Good morning, everyone, and welcome to IAG's FY 2019 results presentation. I'll just hand over to Antonio Vasquez, our Chairman.
Hi, good morning, everybody, and we're very welcome to the IG Result Presentation. I'm glad to be here with the top management team of IG and the senior independent director Alberto Turre also. Thank you for coming all of you. As far as the 2019 result is concerned, the board is extremely happy with the strong set of results for both the full year and the last quarter, even though the second half of the year has not been easing in terms of how we had the industrial action and some of the disruptions around. In fairness, the the Q4 result has been a record in terms of absolute operating margin and operating profit.
As far as the shareholder return is concerned, we have announced an interim dividend so far with the occasion of the 3rd quarter result. Of a per share. And I'm pleased to announce that the board is recommending a final dividend of 17 per share. So this makes a total dividends for 2019 of 31.5 which is slightly higher than the $0.31 in respect to 2018. This demonstrate the board confidence in the IAGs financial result, financial strength, strategy and outlook, especially in the face of the uncertainty that, this, on travel demand that is coronavirus is scoping right now and representing right now.
In view of the management's plan, acquire Aeroglator in 2020, the board has decided not to recommend additional return to shareholders at this stage. Including the final dividend, we will have returned a total of 1,000,000,000 to shareholders since 2050. I understand that these kind of meetings are to talk about the numbers and not to talk about the filling but I have to share with you kind of feeling today because, formally, is a last presentation or result of IG by by Willie. Willie will retire almost in 1 month. And I want to share with you my my point, my feeling right now.
And since we last started working together and at the point in time, I'm talking about 9, 10 years ago, when we were trying to merge 2 companies, if not very easy situation. So we were putting together 2 big restructuring plans. And so since this point in time, until now that we have in front of us, one of the top leaders in the airline industry and 1 of the most solid group in the airline industry, it has been a long journey. And William and I, we had been working together for many, many years and right now, and of course, we did not agree always, but, which is very healthy, by the way. And I can tell you that we have been having all find a full consensus on putting always on top of everything, the interest of the company and the shareholder.
And that had the main clue, which has been making us work together very efficiently, very well. I'm really grateful for this year. Integrity leadership determination, vision, commitment, that's kind of will its attributes we are, will be forever in the foundation of IG. So I really thank you very much, Willie, for having working with you such a long time, and I think we will never forget you. I want to welcome formally, Luis, as a CEO, which he will be formally in one moment from now, and it will take over from Wille with the whole life in aviation, I think the transformation of Iberia has been a business case which a lot of our competitors have been trying to copy, but never anybody has been able to match.
And, I think it's, with the skills of our personal and professional skills of Luis. And, and the exceptional leadership of Luis and the wonderful experience that has been Luis working together with Willie for this many years, we have a wonderful ingredient to be So Louisa has a full support to the board, and I hope you will all be extremely happy with the performance of the company under the leadership of Luis. So I just hand over to the management team, let my ability to go with the presentation, to go back to the numbers.
Thank you, Antonio. It's good that we finally agreed on something. So, ladies and gentlemen, I'm not going to spend too much time by way of introduction because the Chairman has actually covered a number of that I was going to make. But I just do want to highlight a couple of issues because, clearly, there'd be a lot of distraction given what's going on in the current environment. But I think reflecting back on 2009, it's important to realize that we did actually make quite a lot of progress on the key strategic objectives for the group.
And we have, continued to invest in the right areas of the business We've looked for opportunities to consolidate and Aerioropa, I believe, will be a fantastic acquisition, by IAG We're working on that and hopefully we'll be able to close that deal off in the second half of this year. We've invested in the project, as we said, we would, and the response from customers has been really positive to that, and we will continue to do that through the coming years. And it's not just in BA. I know there's been a a real focus on what VA has been doing, but it's right across the group. And I think what's particularly pleasing for us is we're seeing that these investments are being rewarded in terms of the improvements in our Net Promoter Score, which as you know, is one of the key metrics that we use And we've balanced all of our investment decisions against the impact that they will have on NPS.
And we're seeing real positive momentum particularly at British Airways and at well included an exceptional job in 2019 responding to the challenges of air traffic control in Europe. And it's important to point out, 2018 was the worst year on record for ATC 2019 was the 2nd worst year on record. So we went into 2019 hoping that it wouldn't be any worse than it was in 2018. We saw a slight improvement, but it was still the 2nd worst year on record for our traffic control. Our leadership position in our key markets continues to be strengthened.
We added 4% capacity, but we saw traffic increase by 5.6%. And you can see no America up by 3.6, Latin America, 15.6 into Europe, a combination of domestic and our EU flying of 3.8 in Asia, 5.5, number of new routes by all of the airlines. And again, these are designed to strengthen the network to ensure that we have leadership, particularly on the North Atlantic and on the South Atlantic. And we continue to invest in our common platform this year and last year, but this year, in particular, strong emphasis on what we're doing to ensure not only are we financially sustainable, but environmentally sustainable. And, we launched, as you know, last year, our flight plan to net 0 by 2050.
I'm really pleased to see that that initiative is being picked up by others. The investment in new aircraft I continue to be astounded by the fuel performance of these new aircrafts. So the 833 the, 1000 in BA 900 in Iberia. These are making really significant improvements in fuel burn, fuel efficiency. And therefore, carbon efficiency.
And the 321neo LR, which Erlingus has introduced on the Transatlantic showing about a 23% improvement in fuel burn versus the 757. So the unit cost performance of these aircraft are absolutely excellent. And we're making really good progress, under the leadership of our new CIO, John, who's here today, on IAG Tech. So good solid investments in the foundations of the business and making good progress, which led to, I think, a good set of results in 2019, though the operating profit, as you know, was slightly down, the margin slightly down, that's largely due to the disruption that we encountered through the year, which we have highlighted to you separately. We saw fuel headwinds in terms of a cost of €738,000,000, passenger unit revenue and our non fuel unit costs developed exactly as we said they would So, you know, it was a positive set of results with a very strong 4th quarter performance as the chairman has said, with a return on invested So just slightly below our 15% target at 14.7%.
It would have been above 15% if we hadn't had the disruption. And On carbon and our carbon efficiency metric, we improved by 1.9%. So that's ahead of our annual target of 1.5% improvement. And as the Chairman has said, we continue to make returns to our shareholders to reward them for the confidence that they have shown. These are, just a quick snapshot of the key metrics that we've mentioned before, but, I think good, strong performance by all of the airlines in the group and a strong performance for IAG.
I'm going to hand over to Steve will take you through the details of the financial performance, and then I'll come back to make a few comments at the end.
Thanks, Willie. Good morning. So let's talk through the financial results. As Willie Riley said, strong operating profit for the full year, 200,000,000 down. For the first time in, 4 years, we've actually had an FX benefit this year rather than an FX hit.
So, 1,000,000 FX favorable for the year. So if you did a constant currency, we're down 267,000,000. We think these are strong results, as I say, because the fuel bill was up 1,000,000. Clearly, there was significant strike and disruption in the year. And one matter that we haven't touched on already was It was a challenging, economic and demand environment in 2019 compared to, say, 2018.
And, that brings us down to look at traffic and capacity. As you know, we went into 2019 looking to reduce, looking to grow our capacity by 6%. But because we could see the demand environment was weaker, we've been cutting capacity throughout the year. And we finished growing capacity only 4%. So we took a third of our planned capacity growth out.
And the BA strike accounted for about 0.4 of that capacity reduction. What I'm pleased to say is, albeit, we grew slightly less than we intended our seat factor benefited, and we finished the year with a record seat factor at 84.6%. So good numbers and a good seat factor. If I look at passenger unit revenue, clearly, what we did on capacity helped support and maintain the unit revenue and as well as just said, we came in on guidance in terms of the passenger unit revenue only being slightly down at 0.5 points. A couple of slides, I'll take you through some more detail as to what the passenger unit revenue has done by region.
In terms of total unit revenue, You've basically had a trade off, really, Iberia MRO, MBA holidays have had very, very strong years, and cargo has had a very challenging year. Think we've outperformed the market in terms of cargo, but it has been a challenging year. So those 2 have largely offset and hence why the total unit revenue very similar to the passenger unit revenue performance. If I look at non fuel unit costs, if I look at the airline CASK constant currency, We've improved the position by about 0.9, which once again evidences our strong cost control. And if I look at total unit costs, you can see then the fuel bill coming through there.
And so total unit costs were up 1.4 rather than down. That's the shape of the full year numbers. Let's have a quick look at the shape of the Q4 numbers. Similar kind of pattern record operating profit for Q4 of SEK 765,000,000. That's impressive given the fact that the fuel build was up SEK 103,000,000 We had an even bigger FX benefit in Q4 of 79,000,000, so that was offsetting a large part of the fuel bill.
The other factor that I think is worth considering in Q4 is we still had some degree of hangover and uncertainty related the BA pilot strike in September. So record operating profit for Q4, capacity down at 1.9% for the quarter, on guidance. We guided to that figure. And once again, a very strong seat factor. Seat factor in Q4 was at 84.3%.
If I turn to the passenger unit revenue, very similar figures to the full year number, being down negative 0.4, but in terms of total unit revenue, more adverse than the full year. Actually, the cargo Q4 performance was more challenging than the full year picture. If I look at non fuel unit costs, negative 1.7 for the airlines at constant currency, aided by some key customer compensation sorry, key supply station in Q4. But even if you strip that out, you're still a good one point better than the prior year. And in terms of total unit costs, actual total unit costs down in Q4 because the, the impact of the 2018 fuel hedging starts to reduce.
And so you're cycling off easier base. So strong Q4 numbers. Let's talk a little bit more about, passenger revenue. Overall, I would call this a mixed regional performance for Q4. We've basically got all of the regions are kept North America and domestic showing rash improvement compared to Q3.
And you're seeing all the regions at North America have lower ASK growth in Q4 than compared to Q3. And if I quickly take you through each of the regions. If I look at domestic, we still grew quite a lot there, 8% ASK growth in the quarter, clearly can have some dilutive effect on yield. In addition to that, welling, which makes up over 50% of our domestic case, was impacted by disruption, particularly in Catalonia and some unrest there. If I look to Europe, I think Europe are much better rasked performance in Q4 than Q3.
Basically, it was down 1.1 points of rat in Q3, up 1.7% in Q4, much better performance helped by capacity reductions. If I look at the OpCos, Welling and Iberia performed well on, Q4 in terms of Europe. BA still had some hangover from the strike, And as I say, in addition, if I look at the countries that most, improved The Spain market and Germany market were particularly strong. The weaker performance, performance were Italy, France and the UK. If I turn to Asia Pacific, over 90% of our ASKs are on British Airways.
And the key performer in Asia Pacific the improved performance that we've seen there was Tokyo, there was good underlying performance and then that was further aided, by the Rugby World Cup. And this is good performance both into Narita and into Haneda. And as you know, Iberia also, flies into Narita as well. Which also had a strong performance. So Asia Pac, very strong performance for the quarter.
If I look at Amica, once again, also a strong performance 90% plus of the ASKs are for BA. And the 2 standout areas there were India, particularly Delhi and Mumbai, clearly, I think we're still getting some benefit from the demise of Jet. And also, re add was a very strong performer in Q4, not surprisingly with the Aramco IPO. If I look at Laka, Laka has improved considerably still negative rash but much better than we'd seen in previous quarters. And interestingly enough, the story in Laccar has moved you know, we've spent most of the year talking about Argentina and Brazil.
Actually, those positions are stabilized. In fact, Brazil was one of the most positive, performers in Q4 for the region. The real story now in LACR in Q4 was with regards to Chile. And due to the political unrest there, really saw a drop off in the RASK performance and we remain cautious about that market. Bear in mind that we have 3 airlines flying into Chile, both BA Iberia and level.
And then in Q4. So, you know, the vast majority of that rash decline in North America was in October and primarily relate to uncertainty and therefore core booking levels, for British Airways. I was pleased to see in November December, you see the RASK starting to improve, once uncertainty started to return to the market and we'd reached resolution on the strike. So that's a quick run through of the unit revenue performances. Let's turn our focus to costs.
As I say, for Q4, cost performance is very strong at 1.7 if I run down through each one of them, employee costs have been flattered a little bit because we've made lower bonus provisions in Q4 this year than in previous years. So there is some flattering of the numbers there. In terms of supplier costs, I've mentioned a couple of significant credits we've had from key suppliers, but there's been good underlying supplier cost performance as well, particularly in engineering. If I look at the ownership costs up 4.2%, no surprise there. This is in an IFRS 16 world, this is all depreciation of aircraft And as we continue to renew the fleet, we see those ownership costs coming up.
But on the same time, when we, we see the ownership costs coming up, we also see benefits in terms of fuel efficiency. And we've added a little box to the left there to show you the sort of rolling fuel efficiency improvement that we're seeing. That 1.6% for the 12 months rolling, you'll be pleased to know the number is pretty similar for Q4 as well. And in terms of Q4, can see our fuel unit costs up 2.4%. As I touched on earlier, the fuel bill was higher.
If I look at where we are from a hedging perspective, we've gone into 2020 by about 90% hedged for the full year. About a quarter of that position is in collars and about three quarters of it is in swaps. And we've run a scenario here. We keep changing this and this week's been a particularly volatile week. So we reran the numbers last night.
And with our current hedging profile, we think the fuel bill would be 5,900,000,000 for this year using a $4.90 per metric ton jet price and a dollar to euro exchange rate of 1.09. If I turn to return on invested capital, as Willie has already alluded to, our ROIC for the year was 14.7%. It's a very strong performance. If you look at the individual Opcos, still Air Lingus way out ahead at 22%. You have Iberia and BA in the 14s, and you have, welling a bit lower at 13% return on invested capital, still a decent return on invested capital, slightly impacted by some of the challenges with regards to disruption.
But overall, a really strong return on invested capital figure we hadn't had the strike, as well as alluded to, we'd have been over the 15% target. In terms of performance, at operating profits, Just a health warning on these. These numbers are not at constant currency. These numbers are at outturn exchange. And basically what you're seeing here is the impact of the higher fuel prices and the slightly harder, economic demand environment meaning each of the optos have delivered an operating result slightly lower than the previous year.
But if I just make a few comments on each one, in terms of Air Lingus Other comments in the year, which I think are interesting is, 1, we've had, impacts through aircraft delays. We were expecting 4 A321 LRs for the summer of 2019, we got 1 in August. That level of disruption does mean you are gonna suboptimize your performance. If I look at BA, clearly the story, over and above the weak economic demand has been the strike. If I look at Iberia, half 1 was a tough period for the business, much stronger performance in half 2.
And if I look at dwelling, you know, clearly affected by the ATC challenges that we've already alluded to and other disruption. But overall, slightly off of last year, given the overall context, as we say, a strong performance. Let's turn now to earnings per share. As you can see, our operating profit was off, 200,000,000 year on year. But if you look at the profit before tax, we're pretty much level 2964+2947.
The thing that's prop up the profit before tax in 2019 is this net currency retranslations. When we put all of this, through IFRS 16, put all of this dollar denominated debt on our balance sheet. We took out economic hedges to cover that, and we mark to market those at the end of each period. And it so happens that in this period, we've had a significant credit. If you remember, we had a significant credit at the end of the half year as well.
So overall, our profit after tax was slightly down at 1.4%, but our earnings per share up at one point 7. And that's because our share count is down. Two factors behind that. We did a buyback in 2018, so the share count is down because of that. And secondly, we redeemed the convertible, this year, which also reduced the share count.
Last slide from me, which is talking about leverage, and what you can see is Gross debt up, about 1,500,000,000, primarily due to, aircraft deliveries. We took 45 new aircraft this year, which is a and a staggering number. You can see cash very strong, up nearly 500,000,000 at 6 point not 6,700,000,000 at the end of the year, very strong cash position. And as you can see, net debt to EBITDA slightly up at 0.2 turns up at 1.4, but well within our 1.8, I would expect the net debt EBITDA to go up at the year end. You know, it's particularly strong at the half year because the cash position tends to build in the first half of the year and then come off in the second half of the year.
And so we expect the cash to be building during Q1 of this year. So very, very strong I think it's worth just reflecting for a moment, on those strong numbers. And it reminds me somewhat of the Capital Markets day presentation where we said, you know, we've done a lot to restructure our business and take, real underlying costs out of the business, hence, why our profitability is so strong and sustainable. We also said we had a very strong balance sheet and we do. Our leverage is low and very high cash position as well.
And we said that position has positioned us very well because if we went into choppy waters, 2 things would be good. 1, we'd be very resilient and 2, we'd be in a good place to exploit opportunities that come along. I didn't realize when I said that, that the choppy waters would come quite this quickly, but they have done so So, you know, we're in a very good position going into these slightly uncertain times with the high cash position.
So turning to the outlook and, I'm hoping that you've bowl had a chance to read this. I'm not going to read his word for word, but maybe I'll just make it, if a few comments. It is clear that the industry and we as part of the industry is being affected as a result of the weaker demands, as a result of the coronavirus. Initially, we saw this China, and it had a knock on effect into other parts of our network in Asia PAC, which is, you know, represents about 8, just over 8, 8 point percent of our total capacity. We responded quickly, I think we're one of the first to announce route cancellations the end of January.
We have taken measures at that point to reassign some of the capacity that we're taking out onto other parts of the network where we saw demand continuing to be strong, and that's both in the case of BA and Iberia Since Monday, we've seen a significant change in Italy with the announcement of the measures taken by the Italian government with a number of cities in the north of Italy. And that has led to very strong falloff in demand in Italy, and it's also impacting on some other European markets. So we have taken a lot of capacity out of the Italian market, during the month of March. Some of that has been announced already, some of that is being, actioned as we speak. So we'll be making adjustments to the schedule for all of the airlines.
So we're seeing this across the group. And we will look at, some potential as the adjustments on other parts of the short haul network as well. In addition to that, we have witnessed some weakness in the business channel, business sales channel. So not shouldn't just read out as premiums happen. It's both premium and non premium, particularly with cancellation of a number of large scale events and corporates introducing, restrictive travel policies.
The net impact of all of this at the moment is that we will reduce our growth targets, which was around 3% ASK growth for 2020 down to 2%. And just to give you a rough example or rough indication but a third of that is on long haul and 2 thirds of that is on short haul. So that's, as we sit here today, the adjustments that we've made to the long haul network are out to the end of June. So we've canceled China until mid April in the case of BA, the end of April in the case of Siberia, but we have reallocated capacity to other destinations out to the end of June. The adjustments that we're making to the ShoreTel network are to the end of March.
Now people have asked me to give a bit of flavor is what we were seeing. It's we were doing this last Friday. I think we would have given you guidance and, we would have been, clearer in terms of what we were seeing because the situation in Asia had appeared to stabilize, by last We had clearly seen a strong fall in demand, but it had stabilized, and we had adjusted capacity to reflect that I think we would have been very comfortable at that stage with what we're seeing. There has been a big change since Monday, on Italy. So we need to see how that impacts over a period of time.
I would expect it to follow a similar pattern to what we've seen in Asia, but far too early for us to for. And for that reason, it's impossible for us to give you accurate profit guidance. So, at this stage, we clearly can't give you any details, but we will update you as soon as we can see patrons and friends that we would be comfortable with. Underlying, I think the investment case in IAG remains very strong. We have clearly demonstrated that this is a group that delivers what we promised.
I think that has set us apart from a number of our competitors. Our structure is unique. I'm just seeing the benefit of that now with our ability to respond quickly, move capacity around, take capacity out, have the flexibility within the fleet, that we have insured as we've grown the business over the last few years. And all of this is designed to ensure that we can be financially sustainable through the cycle. We go into this particular downturn in a very strong position.
Our balance sheet, as David said, is stronger. Cash position is very strong. And more importantly, we know what to do, we know what levers we can pull, we know how quickly we can operate them and we're doing that. So you should expect us to continue to take initiatives to adjust the capacity to match the underlying demand that we're seeing to move capacity around. And that's the flexibility that we have, and that's all designed to ensure that we maximize our profitability in the current year and going forward.
But importantly, to ensure that we're in a position to respond strongly when the recovery takes place. And it is very much a win rather than a diff. So we don't want to do anything that would jeopardize our ability to respond positively when we see that recovery. The progress that we've made, is going to continue. We have a very disciplined approach to the allocation of capital.
I think that's been one of the strengths of the group and is something that we're proud of and will continue. Our companies, the operating company is very focused on ensuring their brands are strong, and they have strong operational performance. And that again, was delivered, very well in 2019. We're leading with, consolidation in the industry, we believe that we'll see a lot of consolidation this year, and it's the form of consolidation we like to see, and that's about the week are going to disappear. It's clear there are a number of airlines that went into 2020 in a very weak position.
What we're seeing at the moment is going to I think, accelerate the demise of a number of the weaker carriers in the industry. So we will see consolidation in 2020. That will be in the form of failure. I don't think there's anybody out there that would be interested in acquiring any of these weak and failing airlines. I expect them to disappear, the demand that does exist there will be provided by the strong carriers, including ourselves.
Our cost efficiency has continued to be a real focus and that will continue under Luis. He's absolutely committed to the targets that we've assessed, which is to target a 1% CAGR improvement in our non fuel unit costs.
So it's not going
to be 1% every year, I need to stress that because there will be some years when it will be less than that, and it will be some years when it will be significantly greater than that. And at the heart of all this, we have a dynamic and creative culture, and that's going to definitely benefit us through this period. And all of this underpinned by our commitment to ensure that we have environmental eligibility alongside our financial sustainability. That's become more important and will be, equally important, if not have greater importance as we go forward. Everybody, you know, the chairman, Steve, me, Andrew, everybody, we're going to talk about this to remind you what we've done.
And we've shown our commitment and our confidence by, the board approving the final dividend for, 2019 at a board meeting yesterday subject to a shareholder approval at our AGM. And you can see our cash priorities there. We'll reinvest in the business where that investment will generate accretive growth. We are committed to maintaining and sustaining an ordinary dividend. We will pursue opportunities for inorganic growth.
And we've demonstrated our absolute discipline in relation to that. We've turned down opportunities, where we didn't believe there was value there. And we've pursued aggressively opportunities where we could see real value. And the acquisitions that we've made, I believe have been fantastic. And then any surplus cash we have, we will return to, shareholders.
To remind you about the letter of intent with Boeing continues to be in place. It is a letter of intent. We're following carefully, the researchification of the aircraft. We're in close contact with regulators and with Boeing Management, as you would And our intention is that once the aircraft has returned to service, we would look for share over approval. So we will not look for shareholder approval until the aircraft is back in service.
Personally, I think this is going to be a great aircraft We need competition, both in the narrow body and in the wide body fields, both of the manufacturer have challenges at the moment, but I believe Boeing will address these issues and the recertification, which is being incredibly thorough will allay any concerns that people have in relation to this aircraft. So I think it's a great option that we have it puts us in a strong position as we move forward, and we will continue to update you in relation to that if and when there are developments. Very pleased to see that the investments we're making, as I said earlier, are proving to be effective, and that's demonstrated by the improvement in our net promoter score in 9 half point improvements in 2019 to 25.8. It's not where we want to be. We have a target, to get higher to 33.
But you can see the measures that we're taking will take a bit of time, significant investment in the be a, club world product feedback from customers is very positive. You'll have 33% of the fleet in the new configuration by the end of this year or in half the fleet by 2021. We're not going to pause our delay the reconfiguration of the aircraft. This is the right thing to do, and we are going to continue with that investment. Indeed, did we have an opportunity to accelerate us we will.
So there is a real commitment to this. It's proving to be as positive, but not slightly more positive we have thought it would be. And as I said, it's not just in British Airways, all of the airlines are making investments. Erlinda is very focused on developing Dublin as a an effective transatlantic hub, and, that requires additional infrastructure to be provided by Dublin Airport but there's a good relationship between Erlinda's and Dublin. Iberia has invested in its hard product on the ground and indeed, we'll be making some in relation to the, in flight projects and with the Iberia long haul business class, in the near future well.
And Welling did an exceptional job in 2019. As I said, the 2nd worst year on record, but to be able to improve their on time performance by 7 points demonstrates that they took the right decisions at the beginning of the year. And, that's reflected not just in their on time perform but in their, customer satisfaction scores as well. And we will continue to be the thought leaders when it comes to environmental issues we led the industry by announcing our commitment to net 0 by 2050. Really pleased to see others follow.
We need the industry to respond positively, on the issue of the environment. This isn't going to be a competition issue between one airline and another. This is an industry requirement. And the more airlines that get on board and the more airlines that talk about their environmental credibility, the better for the So I'm really pleased that others are committed to this as well, and I expect more and more airlines to do so. We've embedded management incentives in our plans for 2020 to ensure that we're driving the right behavior.
So in addition to looking at the impact of investment in our net promoter score. We also look at all investments in the context of what does this do for our environmental performance. So we've got a completely joined up think when it comes to financial and environmental and customer sustain of the visit. And you've seen the pathway to achieve these targets. It's a credible pathway that, we are absolutely committed to including investment in new aircraft, investment in sustainable biofuels, investment in new technology, and recognizing that we're going to have to pay more.
Through, carbon offsetting to ensure that we can get to net 0. So this is going to be a cost Everybody in the industry is going to bear. And that cost clearly, we expect to see carbon prices increase as we go through our path to 2050. Now you will recall that we introduced the permitted maximum notice in February of last year. We were pleased that we were able to withdraw that in January of this year.
And we keep this situation in relation to our non EU shareholding under review. This has nothing to do with Brexit. I know some people confused it and mixed it with Brexit. As you know, this was in our bylaws in neurological, when we created, IAG. So it just reflects the fact that we have to satisfy governments around the world, around the ownership structure of our airlines.
So we'll keep this under review and, we it's important for me to note, and it's in the presentation here that the board is authorized to reimpose the permitted maximum at any time, if net necessary, but the situation, as I said, will be kept under regular review by the boards. On Brexit, It's done, I believe. I read the paper. It was done. So, there will be some negotiations.
I remain convinced actually that we will see a comprehensive air transport agreement. I know from close engagements with both EU officials and UK officials that this is what they want to see. It won't be exactly the same as existed, while the UK was part of the EU, but I believe we will see a comprehensive air transport agreement. We have, as you know, submitted our plans to the national regulators in Spain, Ireland, France, and, Austria, and the commission have been notified about the remedial actions that we will take. Important to note that the UK government has not asked us to take any remedial measures in terms of ownership and control.
And, we'll continue to make progress. You know, I think the opportunity to acquire early rope, as I said, fantastic, that is subject to regulatory approval. We hope that we can progress that in the second half of year, we'll continue to invest in new aircraft and new products. Really pleased to see a new partner with IG Loyalty, Barclays And that's going to be, I think, a fantastic initiative, for IAG loyalty. We've continued to invest in our network, strengthen our position in the key, channels that we have.
And that, again, will be enhanced by the acquisition of Air Europa, and we'll consolidate the growth that we've seen in the intra European market. And we have commitments, as I said, to improve our environmental performance targeting 87.6 grams of CO2 per passenger kilometer in 20s. And it's going to require work to get there, partly facilitated by the investments we're making in these new aircraft, which, as I said, are producing fantastic results. Now, I've included a couple of other slides, and I'm just going to comment on Luis in in a moment, but if I was to sort of wrap this all up and say, what do I think I would say that's our unique structure is really going to demonstrate value now. It's at a time like this when we can prove to you that IAG has the ability to adapt to withstand, to address anything that gets thrown at us.
We have the advantage of having that flexibility that I don't think others have. We have the ability to make decisions quickly and implement those decision as quickly. We don't waste a lot of time debating them because to be honest, we've gone through all of this before. We've all seen it before. So we've learned from the experience, it's easy to forget some of the challenges we've gone through, but we know what to do in a time like this and we know how to respond, and you should expect us to continue to do this.
We will continue to look for opportunities to pursue consolidation, where that makes sense, where that is positive for our shareholders. As I said, I expect to see quite a bit of failure in the industry this year, not just within Europe, but globally, and that will give us opportunities to expand to fulfill the gaps that are left there we will continue to lead on the environments because leadership is required. We will continue to focus on our cost performance. We're proud of us It's a positive thing to do. We're always looking for initiatives to see how we can do better.
And I know Luis was absolutely committed to the to doing us. All of this is supported by a strong performance in 2019 and, pleased to say that's reinforced by our confidence and the board's confidence to say that we are continuing to, return cash to shareholders given the commitment that they've made and the support that we've received from our shareholders over the years. And finally, you can see a big smiling Louis, Diego there at the top. Delight has to be taken over. You're still smiling, even with coronavirus is still smiling.
I think the thing I would say here is, first, but the benefit of people who don't know Luis, we've included a couple of charts in the online press presentation. So you can see what his financial performance was in Iberia. I've talked about it to you before, so I'm not going to labor on this, you know, but he is I think one of the exceptional leaders in our industry, he's demonstrated, leadership capability through what he's achieved in Iberia. And it's not just a financial transformation, you know, some people focus on that. It's a, your total transformation the brands, the, the, the culture, the atmosphere, the engagements at every level in Iberia, you've seen it transformed.
And I know Luis will continue to do that. Significantly, he's had the opportunity, to pick a number of the new players here. So, delighted Marco is here, Marco Santabini, who's taking over at, Vueling and Javier, who's taking over at, is in the second one yet, at Iberia. Louis and I sat down to consider who should replace him at Iberia. We had the same names on the list and the same person at the top the list.
You know, so Javier was our number one choice. We're delighted that he's agreed to do that. When we looked in as replacing Javier at well, we have the same names on the list and the same person at the top of the list. So, unfortunately, we do think the like. So, And then, of course, really sorry to say Drew leaves the business.
I think Drew has had a fantastic influence on the business and has done a great job But again, replacing Drew and, Adam Daniels, we announced yesterday will take over. We say Avios there, but we've actually rebranded quietly Avios IAG Loyalty, and it was just too long a name to put on the chart there. So, Adam, who was the commercial director at Agiosen, is now the CEO of IAG Loyalty. So these are people that have been chosen by Luis. And clearly, he also had significant input he knew, that Steve would be appointed as the group CFO with Enrique's retirement, he was involved in the selection of, Alastair, at strategy and involved in the of John at IAG Tech.
So we have a very strong team here, completely dedicated to continuing to deliver in the way that we have in the past. And I absolutely no, no doubt in my mind given the experience around our table, given what all of these people have gone through, the knowledge they've had of previous, challenges that we face that we're in very safe hands and that we will respond in a very positive way to the challenge that we face as a result of, the coronavirus today. So you're in safe, very capable and very exciting hands with, Luis and the new team And, I'm looking forward to the next month. I'm still fully engaged. I can assure you, but on 26 of March at midnight, I'm handing him the keys.
And, at that stage on 27th, I'll be wondering around London, looking for some of these with, but, stay out of my way unless you're here, unless you want some trouble. So, I think on that maybe Steve, if you want to rejoin me here and we'll start taking some questions. Andrew, if you want to moderate it, I don't know. Do we have a couple of So we have some microphones, David, and Andrew will
Just maximum of two questions, please. And if you want to ask more, then you can do so toward the end of the session.
Chains.
Good morning.
James Holland from Exane. I think I speak for everyone, Willie, when I say a fond good riddance from us all. Two questions. Just on level, my colleague here, the peer competitor, wherever James is, I noticed there's no CEO of level at the moment. I was just wondering, you could talk about the performance of that potential growth rates through this year and obviously leadership, The second one was on Air Europa, whether the current market might lead to a review of the price and potential of the deal.
So,
with level, Fernando Condella has done a fundamental review, it is a fantastic day in his track record is great. So what we asked him to do was to go back and start again and just challenge us as to whether the model works and then challenge as to whether our application, to the model works. And what he has done is he's confirmed, oh, we believe it was true that the model does work, he questioned some of how we went about doing level. And I think his observations were fair. If you remember, we launched level earlier than we had expected to.
So we did, if you like, rush it to market because we wanted to get into Barcelona ahead of one of our competitors. So, the first year of operation in Barcelona was fantastic, largely benefited by a very strong performance Winazaros, and we redirected a lot of capacity into Winazaros. So that probably splattered us in a way and hit some of the relying issues that we didn't need to address at that stage because the revenue performance was so strong. With the devaluation of the currency in Argentina, it did then put the operation under a bit of stress. And he's looked at some of the things we did that he said, if you were to do it, again, you wouldn't do this.
So we had the commercial model wasn't right. We were selling on different platforms. We weren't able to fully exploit ancillary sales, so there were a number of issues there that he is now correcting. I think the other issue was, Paris has been a disappointment. The market has not responded in the same way in Paris as it did to Barcelona with stimulating new and additional demand.
So, the performance in Paris is under review. So he's convinced the model works. He's, correcting some of the mistakes that he believes we made in terms of, the application towards that model. And I think we're in very capable hands with Fernando with Level. So we've We had planned to add capacity to Paris this year.
We're not going to do that now. So that, that capacity is been redirected to Barcelona and we're looking at, we're reviewing, we're continuing to review the performance of the paris operation. And then your second question, was yeah. Sorry. Are you open?
No, we remain committed to us. To be honest with you, you know, it is subject to competition approval. We will address those issues that arise from that. But I think the case for consolidation is very, very strong. And where we want to have a stronger position at the Madrid hub, and this is a fantastic opportunity to do that and create a real international hub, not just a, as Luis has talked about it in the past, a hub for Latin America, but a hub for the global network, and we better, we're better placed to do that through the acquisition of area of this.
So we remain committed to that acquisition.
It's Alex Patterson from Peel Hunt. Two questions, please. Firstly, just obviously, the current environment with coronavirus demand has been weak for Asia Pac you responded and now Europe, it may spread to other areas we will see. How will you, other than capacity cutting capacity efficiency savings and so on? How will you respond?
Do you expect to adjust fares? Do you think that if this follows the path in Europe as it seems to have done or was doing in Asia Pac, but it will be temporary and you would therefore, if you bring fares down, put them back up again. What you see? And then the second question is just out of interest in your time at IAG, is there anything that that you wish you had done differently or something that you would have liked to do that you've not been able to?
Yes, I think our thinking at this stage is that we're would expect to see a similar pattern in Europe to what we've seen in Asia Pac. We are reviewing all of our commercial policies we may not do things exactly as you would expect because we've learned from what we did in the past. We did things back in 2000 and 1, 2008, that we thought were right, but then having reviewed them afterwards realized that we could have done it better. So I've talked about this previously. In 2008, we took a lot of capacity as we combined flights, absolute sense, we kicked that box capacity reduction, but what we then found is the recovery in demand, we had no seats to sell at the higher prices.
So in revenue terms and in profit terms, it was suboptimal. So having learned from that experience, we're not going to repeat the mistakes that we made. So we'll do it in a different way. And I'm not going to explain all of the commercial initiatives that we're going to take, but, some of them may appear to be counterintuitive at this stage. But that's based on the learning that we've had from, similar situations in the past.
So as I said, what we had seen in Asia Pac and had we been doing this last Friday, you know, we would have been saying, Yes, we've seen demand fall. We've adjusted capacity to that demand. The market has adjusted capacity to that demand. Demand appears to have stabilized at a lower level. And that certainly was the trend.
We looked at this very carefully over the last few days. So, this time last week, that's the message you would have got, that it seems to have stabilized and that it will recover then in due course as production in China starts up again, businesses start traveling as we see the falloff in, the number of cases being announced. So I'm expecting to see a similar pattern, but I'm not an expert in this, but certainly This is the type of pattern that we've witnessed in the past. So I don't think we're witnessing anything that's different today. What are the stats we looked at, which gave us some degree of comfort, we looked at calls to one of our call centers over the 1st 3 days.
So this would have been Tuesday, Wednesday, Thursday of last week. So if you remember, it was the Northern Italy, issues were highlighted, I think, on the Monday. A number of government issued travel advisories on Monday, corrected them on Monday evening. So we've got a lot of calls as you would expect then on Tuesday, Wednesday, and per day. It peaked, and if you look at Ireland in particular, it peaked on the, Wednesday I think triggered by talks of the cancellation of the, Ireland just leave won't be much.
So about a third of the calls we received on Wednesday relates to coronavirus. Customers either wanting to cancel flights, looking at options to change their flights, or looking for advice, then dropped off significantly on the Thursday. So I think we're seeing consumers respond to the media focus So there's, there's certainly data that we're looking at that gives us, reasons to be, I don't know what words you use here, confident, maybe, that the patterns that we're likely to see, we will be similar to what we have seen. But as I said, it's just far too early for us to be in a position to be able to give you accurate guidance at this stage. So, and that's the reason we'd look to be able to do and we've debated it, we just can't give you accurate guidance.
And I think we'd be misleading you if I said that we could give you accurate guidance at this stage. We'll watch this pattern over the next few weeks, and clearly, we'll update you as appropriate when we have the information that we think will be of value to you. And in terms of do I regret the only thing I regret is I regret not recruiting John 3 years ago. I think he's made a fantastic change both of the culture, and to the capability of our tech. So I'm really pleased with what John has done and I'm very excited about what you're going to see, from John and the team going forward in relation to our IT and digital capabilities within the business.
Hi, Steven Furlong from Davy.
I just want to ask Will in terms of IAG today, the fixed variable cost nature of the business compared to if you go back to the BA group into the financial crisis, maybe just qualitatively talk about that. I think people would be interested in that. Thank you.
Yes. So if you look at it, yeah, our employee costs are 23% of our cost base. If I look at full year 2019, fuel is 27% if you were to take things like fuel handling and unreal charges, which are, you know, you could say are directly related to the operation of the aircraft, that's 50% of our cost base. So clearly, when we don't operate the aircraft, these are costs that we generally can avoid, and we need to be careful because what we saw in, if you remember, in 2001, because of the nature of economic regulation for airports and air traffic control providers, they recover it in future years if they don't get their revenues in the year that happens. But, you know, that's just a very, very rough example of what you do.
And then within our employee costs, we clearly have flexibility within the labor contracts that we have, and they vary, across the group So, the immediate action that we've taken, as you would expect, as we've now postponed any future recruitments if required sign off by the CEO in each of the operating airlines, if they are to recruit people. What we want to do is be careful that, we're not going to put out risk, our ability to respond when the market recovers. But we think that's sensible measure, and we'd prefer it to be operating on the side of caution, at this stage. We have a number of issues initiatives. There is pent up demand for part time work, for, unpaid leave.
So these are things that we don't know facilitate at this time of the year, so we'll be able to do things. So these are all sort of, I would call these business as usual, routine initiatives as we will apply very, very quickly, in relation to what it is we're seeing. So we're taking a view, as I said, on long haul through to the end of June on short haul at this stage is through to the end of March until we can see the patterns, that give us, some evidence to make a longer, when I say, longer term decision in relation to capacity for April, May June. But we do have a lot of flexibility in the cost base. And then if you look at aircraft, we will have, a number of aircraft in our fleet that are fully depreciated.
We have a, and that's both wide body and narrow body We have aircraft that are coming off lease. We were looking at taking additional leased aircraft this year that we now won't take into the business We're committing to taking all of the aircraft that we have purchased. We don't see any reason to change that. So these are I would describe as the measures that you would expect us to take both centrally and in each of the operating companies as well. Any discretionary spends, we will adjust, we will postpone some investments until later on in the year or maybe into next year.
We're not going to postpone any, key investments in products, you know, where we can see the opportunity to late progress there. So as I said, we remain, fully committed to the reconfiguration of the, BA business class products on their long haul. And I think that's absolutely the right decision for the business.
From HSBC. Will he give you an invitation to have a little chat. Talk to us about the 3rd runway and how you feel about that there? Just a little farewell gift. And the second one, talk to us about the relationship with Qatar, please, because you moved Heaven and Earth to get European ownership up and he goes and buys them more, doesn't he?
And at the same time, somehow you've got into Kiss and Makeup with the Americans. So that's remarkable. Yes, tell us about those, and we'll miss you.
So on the 3rd runway, have to answer, it didn't come as a surprise to me. And I had a unique experience yesterday when one of the lawyers came to me and said, we gave you the wrong advice, because they told me that that case would, would not win. It was always nice when you get an apology from a lawyer. It wasn't, it wasn't Chris, by the way. Yeah, it's not it's you still pay them.
Yeah. So I wasn't surprised, and I'm not surprised that the government has said that they're not going to appeal it. I think that's the right decision by the government. Equally, I'm not surprised that Heathrow decided they will appeal. I'm now calling on the CAA to, stop Heathrow spending money on the 3rd roommate, And, okay, the computer wants to spend money on the 3rd runway to let them, but don't allow them to pass that cost on to us, because I believe chances of the 3rd drawn weight being built are significantly reduced as a result of the decision yesterday.
In effect, they've got to go back to square one and start it off again. And even if they do, I think the challenge on the environmental front is still significant, and they have no way absolutely no way on earth of meeting the cost challenge. So I've been saying that for some time, I think I've been absolutely consistent that I didn't believe they could do us either on environmental grounds or on calls grounds. And my view on that hasn't changed. And in relation to Qatar, yes, I'm really pleased.
The relationship between Qatar and American has, has improved significantly. And as you know, they've announced that they're reengaging on commercial initiatives with codeshare, I think that's a very positive development. It didn't in any way interfere with our relationship with American on the one hand with Qatar on the other. What was very helpful was that being in the middle, we were able to, bring the two sides a little bit closer together. And I think that's a positive development for us and also a positive development for, one world.
And I have to say I'm really pleased with the way American is responding, to the challenges that they are facing, but the recent announcement of a closer relationship Alaska, I believe is very positive. We've had a longstanding relationship with Alaska on the West Coast with British Airways and we see opportunities for Erlingus there as well. So these 2 initiatives are very significant initiatives. And you know, they they've invested in IAG because they believe it's, it's an excellent investment and, I can't comment on how people make investment decisions, but, it did come as a surprise to me. We had no advance knowledge of, that decision, we were advised the night before it was publicly announced But that was, I think after they had formally advised the CNMV in Spain that they had made the acquisition, it was a courtesy message to us that they would be making an announcement at 7 o'clock the following morning.
So, you know, I know the Chairman and Luis will have engagement with Qatar after I leave, and I have no doubt that that will continue to be a positive engagement.
Good morning. Firstly, thanks, well, for your decade at IAG and thanks from the analyst community. I think we've all found you, honest and insightful even if you haven't had the answers at that time. So, always thought you know, come to us in excellent hands. Thanks very much.
Coming on to that, then, Louis, I mean, I guess early days of the strategy given in November, is there any areas where you could or would tweak, or is it just exactly, as is? And then secondly, just kind of just coming onto the cost control, I guess you've decreased your capacity down to 2%. What's the natural run rate, I guess, of capacity growth that you require in order to bring down, ex your unit costs or is it a CEO where the minus 1 isn't to minus 1? Thanks.
I think where we're seeing growth at the moment, and we clearly have brought our growth down. So as Dave said, 4% last year when we sort of targeted. In fact, if we got back when we were doing the business planning process, we were looking at about just over 7% growth. We then took a decision at IAG that that was too high and, you know, took a central decision to moderate that down a bit to, 5.9%, which is the figure we gave you this time last year for, 2019. We did make that time, strong comment that we would look to moderate that further as we went through the year.
Now, I think this time around, we have responded to what people have said that maybe we should go the other way where we have a lower growth target and look to improve on that if we see opportunity rather than announcing higher growth targets and look to reduce it. And that's exactly what we did So, you know, we were looking at this year as around a little over 3, maybe towards 3.5%, 3.2%, 3.5%. We've taken that down now to 2. I suspect as we stand here, it's likely to be below 2, but then, that may go up in the, if we were talking here maybe in September, we'd be looking at opportunities and putting capacity in to respond to underlying demand and particularly in an environment where I think a number of airlines will have disappeared at that stage. The natural level of growth for IG, I think is probably in the order of 5%.
If I look at the combination of the group, where we're, we have, if you like, the traditional legacy airlines and then the the value airline, Erlinda's in the middle and then low cost, Erlinda's clearly has opportunities to pursue very strong growth on the transatlantic The performance there continues to be impressive, and with the availability of the 321 LR and then the XL was, you know, I think this, what that can do to the network, and, the whole bank government, will facilitate a strong to growth opportunity for them, less so on the short haul. But if you look at the combination of the airlines in the group and particularly with the acquisition of with Air Europa. That's where I believe it rests. And at that level, I don't see any issue with the business being able to pursue that 1% non fuel unit cost CAGR reduction. You know, I know, I'm going to do the talking today because he'd be doing it from now on.
So I'm not going to hog this stage, but, you know, I know he's committed to ask. But if I were looking at the next 10 years, I would be very comfortable that we can achieve those sorts of targets.
I have two questions.
First, for Steve, in terms of liquidity, fully agreed that EUR 6,600,000,000 of cash, it's good liquidity, but you also have 4,000,000,000 of payables that expire in 30 days. So in a stress scenario, I guess, are you looking today to increase your overdraft limits and how much is that? My second question is this either your financing or your or the credit lines that you have for the hedging of financial covenants in which are they?
Okay. In terms of liquidity, as you rightly say, we're very comfortable with the level of cash we have. And as you see from the accounts, we were sitting on about 6.6 at the end of the year. And due to the natural cycle, that continues to increase over time. So cash position is good.
We have revolving credit facilities, so we have $1,300,000,000, revolving credit facility as well. And you're absolutely right. We have the ability to take out additional credit lines as well. So we're very, very comfortable with liquidity position we have. With regards to covenants, we're in a strong place, you know, what the treasury team have done over the last few years has made sure that the guarantees, etcetera, that we provide and the covenants we provide are pretty minimal, to be honest.
So I think we're in a pretty strong place.
I think if you look at the rest of the industry, you know, if you look at all of our financial metrics, our cash relative to revenue, what we're holding. I see competitors there with, less than 10% of cash relative to revenue. There's going to be a number of airlines in significant stress, in the very near future. We're in a very strong position in our cash balances, our ability to raise additional cash if necessary, the lines of credit we have available to us. The measures that we can take, internally to, conserve and generate cash, you know, all of these things are things that we will focus on as you would expect us to do.
So, I'm, as Steve says, it's nice when you hear his CFO saying he's comfortable with the cash position, you know, but, I'm sure, you know, the, the business will look at how we can generate additional cash as well. And we can if we need it, we can. And this is out there who can't.
It's Vashika from Barclays. Just one question for me. On the transatlantic and the competitive environment, particularly in the premium cabins, I believe a few of the other joint ventures are adding quite a bit of new premium capacity, new product, you, of course, have your own product rollout as well. And so can you just maybe give us an idea as to how you're seeing those dynamic play out? Thank you.
Yes, I think Transatlantic Transatlantic business has been good. The number of competitors been increasing their aircraft gauge with premium seats. But the underlying markets, has been has been okay. I think what we would comment on is, in going into this year, we've seen very strong leisure demands. And leisure is not just in the non premium, that's in both premium and non premium.
As you know, when we give you details of who travels in our premium happens, it's not all business. And in fact, some of our businesses in the economy cabin as well. So yes, the competitive environment is, is strong in the transatlantic, but the underlying dynamics of the market remain very strong. So, I think the, project investment that we're making is absolutely right. We know our project has lagged some of our competitors But then again, our competitors have only just managed to get to a situation where they've got a competitive product in the market.
Our new product is superior about as well. So I think the measures and steps we're taking will put us in good place on the transatlantic, which will continue to be a key market for us. But yes, I think it's fair to say, we're seeing strong competition, particularly from the likes of United States and delta, but these are good, sensible, what I would call rational competitors in the market. So I have no issue with us. You know, I think that that dynamic is a good dynamic to have at the market and, works very well for us.
From Bank of America. Two questions, please. Firstly, on summer bookings, typically at this time of the year, what visibility do you have into the summer And what are you seeing currently? So if you can just compare that. And then secondly, on loyalty, you chaired some numbers that the capital market say, how did you how did 2019 and, what does the Barclays Partnership mean for the loyalty business.
So any color there would be great.
Yes. On summer bookings, it varies by the airline. So as you would expect, the lead time with, advanced bookings with the likes of Welling is significantly different to British Airways. So what we had seen was a normal pattern. And in fact, I would say normal pattern on Europe.
So therefore, if I look at the 4 airlines, however many we have now, 5 operating within the European environments, up until the 23rd February, it was tracking as you would expect. So it was, in line with what we would have seen historically in line with plans. It then deviated from that on the 24th February, and that's the bit that we're watching at the moment. So it does vary BA would have more, bookings into the summer than Wellington would have, which tends to have a a much shorter booking window. But up to the 23rd February, what we were seeing within Europe was very much in line with what we would have expected to see.
We didn't notice any change in trends or behaviors. That would cause to say there's something different going on here. You'll always get variation as a result of events happening, but it did change on the, on 24th that's when we saw it, and it deviates. And that's the bit that we're, we're monitoring at the moment. So when do we see that stabilize and then when do we see that recover and with no visibility on that at the moment.
So that's why I got back to what I said. We just cannot give you accurate guidance in relation to the performance this year based on what we've seen over the last 4 or 5 days. And until we see trends there that we're comfortable with, you know, I can't really give you any more information than that. Loyalty. And loyalty, sorry, can you please?
Yes. In terms of how loyalty finished the year, it very much is expected. So across all of our numbers, we very much were on guidance. And so loyalty finished the way we expected it to office partnership?
Yes, I think Barclays and we've got a number of initiatives in the pipeline there. We're very excited about the the quality of partnership and the commitment that they have, to jointly exploiting the market opportunities that are there. So we've got a very good relationship with Amex. We've had very strong engagement from Mastercard, for example, recently their CEO has been interested in the 3 or 4 times in the last 12 months. You might came to do business with us.
So this is an area where I think opportunity for the business. And people, that the likes of partners like Barclays, I know this, I can't name them all. We're talking to the moment. So I think these are quality partners that are completely aligned to our objectives in relation to this segment of the market. So this is an opportunity for us going forward.
Neil,
Credit Suisse. If I could ask 2 questions, maybe the first on short haul following on from some of the other questions. I guess, the Tenerife Hotel situation certainly brings to mind Easter is clearly fast approaching. I know it's difficult to guide and I'm not asking for guidance, but can you give us any kind of sense as to how bookings to the Canary Islands, for example, stopped, or have they just slowed down quite significantly at this point? And then more from a long haul perspective, clearly, we're all trying figure things out.
But one key structural difference versus SARs or even the global financial crisis for that matter is the joint ventures that you have with American JAL Guitara Airways. To what extent does that make this time quite different for you in terms of how you manage capacity and revenue and how much does do those help in reality?
Yes, on short haul, surprisingly, we haven't seen what you would have expected to see on January. In fact, we've monitored that one. That's been unusual. You know, the land very, very noticeable, both in terms of the, the number of people that have bookings to travel and then the number of people that turn up on the day to travel. So, you know, we, we've seen a, and this is one of the things we monitor, you know, the no show rate well as the booking rate.
Tenerife, we were surprised when we looked at this yesterday, we So I think we had 2 flights to Henry from Gatwick yesterday, both of them were full. So it's not a consistent pattern of, behavior And I think it probably differentiates by, you know, the customer segments as well. So these are things that, you know, we're monitoring. So I couldn't say it's exactly the same on all parts network because it's not, but what is very noticeable, Italy, you know, is a stand out in terms of the, the way demand has rolled. And as you would expect, that's led by Milan, for quickly followed by, I think altogether VA flies to about 5 seen Italian destinations, between city, Gatwick, and Heathrow.
But it's been led by, Milan but impacting on all of the airports in Italy, and the same is it's a similar pattern with the other airlines. And the joint venture, yeah, the joint venture does make a difference because, you know, clearly, being able to, talk to your partner coordinate activity is definitely an advantage in a situation like this where, capacity adjustments can be made in a collaborative way because we have approval to talk to one another, both in terms of pricing and capacity. We've not made any adjustments to the transatlantic network, at this stage nor have we made adjustments to the Middle East. But if we were to do that, we have the option of, discussing that with our partner. So I think it does make a difference.
And, it's definitely a help in an environment like this, to be able to, have those discussions with an immunized partner.
Thanks. Jamie Robotham from Deutsche Bank. 2 from me. 1 for Willie, 1 Steve. William, I think most major airlines that are in rude financial health like yourselves would be looking to make the most of a crisis.
And I just wondered what IAG can do to make the most of this particular crisis. You seem to allude to the fact that you won't be buying back shares despite the falling the share price, you might not be buying any of the many airlines that will be knocking on your door looking for financial help So what can you do? And then Steve, it's another one on cash this time on cash conversion. So 1,000,000,000 of cash on your levered free cash flow definition. Don't know if you can share what that number would look like if we knocked off the operating lease payments.
More importantly, I appreciate guidance goes out the window, certainly on EBITDA. But at the Capital Markets Day, that 1.4% was going to go to 2.1% on average over the next 3 years. Putting the EBITDA bit to one side, which was going to provide some of the growth. I think some more was going to come from pensions down, partly offset by CapEx up a bit. Is that still the direction of travels, you think, on cash conversion?
Putting the EBITDA starting point to one side? Thanks.
Look, I wouldn't like to be quoted as somebody who's trying to take advantage of situation where this is clearly tragic for a lot of people. So we need to be careful here. Our focus is on doing what's right for our business in the current, you know, just absolutely focusing on IAG. So what can we do in this environment to make ourselves more robust. We're not looking at, opportunities outside of that.
It's right now, we're focused on doing the right things to ensure that our position remains strong and if possible that we strengthen this. And we've learned from past experience, airlines that can go into crisis in a strong position. Don't always come out of it in a strong position, you know, because they've wasted their strength that they've gone through. They haven't taken the action. That they should have taken because of their strong position going in, we're not going to make that mistake.
You know, I look back to what happened in 2000 and 1 a number of airlines actually went into that crisis in a strong and healthy position. But sat there waiting for everybody else to fall over and just saw their own position deteriorate. We want to take measures to strengthen position. So we're looking at how we can make ourselves stronger. And then let's talk about the opportunities when everybody gets through this particular crisis and we can focus on that.
Well, I absolutely no doubt that, there are airlines out there that just can't survive this. And, I feel sorry for some of them others, I don't. Like, I kind of know sympathy for glycation B, in an environment like this. That's a business model that doesn't work, with shareholders that have suddenly coughed on that they bought a dog. And, you know, the idea that the British government pay them out in this environment, I think, is madness.
So, you know, I, I have no hesitation in saying that I don't see governments coming to the rescue of, weak airlines. They don't need to. There's plenty of airlines out there that are in a healthy position who will provide the capacity that's required.
In terms of guidance on cash, I'm not going to give you guidance on cash. I mean, if I could point you to 2 or 3 sort of signals of confidence, you know, we've we've announced the final dividend today. You've heard early say, you know, we're not looking to, not take the aircraft deliveries that we've got on the books and we're not looking to stop product investment where it's going to make a material difference to our NPS. So if you're looking for some sort of signals of confidence, I would point you to those 3 points, but I wouldn't get into more detail in terms of specific guidance on cash.
Malte from Commerzbank. Two questions from my side. First of all, do you see if this crisis was a little bit more into the summer. Is there any underserved regional anywhere where you could redeploy capacity where you don't fly at the moment or don't enough at the moment and just to safeguard the slots in Heathrow. Do you have to keep up a certain capacity to not lose them to competitors?
Because probably any airline would love to jump at the opportunity to steal some of your east first slot, then the final one would be or the second question would be a little bit this being the split business and leisure travel, I think I understood that you see significantly more impact on business demand in all cabins. Which I would also regard as normally at probably the higher yielding traffic. So do you see a significant hit on yields, or is there anything indicated Q1?
So, in terms of, redeploying capacity, I think there is some opportunity, but I wouldn't describe it as a lot of opportunity until we witness what else happens. So as I said, I think, over the coming weeks months, you're going to see a number of airlines disappear, which will provide us with opportunity. In terms of slots, there is discussion for an alleviation on the eightytwenty slot rule at an industry level. And I know there's been a dialogue between IATA and regulators around that. The timing of this, coincides with the change in season.
So we have capacity up to March and then we have capacity after March. So the slot issue is not a concern for us at the moment. We've lots of capability to adjust, within the Slock rules as they apply at the moment. But I suspect given that this is being experienced by everybody in the industry, which is different maybe to what we've seen previously, where it's impacted on some airlines more than others. I saw Easyjet comments this morning, for example, and I can only imagine that what we're seeing and what Easyjet is seeing is similar to what Ryanair is seeing and everybody else.
So I think this is a different environment than maybe what we've seen before. So slots, I don't see that as being a concern. And what I said about, the business channel. So as I said, it's not just premium. It's not a premium issue because business doesn't just travel in, in the premium cabinets.
And we look at it as a sales channel, so it impacts on both. It's not always the highest yield. Because as you know, in many cases, this is discounted. So, we're not going to give you any more detail because clearly we want to analyze this as we go forward. But again, we've experienced this previously.
So it's not something new that we've seen we saw this in 2001, we saw it in 2008. We've seen this, at other times as well. So we have a reasonable understanding as to how this impacts on, on yields and, on the booking patterns, So, other than that, as I said, we'll just wait to see how these trends develop over the next few weeks.
Thanks, Willie, Steve. Thanks for your questions for coming on today. We'll speak again on May 7th when we have our first quarter results.
So I can heckle from the back or something. But if I don't get the opportunity to say it to you personally, can I just thank you for the interaction I've had with you over the past 15 years or more and wish you all well? And, you know, hopefully I'll continue well. Will continue to watch the developments in the industry with interest, but I'm going to be around for the next 4 weeks, as I said. So, I'm not gone yet.
So it I think one of the funniest things that's happening is one of the newspapers has been on to us about writing my obituary. And they said, they want to get ahead, you know, they want to have it on file for me, you know, I'm leaving the industry. I'm not planning on leaving Vanner. So, but thank you very much, everybody, and