitted to its new 737s when they are delivered later this year. We also continue to upgrade our advantages around the world with the imminent opening of the new MR launch at installation for Iberia and BA has announced their intention to grade the lines at the Newark Airport. One of the benefits of our transformation program in the last few years has been that all of our airlines are now delivering sector building on time performance on both a European and global basis. Aer Lingus has outperformed its largest competitor in doing for the last 37 months in a row. British Airways had its best quarter in the first quarter of this year. And Iberia and Vueling were both in the top 5 European airlines for the year-to-date. This has helped deliver strong customer NPS and an efficient operation, which underpins our profitability. As I mentioned at the beginning, IAG Loyalty has continued to deliver strong results in terms of its financial performance as well as strategic initiatives. Avio issuance issued went up by 50% and the number of active members increased by 9%. New balance sheets were signed with BP Post and Uber its in the U.K. and Inessa in Spain. The holiday business was affected by the Middle East crisis but has seen some additional demand in the Caribbean, India, Asia and Soho Europe. Holidays has also seen significant benefits from the new BA a TierPoint League with a significant increase in revenue per booking from gold and similar cardholders. We continue to make a good progress in our sustainability product. Primarily, we are ensuring that we comply with our obligations securing SaaS volumes toward our 2026 requirements. We are working with partners to encourage the production of advanced stuff in the future. We are also engaging with governments and regulators to ensure that custom-related targets are achievable and do not unfairly penalize European airlines. In particular, we are evaluating the recent EU ETS proposal for its likely effects. But in principle, we prefer the they support Garcia, the global United Nations initiative. As always, it is our people that are critical to our success. We hired 6,000 people in the first half of the year, increasing our total head count to around 78,000. This reflects the normal seasonal increases in pilot and cabin crew effect of the business aversion as well more manpower in our south groundhog businesses -- business, sorry, -- and we have a new agreement in place with groundings at Iberia. So moving on to the outlook. As seen in the first half, we are well positioned to navigate the near-term headwind space in the industry showcasing the strength and resilience of our business. We are booked at around 57% of expected revenue for the second half, in line with last year. We continue to expect to recover around 60% of the increase in the fuel price through revenue and cost initiatives and supported by our transformation program. Based on our revenue and cost actions and our decision to take out inefficient capacity, we expect to deliver an operating margin this year within the group's 12% to 15% target rate. This, in turn, will generate significant free cash flow. We are delivering for our shareholders through dividends and our excess cash return, and we expect to continue to improve again next year. And we are confident in delivering long-term value creation for our shareholders. And now we are opening the session to Q&A.

[Operator Instructions] Your first question comes from the line of James Hollins from BNP Paribas.

Well, first of all, congratulations, Luis and Jose Antonio on the World Cup, very -- I think we're all of Spanish that day. Two questions, please. First of all, on this capacity reduction. And maybe just sort of unpack a little bit where it's being removed? And maybe if it reflects sort of strategic reductions or just late aircraft availability, I think you talked about that impact in Q2 and whether you're still seeing ongoing engine issues in particular. And then maybe we could hear from Lynne on Aer Lingus, just I saw some idea on the transformation plans. It looks like quite a big there. So maybe just a bit more on what's being done cost-cutting strategy, et cetera, it's quite a big 1 to get that turnaround.

So talking about capacity, as we said the full year capacity now is guided flat. The main reason is that we can sell a big part of our operation in the Middle East. We are going to resume that operation, but slowly, for example, we resumed on the 1st of September regard from the 1st of October and also Dubai and Telavi but is taking time, and we are following the situation there. The other reductions is more because we want to have capacity discipline. We are evaluating all our flights. And at the end, what we want is to preserve the margins of the company. So it's true that we have some issues with the engines, in general, the situation is improving, but maybe, Sean, you want to comment about that.

Yes, I think we have an improvement in the rollout trend availability. So we have less aircraft out this year than we did last year. And I think that's enabled us to grow the North Atlantic, for instance, in the first half, where our capacity was up 5%. We have taken reductions in the Middle East as Luis said, but then we have redeployed some of that capacity into markets like India where we've actually had an extra frequency to Bangalore and increase gauge in markets like Mumbai and Delhi. We've also had a capacity into Nairobi, which is performing well. I think it's fair to say that we still have some supply chain challenges that we're navigating through -- across our fleets in long haul. But generally speaking, we're seeing more of our aircraft operating this summer than we would have last summer due to an improvement in the trend situation.

If I pick up on the link 1, James. So this is our first half loss outside of COVID for some time. And at the GBP 114 million swing in profitability, only GBP 45 million of that is fuel. So what we're looking at is quite a change structural environment to the 1 that we used to operate in, where the group margins were more easily enriched. We've seen since those days 40% increase in short-haul capacity from competitors, 50% from long haul. So we just can't sustain that level of revenue pressure with the cost base that we have today. So we are confident we can get and we do have a plan. It starts with head office, where we've been doing zero-based budgeting on the cost base, but importantly, taking over 25% of senior management so far, but we're also consulting with our unions over a similar number of head office in total. . We have taken the weakest flying out of the network. So that's a 6% reduction that we announced recently. We do have a lot of transformation on the revenue side, not in the tech side, but also in product. We've mentioned premium economy and the business class refresh. We do need to see productivity improvements as part of that bridge to get to the group operating margin. And if we do all of those things, I think we're confident that we can get to being an investment case for IAG again, and we do have a lot of craft required, it's going up, and we'd like to make that case.

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

Two for me, please. First of all, on pickup on recent comments on Emirates refusing the first 777X because of rework requirements as a note that they also don't want them. Do you share that view? Or do you think like a possible work in BA is offered more broadly, how confident are you in getting 777X , I believe you'll do your first 1 next year. . Second, the recent news flow around set possibly being a private if some parts of easyJet will become available for sale, thinking about holidays, you can medium haul, it's majority and slots, would they be strategically interesting to you.

Alex. So talking about the 777, we are going to receive our first 777 principle in 2028. And we choose not to have the first serial number of the aircraft though we are not concerned about that. And so visible, we don't see the same product. And about the so we are, as a group, always analyzing opportunities of consolidation across the sector because we think that further consolidation can help to make European aviation more efficient. And the only thing we can say is that we regularly talk to airlines and assess consolidation opportunities, but we are not going to comment anything about this yet.

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

Two questions, please. Just on first of all, CapEx. I see the CapEx now for the year is EUR 3.4 billion. Just remind me what the CapEx is expected to be or what you've said for the rest of the decade or a broad indication. And obviously, it steps up I say that in the context that the net debt to EBITDA is 0.6x, and you talk about excess returns of 1 to 1.5. So maybe just talk about given that where your leverage is? And the second question, just on the market. You keep saying that the European market is competitive. And I'm just wondering what's the issue? Is it too much capacity? Is it the competition? Is it Ryanair? Is it -- or is it inherent in the restructure needed at the airlines, maybe in particularly Aer Lingus and Vueling because it sounds like DA is okay there.

So on CapEx, we guided in the February results about our CapEx profile for the following years. We're roughly in the same numbers that we shared with you at that time. CapEx for this year, 2026, we are -- it's going to be around EUR 3.4 billion. For the next 2 years, '27 and '28, we gave you an average of around EUR 4.9 billion. And then for '29 to '31, EUR 5.6 billion average returning to a run rate of around EUR 4.5 billion after 2032 onwards. We're roughly on the same place. There's obviously little changes that happened when the deliveries coming to the right. But roughly, this is the same -- we have now the same CapEx profile that we told you a few months ago. .

And about Europe is the most competitive region. So we have elevated capacity growth, in particular, where there is ultra logos carriers in some markets like, for example, Italy. There are other markets that they continue healthy. But when there is a battle it is tough, to be honest. But in principle, our domestic market is performing well. We see a stable trend and is a solid contributor. So I think that's the market where we see the biggest impact. .

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

First question actually following up on that first question -- on the second question there, which was around European short-haul market. And -- as you say, obviously, it's quite competitive at the moment. And I'm just kind of wondering what your views are and how that develops over the next few years. Obviously, you had mentioned that ease maybe taken over, you have any views on consolidation just for that market as a whole. And in terms of the order books within there, generally speaking, it looks like capacity could be mid- to high single digits if retirement rates stay as low as they are. So just kind of thinking what's your views on that run rate going forward? And then the second question is, as we look into winter, obviously, your cutting capacity growth will have a higher weighting from the life of corporate generally, they'd be a bit less price sensitive. Should that improve your ability to raise pricing into the winter and maybe perhaps an update within that of how is corporate overall kind of tracking at the moment.

It's difficult to predict what we're going to be European market because if this situation continues, I'm sure that some competitors that are going to suffer and they are going to reduce capacity. So it's true that we can have some consolidation that maybe we are going to have also less capacity from people that they are not so strong in order to survive to this situation. So we are following that very carefully if we have some opportunities for sure, we will take action. The second question was about the business traffic and corporate traffic. So Q2 was very strong in corporate revenue, high single digits year-on-year, and it was driven by volume and also by yield. So BA was very, very strong. Iberia corporate demand also work very well in North Atlantic and domestic. So is something similar to what we are seeing for the rest of the year. We continue to see a strong business demand, in particular, as I said, in the North Atlantic and domestic region. It's true that also will have some traffic from the Middle East that is coming to our hubs, and it's something that is going to decrease on time. We hope that this conflict will solve at some point but that's also helping us. So I don't know, Marco, you want to comment over that.

Yes. I think North Atlantic has been very robust, and we've had both volume and price increases. I think technology and financial services have been strong but also small and medium enterprises, we've seen volume growth there and also a combination of personal and business trips has been a growing segment. I think as Luis said, if you look at the rest of world, flows like North America to India, we're doing very well on business traffic. And a lot of that traffic at the minute is bypassing the gulf hubs. And I think we're capitalizing on that and we've added more capacity into those markets to kind of build on that momentum. So look, I think we're seeing that trend continue if we look into the second half of the year. And as you say, in the winter, that makes up a bigger mix of our business, but the trends are encouraging.

And the same in implemented from our previous standpoint, we had an 8% increase in our corporate traffic in Q2. In particular, the strongest 1 was North America, but in general throughout our network, long-haul network, in particular, we do see that strength.

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

Two questions from me, 1 on revenues, the other on costs. Firstly, you've mentioned that 57% of expected revenues for H2 are booked that, that percentage is similar to this time last year. Clearly, your expectation is for revenue growth year-on-year in H2. Can you offer any thoughts on how you see the constant currency RASK for the group progressing in Q3 and Q4 from the 4.6% level seen in Q2. In particular, do you see any price cuts from U.S. legacy carriers that might affect how that progresses? And then secondly, easy to see that the flat ex fuel CAF guide is there despite the much lower ASK. But could I get you to talk a bit more about the GBP 149 million of restructuring costs. What's been done exactly at BA and Iberia in H1? Is that just part of BA transformation and Iberia is planned well? And how much restructuring do you envisage in H2 for anything else at those 2 airlines along with the announced restructuring at Aer Lingus?

So yes, as you said, the account position is 57% of expected revenue book for second half. So it's similar to the percentage that we had last year, not in absolute terms because what we see for the second half is a broadly similar behavior in BRS of the behavior that we had in the Q2. So that's the performance that we see probably may be you want to comment on the cost side.

Yes, on the cost side, so to comment here. First one, obviously, Q2 was a good reaction. It was a disciplined approach to cost and in the new situation. We are going to continue putting focus on cost for the remainder of the year. And as you say, the guidance we're giving on nonfuel cost, given the lower capacity shows that we are disciplined and we are react quickly the situation when it's needed. In terms of the exceptional costs, you're right that part of the transformation programs of both Iberia BA in terms of getting -- having a more efficient employee base, especially in the case of BA more on the headquarters. In the case of Iberia, also includes some of the operational parts of the business. And it's a part of the ongoing transformation that we are having both this retinal market of .

Out of the way, EUR 149 million there are EUR 140 million that are corresponding to what we call the voluntary the furlow scheme in Spain, the era touches almost 1,000 people in Iberia that has been agreed with 100% of the support of the unions. 85% of radio the people out of the 996 that being applied to that. So we are in full implementation of that. And that not only ensures that we have a change in our profiles to be prepared to face all the initiatives that we have in the plant wide but also allow us to have a structural lower cost base in our labor costs. So it has a double effect both in efficiency and capability to execute our plan well. .

Yes. And British Airways, it is, as Jose Antonio said focused on our head office functions. So what we found over the last 4 years as we were rebuilding the airline, we felt it was the right time to have a look at how we're set up in terms of back office functions, both in terms of efficiency and effectiveness. So we're going through a range of consultations across a number of functions would have due to streamlining and removing duplication. . It also puts us in a good position to exploit new technologies to be more effective and efficient -- so we're probably about 60% of the way through that program, and it will carry on for the remainder of this year and into the early phases of next year.

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

Two questions. Just first on the comment about kind of the unit revenue and kind of the second half looking wondering if you could provide a little bit more color on maybe regional or other dynamics that I would have thought maybe improving because you've seen fuel move higher and maybe higher selling fares as you go through the year and then the World Cup impact, not as big in the second half? . And then just secondly, just on competitive trends. I appreciate what Lynne called out at Aer Lingus. I was wondering if you could talk a little bit more about what you're seeing in Iberia. .