Good morning, everybody. I'm happy to welcome you to the Capital Market day of IAG. I'm happy to be with the three non-executive director with us, our Senior Independent Director, Alberto Terol, Javier Ferrán, and Marc Bolland. We are happy to be with the management here and sharing this important morning with you. We announced an interim dividend at 3Q19 result last week of EUR 0.145, which is exactly the same than a year ago, despite the slight fall in our net income due to the BA pilot strike and disruptions. This demonstrated the confidence of the Board, not only in the way in which the company is doing, but in the outcome of the company and the financial strength of our company.
Including this interim dividend that is payable in early December, we will have returned EUR 1.31 billion in cash to our shareholders along the year 2019. In total, we will have returned EUR 4 billion to the shareholders over the five-year between 2015 and 2019. Regarding the use of excess capital, the Board will routinely evaluate shareholder return in the context of growth and M&A opportunities. As far as our M&A is concerned, it has been a busy year. At the beginning of the year, we did announce it, that we discontinued our interest in Norwegian Air Shuttle, because at that point in time, we did consider the transaction was too risky. Last Monday, we were happy to announce our intention to acquire Air Europa, which is basically a local operator in Spain and Latin America. Luis Gallego, CEO of Iberia, is going to talk about it afterward.
As far as the Board of Directors is concerned, this year in our ongoing refreshment activity of the Board, we have appointed three new Board members, two non-executive, Margaret Ewing, which is bringing to the Board a very significant financial experience and having been partner and Vice Chairman of Deloitte for a while, and also transfer experience because she has been CFO of BAA, which was a former Heathrow company. Javier Ferrán has incorporated as well to our Board. Javier is bringing a very good experience in consumer goods customers and a very long experience, and he's bringing as well a very solid experience and background as a CEO and Chairman of big listed entities. Javier is currently the Chairman of Diageo. Last but not least, the incorporation of our Board of Steve Gunning as an Executive Director, replacing Enrique as the CFO of the company.
Most of you know Steve, and after today, everybody will know Steve very well. I hope that we will remember Steve quite promptly. On Brexit, we did inform that we have submitted remedial plans to our national airline regulators in Spain, in England, in Dublin, in Ireland, and in Austria, which basically are dealing with the requirement of having contingency plans well prepared for the post-Brexit situation. The assessment has been positive in the way that they all say that if we put in place the plans that we have presented, we will comply with the EU ownership and control requirement for post-Brexit. As far as the permitted maximum is concerned, we implemented it in the month of February. I realize, and we realize, the management and the Board and everybody that is not an ideal situation, and we continue to evaluate the way to address it.
The only thing I can assure right now is that the Board and the management is absolutely committed to removing the permitted maximum at the appropriate time. I hope you will enjoy today's presentation from the IAG leadership team. I think you will conclude at the end of this presentation that IAG is a unique, compelling investment case. I give the floor to Willie. Thank you for coming.
Thank you. Thank you, Antonio. Good morning, everyone. Thank you for joining us. Welcome back to those of you who've been with us here before. As Andrew said, the agenda today has been driven by the feedback that you have given us. The format is also as a result of the feedback that you've given us. We recognize that not all of the issues that you've asked us to deal with can be dealt with in terms of the formal presentations. We will have an opportunity at the end with plenty of time for you to ask questions on any of the issues that are covered or issues that may not have been covered that you would like us to address.
Before I hand over to Alistair, I just want to remind you a little bit about what it is IAG has done, what we're doing today, and then Alistair and the rest of the presentations will take you through what it is we're going to do going forward. We've talked for some time about the unique structure that we have within IAG, which enables us to focus on key areas to ensure that we are the most efficient airline group in the business. We've got the right people in the right places with the right portfolio of brands operating in the right demand segments, and we're able to ensure that we cover all of the opportunities that are available to us in the market.
Through this structure, we've been able to develop sustainable returns to drive transformation where transformation has been required, and to ensure that we reward and remunerate our shareholders. We intend to continue to do that going forward. Now you can see that that transformation has led us to deliver operating margins that are well in excess of what people believed was possible for especially legacy airlines in this industry. We believe that those margins are sustainable, and Steve will take you through the plans for the next few years, which will demonstrate that these margins will once again be achieved by the business. We're also delivering industry-leading returns on invested capital. As you know, this has been a real focus area of IAG. We believe that this is something that the industry has started to focus on.
I've often pointed to the change that I can date back to 2008, where you see more and more industry leaders focused on this issue and more and more industry leaders talking about the need to deliver real returns on invested capital. This is one of the real strengths of IAG, in that we can ensure that the capital that we assign to the operating companies within the business is done in the most efficient way. It drives healthy competition between the airlines in the group, and it ensures that all of our airlines are focused on sustainable investment that will generate returns in excess of our cost of capital. We've given you details there to enable you to compare our performance to other airlines using the methodology that IAG has adopted for the calculation of return on invested capital. We're doing this in very competitive hubs.
You look at the position that we have in our hubs relative to some of our major competitors. It's important to point out, if you take Madrid, for example, although we have 49%, about 2/3 of the capacity of Madrid Airport is not used today. There's plenty of scope for growth in that hub airport. Even in an airport where there are effectively no barriers to entry, we are performing very strongly. We believe that our model will enable us to continue to do that going forward. Now I've talked about the unique structure, and you've seen this chart many times before. The corporate parents with the airline operating companies, divided between the various segments that you can see there.
We've given you an idea as to where we believe Air Europa will sit as a value carrier within the group. Luis will talk to you about his ambition for the acquisition of Air Europa later on today. What do we do? We divide activities. One of the real advantages, and you've probably heard me say this before, is that because we at IAG at the center are not distracted by the daily operational issues that all of our airlines face, we have time to think long-term. We have time to think strategically about where the industry is going. We set the long-term vision for the group. We ensure that the portfolio is defined and that it's attractive, and that capital allocation is done on an efficient basis. I like this. We exert vertical and horizontal influence.
That can be pushing and pulling, kicking and thumping. Generally, it's done in a collaborative way to ensure that all of the operating companies are performing at their best. Where we don't see the performance meeting the standards that we would expect, we intervene. We're not passive, and that's an important point. We're not a holding company that passively watches and accepts the performance. We're, on a daily basis, interacting with the operating companies where we believe it's necessary to do so. They have all the time then to focus on a deep understanding of what their customers want and a deep understanding of what the competitors are doing in their segment of the market. They define the customer proposition for that targeted segment group. They have standalone P&L responsibility, and that clearly has discipline associated with it.
I think the really unique sense of IAG is that we can enable these operating companies to retain their individual identity and their culture, which we believe is very powerful. Where we see value in the brand, we can retain that brand, retain the culture associated with that brand, retain the culture associated with the people who support that brand, and that's what makes us unique relative to other groups. I say we're unique, but we recognize that there are some out there who want to copy us. Michael has made no secret of the fact that he believes our structure represents an opportunity. I think they will get there eventually. The difference is, however, Michael, I think, will struggle to take his hands off what Ryanair does and will therefore be involved.
I know from personal experience, when I transitioned from being the COO to the CEO at Aer Lingus, I had to stop dealing with the day-to-day operational issues that I had been dealing with. I know how difficult that transition is. I know the transition between me being the BA CEO to the IAG CEO was difficult. I've gone through these transitions, and I know how tough it is to let go the responsibilities that you had and hand them over to somebody else and trust in that person. I think Michael will struggle a little bit with that, but they may well get there. Lufthansa has said the same thing. To be fair to Carsten has been quite open about this. He loves running Lufthansa, the airline, and that permeates throughout the whole Lufthansa Group.
That's what separates the way we operate from the way they operate. We do have a unique structure. I think in time, people may well try to copy us. I think it will take time to do so because we're well ahead of them in having gone through those transitions. We're not static. We recognize that some of the things we did when we created IAG have worked extremely well. We also believe that there's value to be generated by changing some of the things. This says what we're going to do tomorrow. Tomorrow doesn't mean tomorrow, obviously. It means in the future. Just to give you an example, if I take loyalty, and you'll see a presentation from Drew. You can see today that it's pretty much a distinct opco focus.
The loyalty of the BA Exec Club is very much driven by BA. We believe there's real value to do that at a group level. To exploit all of the data that we have across the group in a way that we can't do on an individual opco basis. Drew will demonstrate the importance of IAG Loyalty and how that can be used to generate even further cash flow and profit for the business. In terms of talent, we spend a lot of time at IAG, and again, one of the advantages we have is that we have time to assess the talent within the business.
We spend quite a bit of time as a management committee going through the senior people within the business, understanding their performance, understanding how we can help them to improve, and understanding how well we're prepared for future succession planning within the business. We believe there's scope for us to do even more of that centrally. We're looking at improving and enhancing the activity that we do at the group. There's a lot of things that we're doing today that we do well but can be improved upon, and that clearly will enable us to unlock future value for the business. Finally, my team. Now, I think somebody was having a joke when they said refreshed, because if you look at the photographs there, I think the only person that looks refreshed is Lynne, and she had just come back from a week's holiday.
These photographs were taken during one of our management committee meetings. I think as we went through the day, you can see how refreshed people actually were. What is important is that of the 12 people there, only three of us were here at the beginning. That's myself, Chris Haynes, the General Counsel, and Julia Simpson, the Chief of Staff. Luis was the second CEO at Iberia. Javier, the second CEO at Vueling. Steve was the CEO at IAG Cargo before moving to BA CFO and now becoming the Group CFO. We've had a lot of change. Lynne, in fact, is the third Cargo CEO we've had since we started. Steve was number one, followed by Drew, and now by Lynne. We've had good rotation within the team. A lot of talent has come from within the organization, and indeed, we've brought talent from outside.
We've got John, who you'll see later on today, and Alistair, who's going to follow me. We've got great talent within this business. We've got great opportunity to exploit that talent. Where we see the need to bring talent in from outside, we're not going to be afraid to do that. We've got the right people, running the right businesses with the right brands, delivering the right customer proposition in the right demand segments, and it's supported by efficient, innovative, and professional support services with aligned businesses there to exploit additional value from the activities of the operating companies. Very well-positioned today, and going forward, we will be even better positioned. I'll hand over now to Alistair.
Thanks, Willie. Good morning, everyone. As Willie mentioned, I'm going to now build on what we've talked about in the unique structure. I'm going to take you through the strategic investment case for IAG, and that's built around three of our strategic priorities. Firstly, a portfolio of world-class brands. Secondly, growing leadership positions. Thirdly, leveraging our platform to create cost innovation and efficiency. Kicking that off, a portfolio of world-class brands. At the heart of the strategic investment case for IAG is understanding that we have customers at the center, at the forefront and the center of everything we are doing. As Willie mentioned before, we have a really deep and real-time understanding across the entire group of our customers' needs when we understand that customers can travel for very different reasons and they can be in different places and different demand segments.
We understand that those needs can be very different in those situations. We have a portfolio of brands that allow us to specifically focus on delivering those needs, really focusing in on what the customer wants and what the customer needs against each of those different demand segments. We recognize that customers move between these, but we believe, and we believe it's demonstrated in our results and will be continued to demonstrate as we go forward, that having brands focus on specific areas allows us to better address those needs rather than diluting that and trying to be everything to everyone. We recognize that we need to be leaders in this space. At the moment, there is some additional work that we need to do to get there.
As we think about these demand spaces across the horizontal axis here, and where we are positioned currently and where our aspirations are, we recognize we are on a journey. Leadership is incredibly important with this portfolio of brands that we have, the current portfolio and potentially adding to that portfolio with additional brands as we move forward. There's work to do. We're really encouraged, because what we've seen in the last couple of years and what we believe our plans are going to demonstrate to deliver as we move forward, is an ability to improve that Net Promoter Score. This is the customer's view of believing in and recommending IAG carriers. This is aggregated up at an IAG level. Back in 2017, from 2017 to 2019, 2024. Seeing continuous improvements over the last couple of years.
We're forecasting again, that as we move forward, we will continue to deliver improvements in each of these areas. That's really critical, having customer at the center of what we do, and that we drive these continuous improvements in Net Promoter Scores across our airlines. It's not just aggregated in that one Net Promoter Score. We're really encouraged because when you look across each of the elements of the customer journey, and this is again aggregated at an IAG level, when you look across each of those elements, we're seeing satisfaction improve in every one of those elements. This is basically a measure, just so you're clear, it's the top three scores in customer satisfaction on a score to 10, the percentage of customers that are scoring that in the top three categories.
We're seeing increases in customer satisfaction in every one of these areas, and we believe there's lots more to come. To dive a bit deeper and to focus in on one brand, particularly BA, again, looking at GBP 6.5 billion of investment in customer satisfaction. We've started that spend and we're continuing to spend that over the course of the business plan, over the next three to five years. This is really important. Again, here, we've illustrated exactly where we've gone and started some of these transformations, where we've started to invest this money in lounges, in aircraft refurbishment, and catering the soft product. Again, we can show demonstrated results from that investment.
We are really focused on making sure we understand what the customers want and what they need, and that we're taking action specifically in those areas to address those concerns so that we can be their airlines of choice as IAG. Particularly for BA, that is resulting in improved NPS in both cabins and in both long-haul and in short-haul. On this chart we're showing you across the top is short-haul non-premium and short-haul premium, and on the bottom long-haul non-premium and long-haul premium. In every one of those cabins, if you want to call it that way, and on both short-haul and on long-haul, we are seeing NPS improvements. We are really, really encouraged.
The actions that we have been taking and that we're planning to continue, will continue to deliver this improved customer satisfaction, continuing to strengthen our brands and enable us to have that really world-class leading performance of brands in our portfolio. I think I'll highlight again here on the bottom, in the bottom right, long-haul premium is the smallest improvement that we've seen to date. Again, we're encouraged because of what we've got coming. In this case, what we're seeing with the new aircraft and the new seats that we're bringing in this premium cabin, we're seeing really encouraging early signs from this. We will believe that although that's only a two-point improvement that we've seen in the long-haul premium cabin over the last couple of years, that there's a lot more to come from this space.
The early signs from the reviews that we're seeing and customers' feedback is that really we are going to be able to drive these improvements in this space as well. The second strategic priority that IAG has is growing our leadership positions. What's really, really encouraging is that our start point, I say start point, 10 years effectively into IAG, is that in each of our home cities, we have great leadership positions, in each of these home markets. The left-hand side is our view of leadership positions by revenue, and the right-hand side is looking at it by passengers. In each of these cities, London, Madrid, Barcelona, and Dublin, you can see that IAG has established strength in these leadership positions. Our choice of business model generating the revenue is allowing us to maintain those leadership positions.
Our focus on customers in the demand spaces that we're looking at is allowing us to continue to do that. We think and we believe that as we go forward, we can continue to strengthen these positions. We may be able to potentially add new home cities or new home markets through inorganic activities. Particularly in the markets that we're already in, we believe there's an opportunity to strengthen our leadership positions. That's an incredibly important part, that leadership element of IAG strategy. If we focus in a little bit on Europe for the moment and looking at the European market, actually over the last circa decade, back to 2008, we have seen considerable consolidation in this market. It's about a 20-point increase in what the top five airline groups accounted for since 2008.
IAG has played a really major role in driving some of that consolidation. What we believe is that it's not done yet. We believe there's still a significant amount more that needs to occur in this space, and IAG plans to be part of that consolidation activity. We believe that actually what we're seeing in the industry, particularly around credit cards, is going to drive some of that consolidation. What we're seeing here is the credit cards, as airlines get into positions of more distress, they're tightening those strings. They're restricting the access to that forward revenue. There's a couple of examples here on the screen that you can see of where that has come out and where it's been public. We think this has a really, really significant impact on working capital.
We estimate for a long-haul carrier, the forward revenue for a wide-body aircraft can be up to EUR 10 million on credit cards alone. This is cash that airlines need that is being restricted. As we see this dynamic shifting in the industry, we're seeing actually it's probably going to generate more and more opportunities for consolidation. It's going to see, and I think it's a major contributing factor in where you've seen Norwegian come out and go and ask its shareholders for more capital. They can only do that so many times. This is a key changing dynamic in the industry that we believe will continue to support the ability for further consolidation in this space.
Not only are we seeing the credit cards and the changing dynamic in that space, but we're seeing the ability for startups and the trend of startups and failures start to change. If you look back to 2000, we've now listed the number of startup airlines in a European context. You can see actually a pretty dramatic shift in the shrinking number of startups you're seeing each year come into this space. Also, if you look across this, and we've provided the analysis, around 70% of those startups fail. This is complex, it's hard, and we're seeing an increased rate of failures in this industry. It's not only startups that are failing. Actually, if you look at a recent set of failures in this space, you've got both well old established legacy airlines, as well as more recent startups struggling to survive in this space.
We believe that with our portfolio of brands and our strength as IAG, we can continue to play a key role in consolidating, particularly in Europe and potentially further afield. Having these leadership positions that we have in the markets provides us some resilience and positions us well for further consolidation as we move forward. The final strategic priority that I wanted to touch on that supports the IAG strategic investment case is around cost and efficiency in our platform. As we look at IAG's performance in this space over the last, call it 10 years, we believe we've shown and demonstrated that we are driving the industry in cost efficiency. The graphs on the chart in front of you show our non-fuel unit cost performance indexed back to 2010, and we've shown against a number of European and North American peers on this chart.
What we can demonstrate here really, really clearly is approximately 11% of cost driven out since 2010. The formation of IAG on an index basis and looking at that on a non-fuel unit cost basis. We believe we've shown that. I'd like to pick out a couple of points that, in particular for IAG, have enabled us to do that. Not only are we developing our portfolio of airlines, and by bringing leadership airlines in there, we are driving synergies at a cost level each time that we bring new airlines into our portfolio of IAG. In addition to that portfolio, we have a platform of services. We get synergies when we bring them together, but tapping them into the common platform that IAG has enables further cost improvements.
Fundamentally, and a point which Willie hit upon, we also enable each of our individual opcos to transform when necessary. Iberia is a classic example of this through Plan de Futuro and its Plan de Futuro 2, where it has shown that it can independently go and transform cost issues that it has within its business or that any of our other OpCos have within their businesses to get to the level of performance that we need to have. We believe at a Group level and at individual OpCos, this cost efficiency that we have shown and this discipline at structurally changing our cost basis really positions us well against our peer sets to be able to weather any particular cycle that the industry faces.
We've been on a long run of an upcycle, but we believe this cost discipline is one of the things that stands IAG out at being able to be resilient in any downturns that may come in the future. There are other things in this cost performance, like density, like other bits that impact how this happens. The combination of business models flow through into all of these sectors. When you actually, though, break that down and try and equalize it, again, we see each of our individual opcos on an equivalent seat basis having an incredibly competitive cost position versus their peer sets.
What we've delivered now, and this is all real reported data that we have gone back and calculated per equivalent seat kilometer as opposed to available seat kilometer, is that each of our OpCos are strongly positioned against their peer sets and are able to then go and execute their business model to generate the revenue leadership that we spoke about before. In addition to this cost, we are incredibly focused on innovation and digital. In 2019, Frost & Sullivan had run a report towards the tail end of 2018 and into 2019. 66 airline groups participating. IAG came out ranked number one in this report. Here on the screen, we've shown a subset of the airlines that participated in this report. It's an external validation of what we, at our core, believe we are driving for the industry, innovation and digital transformation.
We've spoken to you a number of times around the five key transformations that IAG is focused on. Shop Order, used to be called Shop Order Pay, now called Shop Order Settle, Data, Marketplaces, Automation, and Digital Mindset. Across each of those, we continue to be really encouraged by the early wins and the early value that we are generating. Across all of these spaces, we are seeing these not just proof of concepts, we're seeing these actually starting to be implemented and generating real value for our shareholders and for each of our businesses. I'm going to focus in a little bit on the Shop Order Settle and NDC to wrap this up on this last element of our sort of strategic priorities. NDC, we are incredibly strong supporters. We're on the IATA leadership airline group.
What I'm really-Proud and happy to say is that in fourth quarter of this year, we will be certified at the highest level from IATA of NDC Readiness. Certified for NDC@ Scale. We're going to be able to deal with complex bookings and interactions through NDC, and we're going to be able to deal with them at volume. That certification is coming and IAG, through British Airways and Iberia, is going to be at the forefront of driving NDC adoption. Over the last 12 months, we've seen and continue to be really encouraged by the adoption rate improvements of NDC in each of British Airways and Iberia. In British Airways, we've seen a three times increase in adoption of NDC bookings over the last 12 months. In Iberia, it's 7x .
We've already gone out there and been clear that we are going to continue to drive this. One of the things that we're going to do to support that is development of unique content via these digital channels and through NDC. In fourth quarter this year, we are going to be introducing more price points on our long haul. That is also going to include the North Atlantic. Three more price points being introduced in there through these channels only. We're also bringing in exclusive handbag only fares, and we see this as being one of the key elements, differentiating the content through these channels that is going to continue to drive the adoption in this space. We see this as exciting. We see ourselves as being ready to move forward here.
We're excited about the improvements that we're going to see over the coming years. We believe this puts us on a fast track to a low cost and efficient digital distribution. That's really, really critical as we move forward into the next business cycle. Our objectives in this space are threefold. They're really, really clear. We want to drive increased revenue through enhanced retailing capability. Owning that content and being able to use that through the NDC channels and digital channels will allow us to drive those revenue improvements. Critically, again, as I said, having customer at the core of what we do, we need to be able to improve the customer experience. Through these digital channels like NDC, we're going to be able to deal with disruption and better meet the customer needs.
Then finally, again, wrapped in with this cost efficiency element, we see NDC as being a key, key lever at helping drive efficiency and lower costs through our distribution channels. Bringing that together again, before I hand over to Willie to talk about sustainability. We see it as a really compelling strategic investment case for IAG. We're building on our unique structure across our three strategic priorities around portfolio of world-class brands, strong leaderships and growing leadership positions and their cost and efficiency and innovation. We believe we've got an incredible base to build from, we're excited, we hope you're excited about the opportunities that go forward to create value for our shareholders.
Thank you. Sustainability. I think one of the biggest challenges we face in the industry today. A challenge actually faced by all industries, particularly industries that are carbon intensive, but probably even more so for aviation, because in the short and medium term, we don't see an alternative to fossil-based fuels, and that's why it's important for us. For every ton of kerosene we use, we generate 3.15 tons of CO2. Until we can see a sustainable alternative to that, it's clear that our gross emissions will grow as gross emissions of CO2 in other industries decline, and therefore the percentage of CO2 that the industry is responsible for will increase. In an environment where people are focused more and more on the impacts of climate change, that clearly is an area that we have to address.
Individually and collectively at IAG, we're absolutely committed to sustainability. Our primary focus will be on the impact that our industry has on climate change. Obviously there are other areas like noise, waste management, supply chain that we will focus on. It's not just about climate change, but climate change is clearly one of the major issues that people are focused on today. We've got a great track record. Often this surprises people. BA has been one of the leaders in relation to environmental targeting and efficiency for many, many years. In fact, when I joined BA in 2005, we were already participating voluntarily in the U.K. Emissions Trading Scheme. BA had to argue with the government to be allowed to be included in that.
If you remember, the Kyoto Protocol excluded international aviation, actually it allowed for domestic aviation to be included. On that basis, BA argued that they should be allowed to participate. The reason they wanted to participate is they wanted to get experience of operating with an emissions trading scheme. That has been very powerful in enabling us to convince others that this is the right way forward. We have been at the forefront of the industry's drive to improve the environmental performance. We are committed to continuing to take a leadership role in relation to that. What are we doing? Well, we're embedding sustainability into the operating company's business plans, into the IAG activities. That may sound a bit odd because as I said earlier, we've been doing this for some time.
I think the reality of it is our focus on sustainability and the environment, while real and important, almost sat outside of the day-to-day commercial activities of the airline. What we see today is that there's often a clear conflict between some of the things we do that make commercial and financial sense, and the things we should be doing from an environmental point of view. More and more, we want to ensure that we test everything we do financially that is sustainable against environmental sustainability. This is causing us actually to challenge some of the traditional things that we've done. There's a great example of this. Earlier this year, I think June/ July of this year, EUROCONTROL produced a paper. This is from the Aviation Intelligence Unit think paper. You can get it online. The subject was Fuel Tankering; Economic Benefits and Environmental Impacts.
I'll just read you some of the conclusions because I think it highlights one of the challenges we face as an industry. As aviation is a highly competitive market, airlines must do everything possible to minimize their operating costs. In particular, tools have been developed for identifying the value of performing fuel tankering, a practice whereby an aircraft carries more fuel than required for its flight in order to save costs. However, fuel tankering is not without environmental consequences, as the more fuel the aircraft carries, the more fuel it burns, and the more CO2 it emits. Based on the elements of information available to this study, it was estimated that fuel tankering could result in a net saving of EUR 265 million per year for the airlines.
However, it would generate 286,000 additional tons of fuel burnt and 901,000 tons of CO2 emissions at an ECAC level per year within Europe. This represents a substantial economic benefit and a significant environmental impact. This is a classic dilemma that we face. That for many years, driven by ensuring financial performance, we've done things that may not be sustainable on an environmental front. I understand actually Panorama are going to do a program at some stage, which I'm sure will be fascinating and great, and we'll have darkened rooms and actors speaking. The reality of it is, this is in the public domain. It's not a secret. Of that 900,000 extra tons of CO2, we generate about 18,000 tons of that, about 2%. We undertake tankering. We undertake tankering for a number of reasons.
In some cases, we do it for operational reasons where fuel uplift at some of the airports we go to is sporadic, and therefore we have to ensure that we have sufficient fuel for the return journey. We do it in some cases for operational reasons to enable the turnaround of the aircraft in line with the time that's available. In many cases, we do it for cost, because the cost differential between airports can be very significant. The cost differential, according to this study, between the price of fuel at Heathrow and the price of fuel at Glasgow, it's 25% more expensive at Glasgow. We have done, and we continue to do tankering today. We're challenging that. We're asking ourselves whether this is sustainable, and whether we should be pricing in the environmental impact of that.
Some of the things that made absolute sense for us in the past may not on environmental grounds make sense. Indeed, some of the routes that we fly today make commercial sense but may not make environmental sense. This is going to be more of a challenge. Therefore, we've got to embed these issues into the way we think about doing our business. You can see what we're doing. We are looking at incentives, incentivizing management to ensure that we're not incentivizing the wrong behavior. Because clearly, the financial saving would have incentivized us to do fuel tankering. Maybe that's the wrong thing to do and the wrong issue to incentivize. We want to make sure that we have our incentives aligned to the right activities to ensure financial sustainability, but also to ensure environmental sustainability.
We're going to be completely open about what it is we do more and more. We want to disclose more of our activities, and more of it will ensure that this is measured and audited by leaders in the industry. At a Board level, we have the appropriate governance. The Board is fully engaged in relation to this. The Board is absolutely aligned to the thinking of the management committee, and the management committee aligned to what the Board wants us to do in relation to this area. We're embedded in the business. We'll measure it, we'll monitor it, we'll audit it, and we'll ensure at all stages that we have the right governance to ensure that we are doing the right things. Why is this important? I do not dispute the scientific evidence that CO2 is causing climate change.
It's leading to warming, and warming is leading to more extreme activities as it comes to climate. The Paris Accord, as you know, set out an objective to limit warming below 2%, but it also had an aspiration to limit it to 1.5 degrees. Sorry, not percent, 1.5 degrees. More and more in recent years, people have begun to say that that has now not got to be an aspiration, that's got to be the goal. That's got to be what it is we do. As a result, we're seeing countries adopt Net Zero by 2050. We believe that that is appropriate. We don't dispute the science. We think the science in this area is absolutely clear. Some of the science in relation to the additional impact of aviation is still immature and further study needs to be done in relation to that.
When it comes to CO2, I think it's absolutely clear. Why is this important from an aviation point of view? You might think, actually, it's not a big deal because if you look at the distribution of man-made CO2 by various segments, transport is responsible for 22%, and within that, aviation is responsible for 11%. Road transport is 74%. When you look at aviation in a global context, we're just over 2%. For many years, the industry said, "Don't worry about us. We're only a tiny proportion of this. We're only 2%, so focus on other areas." Within that 2%, you can see actually that 60% of it is generated through international activities and 40% domestic. Of that 40%, 3/4 of that is by five countries, U.S., China, India, Russia, and Brazil. Those five countries account for 3/4 of the domestic CO2 generated.
U.S. alone is 17%. Over 17% of CO2 produced by the aviation industry is produced in the U.S. domestic market. This is one of the problems that we face with the international accord that we have, CORSIA, because CORSIA only addresses the international aviation. It excludes this domestic aviation. Quite honestly, it was one of the reasons why the U.S. airline industry was able to sign up to CORSIA, because it excludes a lot of their activity. That's why I've been very clear publicly in saying that I think CORSIA is a good first step, but it needs to be developed upon, if the industry is to demonstrate that it has the credentials to be allowed to continue to grow into the future. This highlights part of the problem.
If you look in 2005, the aviation industry generated about 640 million tons of CO2. It was 2.3% of total global CO2. In 2018, that was 918 million tons. You can see globally, we're seeing CO2 increase, but we're still around 2%, 2.3%-2.4%. The problem is when we forecast what would happen in 2050, this is just focused on CO2, as other industries start to improve their performance and decarbonize, we still see our growth increasing. We would go from about 918 million tons in 2018 to 1.8 billion tons-1.9 billion tons of CO2 in 2050, that's why people are focused on us. In percentage terms, you could argue we're not a big problem. The problem is in absolute terms, we're going to continue to grow as most other industries can actually reduce.
As economic activity continues to grow, a lot of industries have been able to disconnect their growth from their CO2 performance. We still have a short to medium-term requirement for fossil fuels. There is a lot that'll happen between now and then, and I'll cover some of those now as we go through the action plan. You can see at a global level, we've had the Kyoto Protocol, you've had the U.K. Climate Change Act , you've seen the Paris Accord. Globally, a lot of focus on this area. What have we been doing? What have we been faced? Well, we faced additional taxes, the introduction of air passenger duty, which was introduced as an environmental tax. Expanded doubles in 2006 because of environmental reasons.
Increased further until the government finally acknowledged because they couldn't continue to argue that they were doing this for environmental reasons, but it was introduced an environmental tax. EU ETS was being introduced. It came into effect in 2013-2020, the current phase, we get about 34 million tons of allowances or 34 million allowances. It represents about 45% of the activity within the intra-European area. We're paying for about 55% of our emissions today through the EU ETS scheme. In 2020, that will start reducing by 2.2% or from 2021, 2.2% per annum, the amount of free allowances we get. More and more of our activity intra-Europe is going to be covered by the emissions trading scheme. The emissions trading scheme is only flights within the EU. Originally designed to deal with flights into and out of the EU, including international traffic.
Because of opposition by other global economies to what the EU was doing, the EU decided to pause that while ICAO looked at introducing a global scheme. In 2016, ICAO introduced what they call CORSIA, Carbon Offsetting and Reduction Scheme for International Aviation. This is a scheme that will apply from 2020, initially on a voluntary basis, but a lot of countries have signed up, I think covering about 78%-80% of international global emissions. There is a lot of activity going on to ensure that this is efficient. At the same time, what we see is more and more countries looking at taxation. Now, in our opinion, and I'm happy to debate this with anybody, taxation does nothing to improve environmental performance. I think there's lots of evidence to demonstrate that with what's happened with road transport.
We believe that the emissions trading scheme and carbon offsetting scheme is the right way forward because the money that goes into those schemes actually goes to improve environmental performance. Taxation, the money that goes into the government coffers, not a penny of that goes to improving environmental performance. Now, we've argued for these taxes to be hypothecated. There's no government that's willing to do that. If you're serious about improving the environmental performance, then the emissions trading schemes and carbon offsetting schemes are the right way to do it, because the money goes directly to improving the environmental performance of industries. More and more, as I said, these taxes are beginning to appear, and we believe that this is something that excites governments. We have to demonstrate that we're serious about doing this.
This was one of the reasons why we have changed our approach to our commitments. Now, U.K. Aviation signed up to a pathway that aligns to the global aviation scheme. You can see here, so reference to 2010. What's interesting about this is the 2005 figures were actually higher than the 2010. In 2005, from memory, the U.K. Aviation was responsible for about 37.5 million tons of CO2. That fell in 2010 to 34. That was clearly as a result of the global financial crisis, where international activity, and indeed some domestic aviation activity, declined through that period. Using 2010 as a reference, you can see what happens in U.K. Aviation if we do nothing. Just looking at the forecast demand, our emissions as an industry in the U.K. would significantly increase. Completely unsustainable. Nobody is going to allow that to happen. What are we doing?
Well, there is a lot going on. You can see we're reducing the amounts of CO2 through more efficient operations, more efficient ATC routings, and there's a lot of activity going in behind that. We're improving as a result of aircraft that have come into service, replacement aircraft that will come into service in the future. The development of sustainable biofuels, this is an area BA has been very focused on. When we look at sustainable biofuels, we're focused on waste to liquid. The reason for that is we can't have a biofuel that's using lands that otherwise would have been used for the production of food. To be truly sustainable, you have to be clear in terms of the feedstock that you're using and to ensure that you're not competing for other sources.
Sustainable biofuels will be part of the solution in the longer term. You can see the impact. It's not going to be enough to offset the increase in CO2. To achieve what was the global target of a 50% reduction in net emissions, we have to have some form of a global market-based measure. What we're seeing here is that a continuation of the EU ETS and CORSIA. Originally, it was expected that once CORSIA came into play in 2020, the EU ETS would be replaced. We don't believe that that will happen. In fact, I think there's a strong argument for the EU ETS scheme to continue beyond 2020, aligned with CORSIA as well. The industry had said we can improve our performance through a number of measures.
We can pursue carbon neutral growth from 2020 through activities that we're undertaking internally, but also because we recognize that we're going to have to pay our way, and therefore provide financial incentive to other industries to decarbonize, and that the net benefit of that for the world will be what you see here in the dotted blue line. Our plan is slightly different, and this is something that we've developed recently. You can see here, if we were to do nothing, our gross emissions in 2020, which would be about our latest forecast, 31 million tons of CO2. In 2018, the most recent reported figures for IAG was 29.9 million tons of CO2 gross, 27 million tons net, the difference being our participation in the EU ETS. If we did nothing, our gross emissions would continue to grow, and that's unacceptable. That's unacceptable to us.
The people working for us in the business don't want to be associated with this. This isn't just about addressing concerns externally, this is about addressing concerns internally as well. We want people to be proud to work for us as an industry. We want them to be absolutely clear that we are committed to playing our part. Now, if I look at our emissions, about 4% is from domestic activity, 20% in Europe, 76% of it is from international activity. Interestingly, you can see here that most of the industry's emissions, about 85% of the industry's emissions, are from flights in excess of 1,500 km where there is no alternative. A lot of the debate today is about taking an alternative to aviation. In many cases, there is no alternative. In our case, 78% of our emissions are from flights in excess of 1,500 km.
It's important to point out, if you look at Iberia, for example, the average stage length of the Iberia domestic network is about 860 km. A flight from Madrid to Tenerife, which is part of that, is about 1,800 km. Now, there isn't really an alternative to get from Madrid to Tenerife or Madrid to Las Palmas other than to fly. There is a ship. I'm not going to be taking it, we've got to be realistic here. Yes, there are some of the activities we're engaged in today where there is an alternative available and a more sustainable form of transport available. As I said at the beginning, that's leading us to question some of the activities that we were doing. A lot of it is activity-driven, where there isn't an alternative, sensible or sustainable alternative available.
You can see the industry targets were to achieve a 50% reduction in net emissions by 2050. Following discussions with the Board in recent months, we've decided that it's time for us to demonstrate our leadership again and to recognize that the debates that led to a target of 50% reduction, which was back in 2009, 2010, is no longer relevant today, and that things have moved on. We committed in the last month to a target of net zero emissions by 2050. That's a big change. We have a pathway to get there. Not all of it is completely aligned because I think we're going to have to improve on some of these targets. We're looking at and achieving 1.7% efficiency on an annual basis up to 2020.
In 2020, our grams of CO2 per passenger kilometer, which is the standard industry measure, we're targeting 87. In 2018, it was 91.5. We're looking by 2025 to have that at 80. In fact, I think we can get it below 80 with some of the things we're looking at today. We'll be looking to improve that target. These are the targets we have today to achieve 22 million tons net emissions by 2030. Realistically, I think we're going to have to target something in the range of 17- 18 to have us on a clear path to getting to net zero by 2050. We have a pathway. We know what it is we're going to do to achieve the targets that we've set, and we're going to challenge ourselves to improve on these targets and to accelerate the performance of the business.
How are we going to do that? Well, we're going to do it through a number of measures. New aircraft, 142 new aircraft by 2023. I think the later charts, I know somebody's going to add it up. I think we have 142, but it's close enough. 143. The A350. Recently, we took a group of journalists to demonstrate the new BA Club product, which you can see outside the door for those of you who haven't seen it, on a flight to Toronto. On the day of the flight, on the A350-1000 that we operated that day, which is configured with 331 seats, which is as you know, a replacement aircraft for our Boeing 747-400s, which has up to 337 seats. It's a like for like replacement.
The difference in fuel burn for the A350 compared to the 747, because I got our team to run two flight plans. Same payload, same flight plan, same conditions, exactly the same external factors. The only difference here is the performance of one aircraft against the other. The A350 was 38% more efficient. It burnt 38% less fuel and therefore generated 38% less CO2, like for like. That's a huge improvement. We're investing in new aircraft, and these new aircraft have significant fuel and environmental benefits over the aircraft that they're replacing. Now, as you know, some people argue that we should have accelerated the replacement of the 747s a number of years ago. We did look at that. Part of the problem was we didn't have an aircraft available to us that was a like for like replacement.
We have replaced some of them with the 777-300ER, a fantastic aircraft. In our configuration, like for like, we have about 293 seats. That would give us a saving of about 24%. It is significant. We took a decision then not to invest all of our effort and money and capital into a very good aircraft when there was an even better aircraft coming along. I think absolutely the right decision, because to achieve the targets that we believe are important, getting the benefits from new aircraft like the A350-1000s and the Boeing 777 that we'll take later on. These are significantly better than the aircraft that they will replace. That's going to be part of the solution. We're investing in fuel efficiency software. All the time looking to improve the operational performance.
We're looking at innovation. You'll see outside there's a couple of stands there with activities that we're investing in, including carbon capture with Mosaic. I think a fascinating opportunity for us. We're looking at biofuels, sustainable biofuels. We're looking at carbon capture. We will see the production of biofuels from 2024, 40 million L a year. Very excited about that. Waste to liquid. It represents about a 70% reduction in CO2 over the life cycle of that. We factor in everything. We factor in the CO2 that's generated by taking the feedstock to the plant, the CO2 that will be generated in the plant. It's looking at every aspect of the production of this to compare CO2 from a ton of kerosene today to CO2 from a ton of this biofuel in the future. About a 70% reduction.
That's really exciting, that can be scaled up, but there is a limit to how much that can do in the timeframe that we're talking about. As we've said, there has to be some form of financial incentive, or in our case, the financial costs, because we're going to have to invest and we're going to have to spend money to improve our performance. Equally, we're going to have to give money through these schemes to incentivize other industries that do have more readily available alternative sources of energy. You can see the pathway that we've identified to get us to net zero. 39% of us will have come through, if you like, the existing technology with aircraft changes. 18% by 2050, we believe, will come from the sustainable biofuels that we're investing in.
The balance, 43%, will come through efficient offsetting and emissions trading schemes, which will include voluntary offset and carbon capture technology. As I said, we have a credible pathway to get there. We recognize that we're going to have to spend money. We recognize that this is money that the industry and cost that the industry is going to face. We look at it as a blended cost of fuel going forward. Therefore, the more we can do to reduce our fuel burn, the more we can do to become more efficient, the better it's going to be financially and environmentally. As we said at the beginning, this event is being completely offset. 40 tons of carbon offset.
We looked at how everybody was getting here, the mode of transport being used, the CO2 being produced by the everything to see how much CO2 that this event was likely to produce. You can see where I'm going. This is probably going to be the last Capital Markets Day . I talked about that the last time. We have offset all of this, and we've done it through Ecosphere, who are here today as well. What you're going to see then going forward is we're going to continue to lead the industry. We were instrumental in the industry agreeing to the 50% net reduction by 2050. I led the debate within IATA. We got the rest of the industry to sign up to that. We're the first to invest in what we believe is a truly sustainable biofuel, waste to liquid.
We're the first airline group in the world to commit to net zero by 2050. In future, that important chart that you saw at the beginning, which sets out the investment case, you're going to see it's going to be underpinned by environmental sustainability. It's not just that we're focused on our financial performance and doing everything that is right to make sure that we have a financially sustainable business. We're going to do everything and integrate all of our thinking, all of our planning, all of our activity to ensure that all of this is underpinned by an environmental, sustainable business in the future. Thank you.
Okay. Thank you, Willie. I'm not quite sure how to follow that, really. My name is John Gibbs. I'm the new CIO. I'm going to spend the next 30 min talking about Digital and IT. First part I'm going to just talk about is some reflection on since I've joined. Second one is about the creation of IAG Tech, which Willie's already highlighted as one of the platforms of IAG, and we'll talk a little bit about technology. I think, really, I'm going to start off by just talking a little bit about before I joined. I think we recognize we've had stability issues, some cybersecurity challenges. We took immediate actions, and I think, actually, if you look at some of the actions we've taken, that presents a really good foundation for the business. For example, UPS and diesel generators in our existing data centers.
I think also we've continued to focus on stability and cyber. Some of those produced real foundations for us going forward. For example, we were creating new data centers, data center migration projects, actually, we're investing in cloud-based services. As I look forward, I think actually we've got a good foundation, which includes, of course, cybersecurity investments, also we've been doing things around operational stability. For example, we've actually been doing things like replacing legacy infrastructure, evergreening, patch updates, et cetera. A really good foundation when I joined. I think the second thing I would say is actually putting the role of the CIO on the management committee is really important and recognizes the importance of Digital and IT to the future of the business. That's given me really good insight into the business.
For example, I participated in the two-day strategy session recently where the management committee and the Board actually thought about the future of the group. Actually, that allows me to, as the digital leader, to get ahead of the game and of course, actually bring in technologies ahead of when the business needs it. I think the second thing actually is, I think organizations struggle with the difference between Digital and IT. Quite often there's a gap between the two organizations, quite often an overlap, and even sometimes competition. Bringing them together actually allows us to leverage the power of both Digital and IT as an organization and to really accelerate. Of course, that will build on the fact that we're already the leading airline group within the digital sphere.
Actually, I'd like to acknowledge also some great support from the Board, and also the management committee and the operating companies that I've joined. I've been really pleased with how people have allowed me to understand how the airline industry works, but also actually to understand the individual airlines within it. A good example is recently I spent two days at Aer Lingus on Thursday and Friday last week. That gave me great insight into, for example, Hangar 6 and the maintenance and repair operation that existed there. I think the final point that I'll talk about since I joined is actually, I believe we've got the right level of resources, and I think we've got the right level of investment. It's just about honing exactly what it is we're going to be doing. What have I been doing?
I've been looking at the business, understanding the challenges that face the organization. I've actually been spending a lot of work with our existing programs, re-energizing them. Actually, I've introduced a new brand, IAG Tech, which you'll see a video of in a second. Going forward, what I'm actually looking at is actually how do we do our digital IT capabilities much more effectively? Looking at a strategy and enterprise architecture, and I'll talk about those in a minute. A new way of working and a greater transparency. What I would like to do now is move into introducing IAG Tech. Okay. Just to kind of highlight a few of the things that we talked about in there. If the thing will work. We brought together our digital and IT organizations together.
The beauty of that is actually we've got over 1,000 experts within the organization currently working around the world. As in the video said, 500 people already working on product and service development. Of course, we have a world-class IT supply chain as well. The key thing here is bringing those two things together and focusing on a single vision, which is around technology excellence. You saw in the video what that looks like. Of course, we're already recognized as market leaders in digital. Actually, from an external perspective, actually, I think that's what we want to become, which is industry leaders. Of course, that's about challenging the norm and looking at creative ways of using digital and technology.
We also want to make sure that we have a great customer service journey. I'll talk about that in a second. Also about the way that we operate in the most efficient and effective manner. Finally, about empowering our employees and being trusted by our stakeholders. As I look forward, we decided that we needed a refreshed and common purpose. You'll see that again in the video around share the value of business performance and delighting the customers, et cetera. I think the importance here, though, is actually what we wanted to do is ensure that we bring digital and IT across the group and the power of our combined teams. You can see here we came up with a logo, Powered by IAG Tech. The organizational structure we put in the new organizational structure in place. CIO obviously sitting within the management committee.
Actually, we're organizing ourselves in a more traditional way around research, which looks at the five-year vision. Technology obviously looking in the short to medium term. Development and programs looking at how we build new capability, operations, and in cybersecurity. Willie talked about a hybrid model. Actually, in the case of digital and IT, that's actually how we do this. We have by extent of the capability that we leverage across the platforms, across all of our brands, and that's where we get real synergies around our processes, our applications, our data, and our infrastructure. We recognize that the businesses need the opportunity to invest in capability that's unique to themselves. That's the point at which we have OpCo CDIOs who bring the same capability but from an organization perspective.
Of course, we're supported by GBS in terms of our HR finance and purchasing systems. Of course, we need to have good governance and control over what we're doing, and that starts off with the Board. I present regularly to the Board on issues like cybersecurity and our investment in technology. As part of the management committee, we get a weekly opportunity to discuss the progress we're making, our plans, and more importantly, that gives me insight into where the businesses are heading. As an example, most recently, we were looking at the operational plans for the businesses over the next three to five years, and I can immediately see how digital and IT can actually help to transform the business, and especially on things like the sustainability agenda.
On the left-hand side, what we're trying to do is get much more intimate with the businesses in terms of the technology that they need. Therefore, we have governance at an OpCo exec board level, which allows us to ensure that our strategies are aligned to the business strategies and actually our technology strategy is influencing the business strategy and plans as well. We also, at the same time, look at our product project, operations, infrastructure, and cybersecurity and risk challenges. On the right-hand side, this is where I lead the governance of the digital and IT capability and ensure actually that we've got a regular drumbeat of governance. That, of course, starts with our strategy and enterprise architecture.
For those of you who are not aware of the term, obviously, the strategy is about our three to five-year vision of digital and IT across the business, linked tightly with the business plans. The enterprise architecture actually defines our processes, our applications, our data, and our technology. You define that as they are today, you define how they look in the future, and you define that roadmap. This is really the opportunity to get real synergies across the group. For example, common ways of working around customer engineering, overhaul, et cetera. Looking at the business, I can see some massive opportunities there. As I said earlier, the foundations that we've got from the activities that the team have been doing before I joined really provide that platform.
An example of that being the hybrid cloud project, which has got the Amazon Web Services as part of it. In terms of portfolio and project reviews, this is actually checking on our project status and program status. Actually, as we've been doing that, we've been able to accelerate some of the projects and programs we've already got. In week three, we get into our operational performance, so stability. This is a real focus on the stability of our systems, availability of our systems, and ensuring that we're learning from any problems and outages we have, doing root cause analysis and continually driving improvements. It's that actually allows us to invest in things like the replacement of legacy systems and also doing evergreening and patching and that side of things.
The final week we do is actually look at cyber, our strategy, our plans. We'll be using the NIST framework. I'll talk a little bit about that in a minute. A regular review of cyber issues and every single incident that we have and every single challenge we have, we do a very detailed root cause analysis. We're looking continually to improve what we're doing. Of course, we work very closely with our audit and risk colleagues to ensure that any of the risks that we've got within the digital and IT environment gets escalated up through the organization. For the most serious of those, we obviously go to the Board and the audit committee there and review the status of everything we're doing.
The other thing we're doing is actually refreshing our operational governance, and this is really how we manage our suppliers on a day-to-day basis. I've already talked about 1,000 digital professionals inside our organization, but the world-class supply chain, we really need to get that world-class supply chain working efficiently and effectively for us. This is where actually we start to use the strategic relationships that I've got with our vendors like Microsoft and Cindy, the MD of Microsoft in the U.K. Then at an operational level, making sure they're delivering what we're contracted to deliver. I think, as I said, we're bringing 1,000 people together across the organization under a common identity of IAG Tech. Actually, the development of those people is really important.
We're introducing the concept of guilds, which some of you might have heard of, but effectively, a guild is where you bring common practitioners together and you look at the way they work, you look at the tools they've got and the skills they've got, and you take best practice from across the business and you deploy it out to the rest of the business. This chart really basically says we'll have a number of different guilds and then different areas of the organization where the best practice exists. We identify that best practice, we then roll it out with increasing levels of maturity across the business. That allows us to track the maturity, increasing maturity of our digital and IT organizations. Other things we're doing, we're refreshing our professional development framework, we're linking that into things like the British Computer Society.
We're also linking that into the equivalent of British Computer Society in our other markets. We just announced the launch of our new IAG Tech Apprenticeship and Graduate Programme, and that's going to build on the existing programs that we're running for British Airways and other partners. Coming back to looking for best practice. Vueling, as an example, in Spain, have an academy, and that academy allows us to assess individuals, and also to develop their skills, and we're going to be rolling that out much more widely. I think actually, in terms of the bottom, the normal stuff around coaching and mentoring of what good looks like. Actually starting to get rotation of people through the organization, not just within the IAG Tech teams, but between IAG Tech and the rest of the organization. Also with our suppliers as well.
I think the final thing, hopefully the video talked a little bit to this, actually I'm trying to create an exciting place to work, because actually technology is an exciting place to work. IAG as a group is a really exciting place to work as well. What we're trying to do is get that to mirror and map together. Actually also to attract talent is more than just about offering good jobs nowadays. We've got to introduce things that excite them beyond the job. Actually getting involved in activities such as STEM, where we encourage young adults into technology and charities and things like that is another way of attracting talent. The next bit of the presentation is really just exploring a little bit about how technology is being used in the Group already. We thought about Hangar 51 already.
Launched in 2016, its fourth iteration. We've just gone through this year with seven categories. Willie mentioned sustainability was one of those. 474 applicants this year from 52 different countries all coming together with their ideas. We did our Pitch Day on the 3rd of September, which was my second day joining the organization. An amazing event, very inspirational. From that, on the day, we chose 11 finalists. These are people we want to work with. As an example, there are two within the sustainability area that we're working with. Interesting, another two that we decided to go straight to collaboration with. Four finalists actually came out of the sustainability area.
Where they are now is in a 10-week collaboration process, which actually at the end of January will allow us to look at the demonstration and proof of concept of that technology. Sometimes people turn around and say, "Well, Hangar 51, great ideas, but do they actually get into production?" The answer is absolutely. Here are some of the proof of concepts we're already doing. What I'm going to do now is just take you through some of the journeys, and there you will see some examples. Sorry. Anyway, if I look at the journey, and you'll have to forgive me because I'm new to the airline industry and new to IAG.
What I've come up with here is planning a booking as the start, and then as people are at home starting to prepare for their travel, preparing to travel, check-in lounge and bookings, and boarding, sorry. onboarding in flight, arrivals at your destination, and then finally carrying out the purpose of your trip, and then rewarding loyalty, which Drew will talk about in a minute. What you can see is new technologies throughout this journey. If I talk about voice as an example, a much more intuitive, interactive way of engaging with the organization. We already have Alexa and Google Assistant applications that allow people to get access to their boarding cards, flight information, and actually do check-ins. If people aren't comfortable yet with Alexa, as an example, and you saw Alexa on the video, you can use your smart TV apps.
This is where Iberia have got an application that allows you to do all sorts of things about your journey. I think what's interesting is you can quite often see the frustration of turning up at an airport with a bag that becomes oversized. Then of course you're rushing around to try to get stuff moved around between your bags, et cetera. We've got an augmented reality application on your iPhone which allows you to look at your bag. It will put an augmented reality size around it, and you then know whether your bag is oversized or not, whether it needs to be checked in or not. I think that's great. That'll really help people who really are not sure about what they can and can't take on b oard. As we go into the check-in area, I think we're really leading the market around biometrics.
There's an example again with Iberia facial recognition technology throughout the journey, allowing you to quickly and easily check in, drop your bags, and board onto the flight. Back to sustainability around digital newspapers. Obviously we're trying to get away from printed press. Now instead of actually taking printed press on board a plane, all the associated fuel and costs associated with that, actually you can download digital press before you Board and view the electronic versions. Once you're on board, of course we've got our Wi-Fi service, .air, but also an e-commerce platform that allows us to provide ancillary services. Then as you get towards the end of your trip, then actually we've got Mindsay conversational AI, where you're able to ask your iPhone questions about the destination that you're going to, for example, where are the taxis and things like that.
This again is a really intuitive way of finding out information about the destination that you're at. Of course, that allows us to build on that platform going forward. Looking at the next bit of the journey. This is around our operation. Again, we've got planning control on the left, passenger service and airport, baggage services, ramp management, departure flight, in-flight, sorry, arrivals and aircraft maintenance. Again, you can see some amazing technologies being deployed across that. For example, for those of you who know blockchain, sharing reliable real-time information with our fuel management people. In terms of tugs, these are the devices that you see, big white tractors, where people actually connect to the plane and push the plane back.
Actually, that takes a couple of months of training and is expensive, and of course, there's an environmental issue with the diesels, et cetera. We replaced that with an electric remote control tug. Takes two weeks to train, and actually is much better for the environment. You saw the automated dolly in the video. That's now into the second phase of piloting. This vehicle is actually moving around other vehicles in the airport. It's around fuel trucks, catering, buses, et cetera. A real autonomous vehicle example. Automated jetties. This allows us to speed up the boarding process and also minimize the damage to planes as a result of overzealous airport operators hitting the side of the plane. As we get to the top, robotics in terms of baggage handling. Not just rotation, but loading the bags onto the planes.
Actually in the middle, using a combination of video and AI to spot for foreign objects on the ramp so that we actually avoid damage to the plane as it arrives and as it departs. As you get into the middle, we're looking at people's workflows. Removing and simplifying the process for the teams around the aircraft. Within the operations area, providing real-time information about where the planes are in the airport, what we're doing with them, and how they're doing in the flight. I think the thing that I find most interesting is the one that you saw on the video, which is around machine vision and AI. What we're using here is a video to look at what's going on on the ramp, and then artificial intelligence to identify the tasks and how long each task takes.
What that's allowing us to do is to fine-tune the activity that goes on around it. More importantly, it allows us to then come back here and say, if we could just speed this up with automatic technology, remote autonomous technology, then actually we can really make that operation much more efficient, and also safer for the people who work there. Of course, what we're trying to do is capture data all the way through this. Then we use advanced analytics to actually predict problems with the planes. We can then use predictive maintenance on the planes to avoid the planes being grounded or taking too long to depart. The final thing up on the top is, as I said about going into the hangar with Aer Lingus and having a look at repair and all the maintenance.
We're actually using drone technology to actually spot the aircraft damage. Of course, what that does is avoid you needing to put up scaffolding around the plane or have people operating at height, so a much more safer inspection process. I think the other thing we've done, of course, with this sort of technology is try to look at it across the journey as a whole. You saw how cargo were using that to do inventory management as part of the video. It's not just about our customer journey, which is where we want to be world-class, and it's not just about having the most efficient, effective operation, it's also about supporting and empowering our employees. Here I've just given a few examples of what we're doing with our individual groups of employees.
On the left-hand side, providing tools that give us much greater insight into our customer, and allowing us to produce personalized services, especially as you get towards the cabin crew. If you board a plane, as an example with BA, if you're a regular flyer or you've returned recently, then actually we can talk about your previous journey. We can also talk about your preferences, for example, around meals and stuff like that. Of course, bringing all that information together, then selling ancillary services and actually tailoring the offerings to our customer. The other benefit of that, of course, is we then get into the loyalty program, and actually we then use the data that we're getting from there as well.
In terms of commercial teams, operations teams, a lot of this is about machine learning, artificial intelligence, and bringing the capability of the technology to help the business plan a much more efficient and effective operation. In terms of, for example, choosing what are the routes that we want to fly, and actually how do we maximize the revenue on those routes. Through to ensuring that we've got the best mix of aircraft, crew, and pilots to deliver that service. It's in this area, as an example, that we're replacing quite a lot of legacy systems with one system and actually bringing in an integrated solution. In terms of engineering, another example of doing the right thing with enterprise architecture. We're looking at the processes that each of the airlines use for their maintenance repair activity.
We're looking at the different products they use and how the data is being used, and actually saying that there is an opportunity to have a single process, single system, and a single set of data across all of the opcos. That actually will give us real insight and actually able to raise everybody up to the highest level, and then everybody learn from each other. We're looking at how we do the repair and overhaul capabilities there. Again, as I said earlier about building on the foundations that have already been put in place. We've already done quite a bit around both finance and HR common systems and modernizing the systems in that environment as well.
We talked as an example in the opening slides about how data is being used, and this is just really a case study using Vueling as an example over the last two years to show how we've improved our maturity around the use of data. What Vueling have done is identified the key areas that they want to analyze and use data to improve their business, for example, in commercial customer and corporate. On the next chart, on the right-hand side, they then basically said the increasing levels of maturity from intuitive type of reporting, so effectively things like dashboards and that sort of stuff. All the way through to prescriptive type of analytics, which actually help you make the right decisions and has the most advanced forms of AI and machine learning in there.
You can see in 2017, generally a low level of maturity, but some level of usage. Just in two years, the level of maturity has moved dramatically within that business. You can see the net impact is we've gone from nine dashboards to 93. We've got over 3,000 users of data on a daily basis. To enable that, what we've been doing is investing in data scientists. We've moved from 20 data scientists to 77, and of course, we've taken partnerships with Google, Gartner, and other people. It just gives you a bit of a sense of growing maturity within the business around the use of data insights and actually starting to use prescriptive analytics to drive the business. That story is being repeated across each of our operating companies.
Just in terms of becoming trusted again, actually I think there are two areas that we're investing heavily in. One is around cybersecurity, and I talked about the NIST framework. The NIST framework is actually a U.S. framework for cybersecurity, which talks about how do you identify, protect, detect, respond, and recover from cybersecurity incidents. We're following that framework, and we're also following the U.K. government's Board advice and guidance as a framework as well, and investing heavily in each of these five categories. I've already talked about business continuity. I mentioned the fact we were investing in UPS and generators in existing data centers. Of course, we're also investing in new data centers, and we're also investing in data migration and hybrid cloud projects. Again, great foundations for moving forward.
Actually, we also talked about we want to be the best at what we do. We've already talked about leading in the digital space as per the independent study. What we want to do is actually be the best not just in digital, but also in terms of the IT internal delivery as well. We came up with these five things that we value, which you saw in the video. Within each of these areas, we're driving improvement programs from being innovative, not just externally using Hangar 51, but innovative in exactly how we do things in every way of working. In terms of being empowered, we're talking about refreshing the culture. Today, as we've done this presentation, my leadership team has been out doing the same to the 1,000 internal IT professionals and digital professionals. That's a really exciting thing.
We've already created a real buzz around digital and IT. That's really important because we need to be attracting great talent into the organization. Therefore, there needs to be a buzz around IAG Tech. In terms of our process and governance, actually, we've got some great governance. We need to simplify it and really empower our employees so that actually they can find the right ways of working and become much more efficient and effective at delivering technology. We're also investing in the tools for the digital and IT communities. We've already got some great tools on the environment. We're also introducing things like ServiceNow to allow us to deliver better service to our employees and be much more responsive to incidents. For me, one of the most important things I can do is actually drive the professionalism of the organization up.
I've talked about the professional development framework, and I've talked about alignment with British Computer Society and those sorts of things. Actually here, what we want to be doing is recruiting new talent into the organization at all levels. We've got some exciting individuals joining the organization over the next few weeks and months. Similarly, actually, it's about getting the academy. For me, the academy isn't just about developing IAG Tech capability, it's actually about creating a digital first mindset across the whole of the organization. That's really important if we want to become a technology-driven organization. I think in terms of transparency, for me, this is actually about transparency into what's really going on in the estate.
We're putting real time monitoring across the environment so we can actually see and understand the problems and prevent outages rather than actually respond to outages. What you'll see as a result of that is an increasing level of stability in our systems, and that includes, of course, modernizing those systems. The final thing is actually not about agile frameworks and agile methodologies, it's actually about agility as a whole. The whole of the IAG Tech community becoming much more agile in the way they work. That includes moving to agile spaces. Again, I talk about best practice, but Vueling's got some great examples of how you create agile workspaces. We're going to continue to roll those out across the organization. It's also about training ourselves in new ways of working, like the DevSecOps model.
We've already got 500 professionals operating in a DevOps model. This is really the next stage of that journey, the introduction of security end-to-end teams who can deliver products and services really quickly. If you think about Shop Order Settle, that's really important as we go forward with those transformation journeys. My penultimate slide really is basically, I've shown you some aspects of digital and IT, but actually there's an awful lot more we can do and are going to be doing. The new vision and enterprise architecture will be completed in quarter one, 2020. By the end of that, we will have a really good view of how digital and IT, and technology as a whole, will look across the IAG group over the next three to five years.
That includes, of course, the opportunities, as I said earlier, about where process, application, data, and infrastructure synergies can exist. That will allow us to then actually look at our investments and make sure that the investments we're doing are the right investments. The initial look that I've had is they look right. This is about fine-tuning the investments we're making as opposed to massive changes. I think there's thousands of areas across the business where digital and IT can actually really help the business. Actually, depending on how you look at it, we can either drive those through shareholder value, accelerating business performance, delighting our customers, enabling employees, or protecting the business. The portfolio management process we're introducing will ensure we get the optimum blend of that, because all of those things are equally important.
As we go forward, we'll be using much more of a robust portfolio management process to choose the right investments to maximize the returns. In terms of our plans, some of the stuff that you've seen, I've already talked about through the journeys, there's lots of other stuff. We talked about NDC in the presentation earlier, we've done a lot more around global loyalty platforms, which I'm sure Drew will mention in a minute. We've got a group HR platform that's currently rolling out revenue management investments, and also disruption management and core capabilities like that. We're also massively investing in our infrastructure as well. Windows 10 is a really good example. I think we're quite well advanced in our Windows 10 rollout, Office 365, and movement to Teams as a collaboration environment. Again, the foundations are there.
This is really just about accelerating deployment of that. My final slide is actually just to kind of summarize those three areas. I think the first thing is we recognize the challenges that we've had around digital and IT. I think we took the right actions at that time. Actually, we then subsequently built the right foundational projects going forward. Again, I've talked about those. I think that's a really positive position to start with. The introduction of myself on the management committee recognizes the importance of digital and IT to the organization going forward. That really allows us to leverage the capabilities that we've got in both of those teams. As I said earlier, by bringing them together, we've eliminated the gaps, removed the overlaps, and actually stopped the competition that quite often exists within companies between digital and IT teams.
That's been really well received by the teams. I think we do have a really clear journey. That journey has already been started. As I've thought about the foundations, I think those are the right things. What we're actually looking at is, how do we build on top of that? I think the first thing is, we do have the right level of funding. I'm not looking for more funding. I'm not looking for more resources. This is actually just about fine-tuning where we deploy those resources and how we use the investment funds. Portfolio management is a key part of that. I'm hoping that actually you're really excited by IAG Tech. I certainly am. I think we came up with a great brand there. We involved our IT function and digital function in coming up with that name.
Actually the color of the green, for me, it actually links into the sustainability agenda that we've talked about, because that's a topic that I'm really passionate about. With that, we've renewed our vision, and I'm really focusing on our common purpose as an organization. We've come up with, I think, five values, which I think will really accelerate the delivery of digital and IT across the environment. I think the new structure will help bring clarity to people who work inside IAG Tech and those people who engage with us to deliver new capabilities. As I said, I think we're investing in the right foundations. Certainly, we've selected the right strategic tools. For example, Amazon Web Services, one of the market leading cloud providers there, and we've put over the top of their services, cybersecurity layers, which actually will protect us going forward.
I think we've got a really innovative team in Hangar 51. By bringing that team together with the rest of the digital and IT teams, we'll be able to really accelerate how we take the Hangar 51 ideas through into the rest of the business. I think the final point for me is actually, and it's an advertising plea, I think, which is actually there's never been a more exciting time to be part of IAG Tech. Thank you.
Thank you, John. Thanks very much, John. Good morning, everybody. My name is Drew Crawley. I think I know some of you. For those of you who don't know me, I'm the CEO of Avios. Why am I going to be talking about IAG Loyalty today? Well, when I arrived at Avios a couple of years ago, the role of Avios and the P&L that Avios has is simply to sell Avios to third parties and make margin and drive cash into the business. I quickly realized that to do that, the value of the currency is actually not determined in an area which I'm responsible for. That led me to think that a loyalty approach would be a better approach because the value of the currency is established inside the frequent flyer programs of the airlines.
The frequent flyer programs of the airlines are made better by using the data that is available in those airlines, and the technology that we use to allow customers to work with us in a seamless fashion is also a part of that. IAG Loyalty isn't just about how we monetize the currency. It's about how we drive share of wallet in the operating companies and the airlines, using data really cleverly, making the journey for those customers seamless, and then being able to go out with a currency which has huge value and sell that onto third parties who can enrich our programs and drive cash into our business. What have I been doing over the last couple of years? The first thing is changing that operating model. That was the first job I undertook.
The second area that we wanted to look at was how can we create a technology platform that makes what we want to do to customers easier to deliver? In addition to that, how can we create a technology platform that allows third parties to integrate effectively with us? We've got over 900 collection partners. 100 plus of those are big partners who have been integrated into our ecosystem for a number of years. They use old technology. All of the integrations are bespoke, and they have batch processing techniques for giving us data. It's a legacy set of partner integrations that we have. If we're to grow our business, we need to be out there and have technology that allows customers, third-party collection partners, to seamlessly integrate into our business.
We spent a lot of time and money on developing a Global Loyalty Platform that is fit for today and fit for growing our business and extending that collection partnership. The third area that we've been focusing on is that all the while we've been doing all this internal stuff, it was important to continue to improve the programs in the airlines. We've been making incremental changes, and I'm going to cover some of those off throughout this presentation. The fourth area is important because for us in IAG, we believe if you are issuing a currency to loyalty customers to drive loyalty, it's important that they're able to use that currency. The concept a few years ago, in some airlines, may have been, well, let's issue a currency that's not that easy to use and then make money on the breakage.
That is still a part of all loyalty companies' models, but for us, the real value in loyalty is engaging customers and driving share of wallet through the airlines. To do that, you shouldn't issue them with a currency they can't use. Utility is important, and ubiquity, where they can collect and redeem those points, is important, too, and that's a big focus on what we're doing at Avios. Growing our partnerships on the back of that, as I've explained, will be a lot easier when we get great programs, use data effectively, and have a great tech platform to integrate new partners. Finally, to do all that, we had to change quite a bit internally in terms of the management team.
All of my management team is new, and we've made changes throughout the whole of Avios to enable us to deliver what I'm going to be talking to you about today. This is the schematic of what we've changed. If you look at the Avios rewards currency all the way around to B2B partner management, that's what Avios used to do. Now we added these three things on the right, so program design, how we can make programs more modern, how we can meet the needs of customers' engagement better by making those programs more flexible and giving more choice to customers. How we use the data that those customers throw off. There is a ton of data that gives us huge amounts of insights that we should be using in program design, and in the way that we're improving the way we interact with our customers.
Finally, digital services. I think the biggest area of improvement that we can make, and we're making progress on this, but there's still some way to go. It's being able to interact with customers in a seamless fashion. The customer digital journey that we have in order for people to use their Avios can be improved. If you think about the modern tech companies, the Amazons of this world, you make two or three presses of the thumb, and you've got something on its way to you. It's not that easy to engage with Avios through the programs today. That's a key area, and we've set up this digital services area to enable us to do that more seamlessly. As the center of excellence for loyalty in IAG, we also think it's important to understand what's going on in the outside world.
We've put some themes that we found in the loyalty market up on this slide here. I'll just pull out a few of them. Program design, what we're seeing is huge trends in personalization of flexibility of programs. Having a static program probably doesn't do it these days. What we do know is that if you take away some of the milestones within the programs that people are targeting for, customers get upset. In any new design going forward, we're not going to go completely opaque. We're going to have some transparency so that customers know what they're targeting for, but we're also going to have more personalization and dynamism. I'll pull out payments and loyalty converging.
As cash usage shrinks and card usage goes up, the opportunity for new products and services, coupled with the fintech and open banking revolution that we're seeing in Europe, throws off huge amounts of data opportunities and huge amounts of opportunities for us to work with and be integral to payment solutions. I'll come on to speak about that a bit later. Going around, obviously, we need to be on the devices that customers are on, and we also need to keep customers' data safe and give them control over the accesses that we have to it. Top right, we've seen airlines spin out frequent flyer programs and the currencies and then bring them back in. We never thought that was a great idea.
We think being integrated and close to the airlines is the thing, and that's what will drive more engagement in customers and higher value and share of wallet to the airlines. A quick canter through something that you probably know already. These are the schemes where the Avios currency passed. BA and Iberia, relatively mature programs that we're modernizing over the course of the next few years. AerClub and Vueling Club, relatively new and growing in membership on a daily basis. One of the observations about Vueling Club, people were saying, "Well, is loyalty appropriate for the low-cost segment because they just buy on price, don't they?" I think that might have been what Javier thought as well at one point, until I showed him that actually top 10 routes in Vueling, 40% of the customers who fly on those are members of the Vueling Club.
That gives Javier two things. It means he doesn't have to go out and acquire those customers, he's saving money by not having to acquire those customers. They come back more often, and he drives higher share of wallet in that 40% on his top 10 routes. Probably more interesting and more importantly is the number of customers who come and fly on Vueling from the other airlines, using their Avios to redeem on Vueling. That is a nice revenue stream for Javier now, and I'm sure he's terribly grateful to his other colleagues in Iberia in particular. The basic ingredients, I don't need to go through that actually in the interest of time. Here are the number of customers that we're dealing with. For comp purposes, we use the number on the left.
This is a number that you'll see from the hotel companies and other airlines. It's basically what we define as the three-year active. These are the people who are in the program and haven't expired. On the right-hand side here, this is the interesting one. These are the super engaged customers. These are customers who are doing something within a year. They're either collecting Avios or redeeming Avios with one of our partners, and they're the people who we are really keen on growing, getting maximum engagement from these customers. This number is important, but the 9 million is more important. To broaden the scope of our programs, being part of non- obviously gives our customers a better choice and portfolio of network to fly, to earn, and burn their Avios on. That's what we've got at the top.
We've also got a selection of partners, collection partners, where customers can add to their Avios balances by doing what they do in their daily lives with brands that they love. Finally, on the bottom, we have access to the vast majority of brands that any customer would want to collect Avios on through our eStore portal. A shout-out to Avios Hotels. Those of you who aren't familiar with it, that's a white label on the Expedia platform, which allows us to give 15 Avios per pound spent when you're buying hotels at competitive rates that you'd get elsewhere. It's a stunning product that we need to market more aggressively. Tell your friends about it. Why loyalty matters to IAG. This is just a little insight into some of the Avios numbers, and I'll come on to the broader loyalty play in a minute.
What I like about this is it shows that we've got a decent growth outlook over the next three years. The trajectory looks good. We've got great issuance and good redemption. This supports the fact that we want customers to use the Avios that we're putting out there. Obviously, the issuance is growing a bit faster than the redemption because the issuance, you have to issue for people to redeem. That will catch up over time. We're going to get to issuing about 150 billion Avios by 2022, of which 110 billion we'll be redeeming in that same year. Why is that important? These metrics are two of the metrics we use to determine whether a program is healthy or not. This looks like healthy growth from our perspective for our programs. Also importantly, from an Avios P&L perspective, it's rather interesting.
The Avios P&L has been growing strongly over the past few years, around about 10%, and that we see continuing to grow over the period, and it has 20% operating margin with very little capital requirement. The most important thing, because the accounting is relatively complex on the P&L side, but the most important thing is the cash it throws off. Now, this is not financial alchemy. This is not us taking cash from the airlines and exposing it on this chart. This is cash that's come in externally, and it's net cash. We've taken off the cost of the redemptions that our customers undertake outside the IAG system, and also the cost of the overhead from Avios.
This is the net cash, and you can see by 2022, look, the annual cash will have grown 50% compared to this year, and a good CAGR on that as well. That really is the interesting point about the Avios P&L. Getting back to loyalty. These are the areas where we like to intervene, using data to ensure that we are making this cycle go as fast as we possibly can. People fly on any number of our airlines, and we enroll them into the program. Once we enroll them into the program, we thank them for flying by issuing them with Avios.
We turn their head with another intervention, which says, "If you enjoy collecting Avios, and here are the reasons why you ought to enjoy collecting Avios, why don't you think about one of our non- air partners? We've got plenty to choose from." Generally, at this point, people pick up one of the credit card co-brands that we have. They receive those Avios from that co-brand partner, and then they've got a balance to use to redeem. At the point of redemption, that is when the engagement level goes up another level. To get this spinning is critically important for us to drive our loyalty business hard. This is one of the reasons why.
On the left-hand side, for those of you who are familiar, this is the entry level of the British Airways program, but it's the same in all of the programs. For a customer that is not in the program, they generate this amount of value. Once they're in the program at entry level, the flying margin that we can attribute from this, three times that of a customer who isn't in the program. Then when we turn their head and get them interested in collecting outside IAG, they become five times more valuable. These same customers, when they make a redemption, even if they're not collecting elsewhere, they become five times more valuable as well. You can see the reason why we want to get that cycle spinning. The way I look at this slide is as a world of opportunity.
33% of our journeys are the percentage of customers who are members of our programs. I think that we can get that to 50%. If you think about what the hotels do, that's generally around 50%-60%. Some of the retailers' programs target 70%+. For us, I think 50% is a stretching target, and that's what we should be aiming for. On our top 10 routes across IAG, the penetration's a bit bigger, 38%, but still room to grow. On the right-hand side, it just gives you the fact that the loyalty customers generate higher yielding fares or are buying higher yielding fares. A good reason to do it. Now, this is the bit about the external cash coming in. This number has moved. A few years ago, 47% of the Avios issued were from third parties outside the IAG network.
We've got over the 50% mark. We're going to continue to grow this through the 930 partners that we have. The vast majority of these Avios come through the financial services area where people are collecting on spend. GBP 40 billion worth of spend associated with the customers in our programs. That's equivalent to 220 per min. The beauty of it is that business comes back to IAG on our airplanes. 89 billion Avios are spent every year, broadly on travel, broadly on IAG airlines, which is 11 million reward flights a year. A few years ago, that was 6 million. The reward seats per hour was around about 600 million, sorry, 600 per hr. What's changed that is that we have allowed customers to use their Avios to discount commercial fares.
Previous to that, they were available on inventory that was allocated by the revenue management systems. There were guaranteed amounts of inventory, and then it was dynamically added and taken away according to the RevMan demand forecasts. Now what we have here is a product which means that Avios can be used on every single fare across the whole of the IAG network, which means there is never any time when customers cannot use their currency. That's what's driven 22% growth in reward seats since 2016. This is an example of how that works out, and this is a flight to Edinburgh that we took in 2016. It happened to have 15 reward seats that were available. Add the Pay with Avios, the ability to discount using Avios, and you open up and 33% more customers end up being able to use their currency.
In fact, that looks like the schematic doesn't quite match up with the 33%, so we'll change the schematic. Right. This is the tech that I've been talking about. The fundamental, the foundation is where you hold the points because that is where you integrate and build out all of the products and services for customers. We've been adopting a new platform called the Global Loyalty Platform. Aer Lingus and Vueling are already on it, and the plans are to put BA and Iberia into it. What this will do is it will give us the foundation to improve the customer proposition across all the programs. To do things like when a BA customer is flying on Vueling, they will be able to use their BA Avios points to pay for food on Vueling. They can't do that today.
This will enable a bunch of things which we think are right and the customers want to be delivered. On top of that, we've built a microservices layer with APIs, and that's the modern way that companies connect with each other. The APIs provide services that customers can integrate easily. When we go out and sign up a new third party, or indeed replace the existing technology of current third parties, we'll be able to integrate much more cheaply and much more efficiently and much more quickly. Typically, an integration used to take between six and 12 months and cost us a decent sum of money. We're aiming for our integrations with new partners to take between five and eight weeks using these API platforms and services. We can also build our own products on the back of these APIs.
These are examples of products that we've built. The one in the middle, you may be familiar with. If you're not, I would encourage you to download it. There's a BA Rewards app. That's the place to go if you want to collect and redeem your Avios. It's got stunning offers on there. You can earn stupid amounts of Avios for doing what you would normally be doing, but doing it through that app, and it will rewarding through that. On the right-hand side is what we think we need to be doing if we're to be perceived as a modern tech data company, which is we've got a developer platform.
That enables developers in other companies to come and play in the sandboxes that we've created here and look about how they might develop their own product propositions for their customers using our currency, understanding that they're developing that product through the tech that already exists. It's not live, but when they decide that they like what they're doing, and they see the impact that can have, then they come to us, and we do the commercials. That's how modern companies work, and that's what we need to be doing. Data. We've put all the customer data onto an intelligent customer platform, onto which we apply artificial intelligence. This gives us the opportunity to do a number of things. We can model out any changes to any of the programs and really predict how that will impact customers.
We're able to look at optimizing the algorithms for the best price at the right time for the right occasion. We won't be sending customers redemptions which cost 100,000 Avios if their balance is only 70,000. These are the algorithms will enable us to tailor effectively the offers that we're giving to our customers. We're going to be able to put the customer in control of their personalization and be transparent about AI logic. On the top, we can, again, tailor offers using that data, which are unique to that customer going forward. Here are a couple of examples of that.
If you've used our eStore, which is the portal on which we have all these collection opportunities, we're able to take the data of how you've behaved and interacted with the brands on that eStore and predict the brands that you might want to interact with going forwards. We're actually using the Netflix algorithm, the recommendation algorithm that Netflix use, which is open source and available to everyone. We've got a 92% accuracy with customers when we send them this. Secondly, emails that we send Iberia customers to get them into the non-air partner ecosystem, using the data to tailor what we offer them has seen a 34% uplift in collection on those non-air partners. It does work, this stuff. In addition to that, we've been adding choice for our customers.
Our nirvana is that any IAG product or service on any IAG platform, you are able to earn and spend Avios on. We're about 80% of the way towards that journey. Aer Lingus this year, we launched Pay with Avios. We've added seats and baggage to a number of the airlines. Upgrades on flights are obvious. We've been trialing upgrades on British Airways at the airport. Customers have wanted to use their Avios to upgrade at the airport for a while now. We had a trial, which we're looking to extend, and we're going to do that in Iberia as well. Lots of things going on to make IAG collect and spend Avios any which way you want to on all of our products and services. Then we've added more partners to meet more customer needs on different demand occasions.
Budget is an addition to our car hire portfolio, which is maybe appropriate to one of the leading customers, Airbnb, for our younger audiences as well, and so on and so forth. We have also been experimenting with pricing and looking at what customers don't like about how they interact on redemptions. One of the biggest insights was that they prefer to use less cash when they are coming up to make a reward flight. Our introductory blue ribbon offering on short-haul is GBP 35 and 8,000 Avios for a return trip. We recently tested GBP 1 and 15,000 Avios across 100 destinations. That now is going to be our stock standard offering because it was super popular. As you can see, 65% of customers chose that. That one was available. We are going to make that available as well. We are not going to take that away.
Customers will have choice and be able to use many more Avios and only GBP 1. It booked a tremendous amount of seats over a very short period of time with a 17% increase in booking. We're doing things like this all the time. This is, once we've tested and learned it, we embed them and make them formal as part of our overall offering. This enables us to do this. This is an example of what we could do. If you go to market, and you have a proposition which says you only have to expend GBP 0.50 for a flight, as long as you've got 7,500 Avios. If you want to add a seat, you can spend a bit more. If you want to pay for food on board, you can spend a bit more. The total cost would be this.
I think that is interesting because if you are a family of four and you want to go to Amsterdam, this is still available. This was quoted on the 25th of October, I just checked on my phone before I stood up. You can still buy this. If you are not keen on that, you can buy this. This one goes from Heathrow on British Airways. This one goes from Gatwick on a low-cost carrier. This one is going to cost you, what is it? GBP 325.88. This one for your family is GBP 2 and 34,900 Avios. I like this one. There are still eight seats available at this price on this flight. I suggest you get booking. Finally, to enrich all of our programs, and indeed, to drive that cash flow that I presented earlier, growing our collection of partnerships outside IAG.
We've organized along the lines of three verticals. The first is financial services, which is the engine room, really, with plenty of opportunity I'm going to talk about in a minute. The second is retail. The real purpose of retail isn't to drive massive profitability, but it's to drive massive visibility. On a day-to-day basis, we want Avios and the brands of IAG in front of customers, because infrequent flyers don't come across Avios or some of our airline brands as often. Getting a day-to-day visibility of Avios and the programs is the job of retail. On the right-hand side, we add this for relevance because we think if you want to buy a flight, you might want to buy a hotel as well or a car hire. These are the areas that we've organized around.
Importantly, financial services is the land of biggest opportunity, I think. On the left-hand side, we've got the standard co-brand cards. These are a staple of most of the big frequent flyer programs across the world, and these are very successful. They work brilliantly for customers. Customers love them. The NPS of customers who hold a card is higher than the NPS of customers who don't. They work brilliantly for us. We've just resigned with Chase. We did a great deal with an improved proposition for customers with Chase, and we're just promoting that in the U.S. now. AmEx has been around, and a very long-standing relationship, which works well for us. We've got headroom for growth here. The penetration of these co-brand cards across our base is around about 19%-20%.
I think there's a lot of headroom for growth here, and it's good growth. That's one area of focus, improving in that area. The second area that we're looking at is whole of bank. To understand what we mean by this, it's becoming a much more competitive area. In Europe, in particular with open banking, you have the neobanks on the right-hand side of this chart, nibbling at the heels of the large banks in the U.K. and across Europe. We think there's an opportunity to embed and either replace their existing loyalty programs or add to those loyalty programs across the whole of the banking portfolio. You'd get rewarded for switching a current account. You'd get rewarded for putting your salary into that current account. You get rewarded for setting up direct debits and so on and so forth.
Once you've got that current account nailed, then you can incentivize customers to renew their mortgage with you. What we know is that the cost of acquisition of customers in some of these areas is huge. There's a lot of margin available for us to go and collaborate with these partners and ensure that they're saving money by not having to go and acquire new customers, at the same time as us enriching our offer for our customers. Whole of bank is interesting. Current account, mortgages, wealth management, and so on. SME is a great market. It's a growing market. It's one of the most robust markets that we deal with. Even back in the financial crisis, this was the strongest growing market.
We think having a card for the SME market to which they can add their Avios to their personal Avios, that's a delightful proposition for small business owners. We've just launched this. If you live in London, you may have seen some of the advertising. We're pushing it really hard, and it's gone down really well. On the right-hand side, I think there's a huge opportunity here for new forms of payment. There are lots of products that I can think of. I'm not going to divulge too many of them, but if you think about account-to-account payments, that is almost zero cost to the merchant, which gives you room to create products and services that you can sell on top of that. I think it's an opportunity for the IAG airlines as well to look at account to account and push that.
I think most interestingly, there's an option for us to add loyalty and data products and services on top because there's a fair amount of margin in between what they pay today with the classic rails of Mastercard and Visa. There will be plenty of examples of that springing open. We're also looking to launch a prepaid offering. We think there's a space in the market. If you look at the growth of cards, credit cards are growing, but debit cards are growing about three times faster than credit cards at the moment. That's a bit of the market that we're interested in. The Monzos and the Starlings and the N26s and so forth, they all started off as prepaid. They managed to generate millions of customers. They don't make money. We know how to make money.
Indeed on that note, I think probably all of the neobanks have been knocking on our door in the last three to four months because I think they're looking at how they can differentiate themselves from the pack. There are active discussions going on the right-hand side. There are active discussions going on here I'd love to be able to tell you about, but there are big banks in the U.K. and Spain, which we'll probably talk to you about next year. Very exciting conversations and a world of opportunity. Looking forward, I'm pretty sure this is my last slide. We're going to do a lot of what I've been talking about, we're going to continue to do. The bit in the middle, I think, which is interesting, is data and tech. We need to reframe Avios as a data and tech company that knows about loyalty.
We're on that journey. We've recruited the right capabilities. We've got the right foundations that we're putting in place. Importantly, what that will do when we're there, it will also give us optionality of how we manage our frequent flyer programs across IAG. It will give us optionality to decide if we want a single program across the whole portfolio. We will have that choice. Much like the hotels, the Marriott Bonvoy and the Hilton Honors and so forth, they've turned their loyalty propositions into a platform.
I think that should be an area of opportunity that we should be exploring going forward. We need to get the foundations in place, but we're not far away from that. I think all in all, a very exciting time for loyalty. Thank you for listening.
Thanks. Right. We now have the second part of the day, with kicking off with a presentation from Steve Gunning, our CFO, on the financial investment case.
Thank you. I'll just let a few people get seated. Okay, I think we'll start. Good morning. Hope you had a lot of coffee. I think we're into slide 112 or something more already, and I think we've got another 40 slides to go just for me. Then Luis is going to give you some light relief. Financial investment case. You've already seen this slide up, and Willie and Alistair spoke to it. It is a genuine way that we look at our business. When we've been going through the business planning process this time around, it's been with a bit of a different mindset to the one that we've had last two or three years. There is no two ways about it that demand has softened. You've seen it, and I'll touch on it in a few moments.
We have been trimming capacity as a consequence of that. This time around, as we've been doing the business plan, it's been very much with a different context that says we need to be more cautious, and we need to see how to adapt the business in these softer environments. The way I've been looking at it is like this. IAG has built a very strong core, and I'll take you through some of the reasons I think we have built a very strong core as a business. We're not complacent. We continue to make changes to it and develop it and strengthen it, and I'll take you through some of those.
At the same time, we're looking at a weaker environment, and I think Alastair had a really interesting slide where you had lots of airline failures that have taken place, and there will be more. Are we poised to exploit the opportunities if we get into choppier waters? Secondly, if it's really challenging, are we resilient enough ourselves? How resilient is our business too? All with a view to all three of those prongs taking you to deliverable, sustainable cash generation, and sustainable growth. I'm going to use those five boxes as my five headings for this presentation. Before I do that, I just want to sort of flag one other thing. New CFO in, been in for all of four months. We've looked to change some of the metrics. Willie, the MC, and the Board have been very supportive in that.
One of the other things we've changed in this is based on a lot of conversations I've had with a lot of people in this room, there's been some sort of question marks about five-year business plan. Really, how well can you predict years four and five? I think it's a fair challenge, particularly in an environment which is more volatile. We've come to a conclusion, let's guide for three years rather than five years. That's why the numbers that you'll see in here are three-year numbers, not five-year numbers, just so you're not surprised. I will take you through some of the new metrics as we go along. I'm going to take you through these five boxes. Let's get moving. A strong core. It's all right to look back, but just don't stare.
In terms of the business, we have been growing very profitably since the inception of IAG in 2011. You can see that in this red line. We've continued to go from strength. 2012 was clearly a very difficult year for a number of factors, but beyond then, it's grown strongly and strongly. What's interesting is there seems to be a point in 2016 where the global airline industry seems to have pivoted down, and we've continued to go up. Willie and I were debating earlier this week, what were the drivers of that? Was that the American carriers giving a lot of their cost savings back? Is it the fact that fuel pivoted again and started to go up again? I think there's a number of factors. There's not just one. It's interesting you see that divergence.
If I look at the operating companies within IAG, you can see they're all strongly profitable. You can see that their profit margins are to some degree converging, albeit with different business models, and different operating platforms. All of them strongly profitable and performing well. If we look at return on invested capital, we've had a huge focus on this. Willie talked about this earlier, so I won't overemphasize it, but we have been very focused on making our capital work for us and generating good returns. We have some of the best returns in the industry. At the same time, we've been strengthening our balance sheet. As you can see, our leverage, this is pre IFRS 16. These were the good old days. Pre IFRS 16, you can see our leverage has come down from where it was even in 2015.
We've been strengthening our balance sheet as we've been going along. This slide, which I think is really important. Since 2015, when we started to give dividends, we have paid back to shareholders EUR 4.1 billion of dividends. What's more remarkable is three things. One is we've paid EUR 4.1 billion of dividends and returns to shareholders. Two, we've de-levered during that time as well. Thirdly, which is on the slide, we've made over EUR 3 billion of payments for pension deficits, all in that period from 2015 to 2019. That should give you some confidence that this business generates a lot of cash. It is a very cash-generative business. I think sometimes we've lost it a little bit in all of the numbers and all of the metrics, but this is a cash-generating machine, very much so. That's box number one out of the way.
Let's talk about maintaining and strengthening the core. We're not complacent. We don't think we've got there. We don't think we're the finished article. There's a lot more to do. Let's talk about some of those things. The first thing I want to talk about is capacity. I've alluded to, we've done this business plan in a different backdrop, a different environment. It doesn't feel like the last few years. As you know, in 2019, because you follow the business closely, we have been trimming capacity as we've gone through the year. We actually walked into Capital Markets Day last year with a mindset of 6.5% capacity growth. I think we wrote circa 6% in the Capital Markets Day pieces of paper. I think by the time we got to February, we're down to 5.9%, and now we're down to 4%.
We have been trimming capacity, and we've been very candid that, quite frankly, Q1 of 2019, we put too much capacity in at that point. If we look forward, what are we going to do for 2020? We're guiding at the moment, we're going to grow capacity just over 3%. That's not adjusting for strikes or leap years. That's all in there. A leap year is probably worth about 0.2%, and the strikes probably would take you down to about 2.7%. We're guiding at about 3% growth for next year. As you look at that, you can see that all of our operating companies have moderated their growth. LEVEL, that is a reduction on the level of growth.
It's primarily just annualization of the routes that have been put in place, and also one new route, which I think, off the top of my head, is Orly-Boston. With regards to Aer Lingus, what you're seeing there is the North Atlantic, the long-haul business is flourishing. There will be significant capacity growth there. On the short haul, we'll be reining back capacity. Actually, short-haul capacity in Aer Lingus will go negative. If you look at Iberia, it's going to be growing our capacity on L.A., it'll be growing our capacity on Tokyo. It will be growing some of our capacity to the Islands, but otherwise, some reductions, LACAR being a key area. Vueling, no growth for next year. We are seeing weakness.
We've indicated that over investor calls over the last month or two, we think at this point, zero growth is the right way to do it. We could put some moderate growth in, it wouldn't be sustainable growth. It needs to be sustainable. In terms of BA, on that +3%, clearly there's 0.7% relates to strike. There's a chunk in there that's for densification. You've got the full year effect in of Islamabad, Mumbai, and Pittsburgh coming through as well. That's 2020, but what about the three-year period? We're also moderating growth there. Last Capital Markets Day, we said we were going to grow a CAGR of 7.4% over these three years. We would have given you a five-year number, but that was the three-year equivalent.
We're dropping that four points, which is a lot of a ASK reduction to 3.4% CAGR growth. Which means our business at the end of year three will be just over 13% smaller than we were anticipating when we did the Capital Markets Day last year. If that's capacity, let's go on to fleet plans. I've gone around and had lots of conversations with you, and some of the feedback I've got is there this big CapEx spike coming a few years, five, six years down the road? I wanted to try and give you some visibility of what is happening with both long-haul and short-haul fleet deliveries. Let me explain this slide to you a little bit. This is the three-year planning period that we're looking at at the moment. In there, I'm showing you the new aircraft deliveries that are both replacement and growth aircraft.
To give you some more guidance, albeit we're only doing a three-year business plan, I wanted to give you more insight as to what's happening years 4- 10. These are the replacement aircraft requirements we have in years 4- 10. Really, you can see, I think, three stories come out of this, if you have time to ponder it. It's about replacing the three old generation aircraft fleets that have been the core of our business. The first one is the 747s. We've been slowly getting out of the 747s, replacing them with A350s. We're going to be replacing them with some 777-9Xs as well. We will be out of the 747s in early 2024. That's story number one. Story number two is the A340-600s in Iberia.
We've begun to replace those also with A350-900s. Based on our plans at the moment, we will have the last A340-600 retired in 2025. That then leaves us the last big core fleet that will need to be replaced over time, which is the 777-200s. We have 43 of those aircraft as we speak. That process begins in 2020, when we get rid of the three A markets and replace those. You can see these brown bars here are the replacement aircraft for the 777-200s. By the time we get to the end of 2029, we'll only have eight of the 777-2s left to replace. That's the story of our short-haul fleet, both for three years and in years 4- 10 on a replacement basis.
We do the similar exercise for the short-haul rather than the long haul, really there's one really big story coming through on here, which is the replacement of the A319s and A320ceo family and bringing in either 737 MAXes or bringing in the A320neo family. You can see us bringing in the Airbus aircraft there, and then yet to be determined, the mix between those coming forward in years 4- 10. As you can see, that does ramp up with a peak at the moment of 2024. I need to put a health warning on this slide because in that 217 aircraft in years 4- 10, there's about 60 aircraft that are what we're calling early accelerated replacement aircraft.
We don't need to replace them at that point, we think for the purposes of unit costs, we think for the purposes of being sustainable and environmentally right, that there is a lot of argument for replacing those 62 aircraft early. We have flexibility. In some ways, we've probably shown the replacement profile in the sort of the worst case scenario. That's short haul. I thought I should mention the 737 MAX very quickly. In terms of strengthening and maintaining our core, the key point for me on the 737 MAX is, in a world where you have a duopoly and you convert it into a monopoly because you don't deal with both on the short-haul aircraft, that doesn't seem strategically to make sense.
One of the key factors for us in the 737 MAX is not only getting a good price, but it's also making sure that the supply is being competed over both Airbus and Boeing. We are still working on this. We haven't reached definitive agreement yet. We will let you know when we do. Not only are we replacing our aircraft and renewing the fleet, but we are doing a lot of reconfiguration of the fleet as well. One of the areas that we know we've had to strengthen is our business class product, particularly in British Airways. What this slide shows you is the embodiment plan of the long-haul aircraft at Heathrow for BA.
As you can see, it ramps up, and when we get to the end of 2021, we'll be over 50% of the way through the embodiment of the new Club World suite. This is an enormous logistical exercise, and I don't think people quite get the gravity of it. I asked for analysis the other day. It's over 7,000 Club Vector seats that we're putting in. It's a huge number. When people sort of say, "Well, can't you go quicker?" The Board have asked us numerous times, "Can you not go quicker?" The reality is the critical path is the supply chain from the seat manufacturers. When you think it's 7,000 seats, you start to understand why it's quite a challenge. We're very excited about the product. It's getting great reviews, and that it is work in progress, and it will strengthen our business considerably.
Some people have, in some interviews and some meetings I've had, some people have been concerned very much about, that this is a four abreast product, so it's far less dense. Isn't that going to hit your profitability? Because, okay, the ying- yang seat's old, but it is dense, so that's very nice, isn't it, from a profit perspective. I don't know if you recall, but I think it was Sean and I. Sean is now running Aer Lingus. When we were both in BA, we presented in 2016 the cabin reconfiguration program, and we took a holistic look at the long-haul aircraft for British Airways. To cut a long story short, we said we needed to shrink first because the load factors didn't justify all of that capacity.
We needed to grow Club by using some of that space freed up in order to have a less dense Club seat. We needed to maximize the size of the Premium Economy cabin because on a square foot basis, it's nearly as profitable as Club World. We needed to densify the back of the cabin as well, go to 10 abreast on the 777s because all of our competitors have already done it. What's interesting is, if you look at this 777-200, that's what it used to look like. That's what it'll look like under the Club World configuration. You see the smaller first. You see the more space devoted to Club World. It's the same size World Traveller Plus cabin, and actually, there's more seats in the economy. Overall, there's more seats in the new configuration than the old one.
We were very comfortable when we went through this exercise that our cabin reconfiguration program was going to be profit enhancing, not profit negative. All of this investment in fleet, what does it do to our fleet age? Well, at the moment, we're at about 11.4 on our fleet age. It's peaking in 2019. With the investment we've put in place, it will be coming down and fairly quickly over time. This investment in fleet is hugely beneficial from a sustainability perspective, from a carbon perspective. We are seeing significant fuel cost savings coming through in light of having these new generation aircraft coming through. When we talk about costs in a minute, you'll see that coming through that our fuel unit costs are coming down as a consequence of this investment.
This brings us to possibly one of the most exciting slides of the day, I hope you agree, which is the CapEx slide. I've been relishing the prospect of presenting this for quite some time. First point is we're going to guide you now gross CapEx, not net CapEx. When you look at, say, last year's capital markets day deck, it'll show in the blue boxes EUR 2.6 billion per annum CapEx. That figure was a net CapEx figure. What do I mean by a net CapEx figure? What I mean is when we had sale and leaseback transactions, we would reduce the CapEx number by the sale and lease back proceeds. When we've typically turned around and said, we lease roughly 50/50 in terms of on-balance sheet, off-balance sheet on pre-IFRS 16, again, forgive me.
When we said we'd do that sort of 50/50, you could basically double the net CapEx number to get a broad proxy as to what the gross CapEx figure was, which would be just over EUR 5 billion. That was for the five-year period. In 2019, our gross CapEx will be broadly EUR 3.8 billion, which is a relatively low year. We then look at our three years in the business plan, you can see that our gross CapEx can be EUR 4.2 billion, EUR 4.3 billion, EUR 5.7 billion. EUR 5.7 billion looks particularly high. It's due to the aircraft types that are coming in. It's also due to the PDP profiles that are coming through as well. That's the profile that we've got for the next three years. The 84%, say in 2020, is the fleet element, and the 16% is the non-fleet element.
That will be things like IT, property, and certain product investments. Gross CapEx, not net. The average for the three-year period would be EUR 4.7 billion. Of that 85%, which is fleet, which is this EUR 4 billion here, 11% of it is for growth, and 89% of it is for replacement. If you look at years 4- 10, our replacement average CapEx is EUR 2.9 billion. I hope that's illuminating. There's stunned silence, so I'm not sure I was expecting applause. This is our CapEx profile. I think that gives you more visibility than you've had before using gross numbers. One of the reasons I wanted to get away from the net CapEx numbers is because sometimes it might incentivize you to choose a certain type of financing because of the way it moves your net CapEx, rather than for the right economic reasons.
What are the right economic reasons? When we look at how do we decide how to finance aircraft, we look at the type of aircraft. We look at, is it a niche aircraft? Is it a commodity aircraft? How long are we going to have it in the fleet for? What's the residual value risk attached to it? We also look at the overall fleet flexibility. We'll touch on this later. We need to have a proportion of our fleet on leases expiring every year to give us the flexibility that says if we get into a downturn scenario, we can reduce capacity without any punitive cost. That flexibility is really important. You have to make decisions that ensure that you have that fleet flexibility as well.
Once we've gone through that process, clearly the funding principles you'll be very conversant with in terms of minimizing the cost of capital, et cetera. We have a lot of different choices as to how we choose or what we choose in terms of funding the aircraft. What we've said in the past is we would broadly use a guidance of 50/50. What we'll do going forward is try and look at it on a case-by-case basis using this kind of thinking to make sure we are optimizing the way we purchase. Let's bring ourselves on to cost now. Cost is part of our DNA, driving costs down. You saw some charts earlier that we've had some good performance in the past. We'll have some good performance in the future. It's interesting running through these. Fuel and carbon costs are down.
We have assumed in here that not only do we have EU ETS costs, and I think we've assumed EUR 23 a ton of carbon, but we've also put CORSIA costs in here, about $17 a ton in 2022 onwards. Our carbon costs double in this three-year period. Despite the doubling of the carbon cost Our actual fuel unit costs are going down, and that's the efficiencies of these new aircraft coming through. What's interesting about that is our ownership costs are going up. No surprise. You're buying brand-new aircraft and quite a lot of them. What's been interesting as we've gone through this business planning process, we find ourselves having far more conversations right now about the trade-off between ownership costs and fuel unit costs.
It's almost dragging you back to a world where you look at total unit costs rather than this divorcing of non-fuel unit costs and fuel unit costs. I think that's the way we'll end up going, in future months and years. You can see this trade-off between fuel and non-fuel there on the ownership. In terms of employer and supplier costs, I can't take you through all the initiatives. There are probably hundreds of initiatives in our business to drive these costs out across all of the operating companies. We continue to target and push the operating companies to achieve a 1% non-fuel unit cost reduction. We look like we'll get there on an adjusted basis in 2019. I did deliberately say an adjusted basis because internally, we do adjust, and we do talk about adjusted non-fuel unit costs.
What I didn't mean by that, there are certain businesses that we have in the group that generate revenues and costs that really aren't ASK driven. Iberia MRO, Iberia Handling, BA Holidays, and some aspects of Avios have nothing to do with ASK growth. These are businesses generating third-party revenues. We want to strip those costs out when we're looking at the airline non-fuel unit costs. That's why we look at an adjusted basis. Because we're focusing on that now and we're being more rigorous in that, I have looked at the definition that we've been using for the adjustment. We've tightened it up, and we've sharpened it up because very often, when we were adjusting out those costs, we were using revenue as a proxy, which was being overgenerous to us.
The way we've changed it, and there's a detailed appendix, I'm not going to take you through all the details of that now, but by all means, send me an email. We've been far more hair-shirt about this. If we are going to focus on adjusted, it needs to be robust, and it's not as helpful to us as it was. Cost reduction, huge part of the DNA, and we continue to push hard on it. The next box, are we poised to exploit opportunities? This shows you what we've done in terms of mergers and acquisitions work since the inception of IAG. What is a wonderful thing for us to be able to say is we've been very successful at this. We've been very judicious with what we've gone after.
We've been very judicious with the deals that we've done, and they've all generated good value. They're all deals we can be proud of. You saw with Norwegian, we looked at it. It didn't work for us. We walked away. It's great to be able to see Air Europa up at the end there. Luis, I'm not going to steal his thunder. We'll tell you about Air Europa shortly. Lots has been done, and as Alistair was saying earlier today, I suspect there's more opportunities coming because I think some airlines are going to struggle in this environment. Are we poised and ready to be able to respond and take those opportunities? The quick answer is yes. Our net debt to EBITDA, our leverage is low. It's at 1.3. We are using 1.8 as a proxy for investment grade.
We would only go above 1.8 if it was a temporary thing and it made absolute sense, but generally, we will use that as a ceiling. As you know, we're now investment grade as well. We have a very strong balance sheet. We have a strong cash position. If there are opportunities, we've got the ability to exploit those opportunities. Let's talk about the other side of the coin, which is, let's say it's really challenging, how resilient are we in that situation? Now, last year, Enrique put up this slide, the scenarios. I'm not going to give you another scenario. That scenario is credible enough. What I did want to do is try and give you just a little bit more color and a little bit more reason to believe, as it were. It's interesting, in some of the investor meetings I've had.
In one investor meeting, they'd actually photocopied this and put it in front of Willie, and I said, "Can you just talk us through this one?" People are really focused on this slide, but I think we've got to go a step further that says, what's the underlying reason to believe? One of the questions we get is, have you just ridden the crest of the market, or have you really made structural change in your business? Hence, if there was a downturn, would you be resilient to it? What I wanted to just do here is put up some of the huge restructuring things that have been taking place in our business since its inception. Just before we brought in BA Mixed Fleet, following the cabin crew industrial disputes. That was a huge step forward for us in terms of flexibility and new contracts.
Clearly, we generated the synergies through the creation of IAG. In terms of Iberia, probably the best airline turnaround story that you could probably see, going from losing EUR 300 million to making EUR 500 million profit. Three phases of that, the Plan de Transformación, Plan de Futuro, my Spanish is great, and Plan de Futuro 2. Been working on that all day. Huge changes. In that first plan, which I'm not even going to try and say again, we cut out huge numbers of routes that were loss-making. We took out an enormous number of staff. It was really a painful process. In Plan de Futuro, which Luis headed up, a completely new strategy for the business, not just commercial costs, network alliances, and in Plan de Futuro 2, going from survival into moving towards excellence.
There has been huge structural change at Iberia, and you can see it in their numbers. If you look at cargo, we got out of long-haul freighters. I know this because I was there at the time. I actually have a picture on my wall, which is an interview. It's a poster from a journal where Lufthansa are ridiculing us for getting out of the long-haul freighters. It says, "Never has IAG spun defeat so effectively." I remember the day it came out, and I went to my management team and said, "We've succeeded. They're talking about us now." The cargo market's tough. I'm sure Lynne might get a question later about it. We're in a great place not having four 747 long-haul freighters on our books right now. That kind of structural change was right. Why could we do that?
Putting both the BA and the Iberia cargo business together gave us a big enough network that meant we didn't need to supplement it with freighters. IAG maintenance strategy has generated tens of millions of savings. BA has done a restructuring program. On the pensions, I'll show you a slide on that later, we've made huge strides on the pensions. In terms of, for example, we can now pay 50% up in terms of dividends without any further recourse to the trustees, whereas it was at 35%. The EUR 450 million we were paying a year was going to go out to 2027. It's now going to go out to 2023, 2024. We're actually now coming into land on that program, so much so that one of the big negotiating items was we didn't want to overpay, so we wanted an overfunding protection mechanism.
There has been huge structural change in our business. If I drill down a little bit further, if I look on the BA side, if you look at the amount of employees now who are on new, more flexible contracts than they were before, rather than the old legacy contracts, you can see those percentages rising all of the time. If I look to Iberia, this sums up the Iberia transformation in two words. Headcount down 19%, ASK is up 14%. That is structural change. Pensions. I was alluding to it a few moments ago. Now our payment commitments go up to 2023. Subject to court approval, which we're hoping to hear the outcome of next week. The blue bars disappear as well. We no longer need to put additional money into apps. As you can see, really coming to a landing point on pensions.
With that structural change in cost, let's talk about the sort of revenue and brand side of things. One of the benefits that we have in a downturn is we're diversified. We have diversified brands. They're working with different operating models. We've got full-service carriers. We've got value carriers. We've got low-cost carriers. We're in a well-diversified position if things were difficult. If I look at our geographical split of our revenue by point of sale, we're basically 1/3 U.K., 1/3 rest of Europe, 20% North America, and the rest of the world is about 14%, 15%. We're very well diversified from a revenue perspective. We've refreshed this slide from last capital market stage to show you how also our revenue is diversified, looking at the industry sectors. When we went into 2008, 2009, we were heavily exposed to the financial and banking institutions.
Where we've diversified away from that, it's now only 2.7%. You look at this, you sort of say, I think one of the figures it would be good for us to get at some point is the premium leisure split. If you look at this pink 48%, most of that's going to be leisure. If you look at the non-deal premium of 20%, a chunk of that's going to be leisure as well. There's a good split. Over 50% of our revenue is leisure. It's true that leisure holds up better in a downturn than corporate and business. Let's go on to another area, which is fleet flexibility. We've traditionally given you those lovely line graphs with all the diversions that you can take for each year. I thought we'd make it even more simple this time around, which is, where's our flexibility?
Our flexibility is if things were really difficult, we've got a lot of aircraft that are pretty heavily depreciated, we could put on the ground, and it wouldn't cost us to do so. There's not a fixed cost that we're going to have to compensate for. That's particularly important for BA. It's particularly important at Heathrow. Because of the slot rules there, you wouldn't be putting short-haul aircraft on the ground. You'd be putting long-haul aircraft on the ground. Having a plethora of 747s still and 777-2s that are heavily depreciated gives us flexibility. On the other side, as I was touching on earlier, we have a number of leases expiring every single year. As a consequence of those leases that we've assumed that we would renew, so these are the red bars, we could choose not to renew them.
That would give us flexibility in a different way, in a low-cost way, to take further ASKs out. That's why we think we've got resilience in our fleet if things were particularly difficult. Our liquidity remains strong. We have a treasury policy that we keep 20% of last 12 months revenue as cash. In fact, as you can see, we've gone a bit above that in the last few years. We think we are resilient if it gets tough, and we think in relative terms, we're very resilient compared to our competitors. We're on the final straight, if that's any consolation. Last section, the fifth box, let's talk about the financial metrics and where we got to with the plan. Before I give you the numbers, which you can all see in the slides anyway, I just want to talk about the metrics that we're using.
The ROIC, the operating margin, ASKs, and EPS growth, same as before. It's this right-hand side where we have made changes over and above going from five years to three years. We have What's a nice way to say this? We are no longer going to use equity free cash flow. I think there were some flaws in the equity free cash flow number, not least of which it didn't include pension payments. I don't think it was a good measure of the cash available for distribution, whether it's dividends or whether it's a share buyback or whatever. We've jumped to the answer, quite frankly. We've gone to levered free cash flow. This is genuinely the amount of cash that's left over after the CapEx, after the financing activities. It's the last run before you draw the total. We've shown you in the appendix.
My apologies, there's a slight mistake in the appendix. I don't know if any of you have noticed it, but we've corrected it online. We're going to levered free cash flow. We're giving you the answer, quite frankly. Gross CapEx rather than net CapEx, I think I've bored you sufficiently on that one already. If you go to levered free cash flow, then you have to have a constraint, a control on that because it is after raising debt, et cetera. I don't think you'd want us, and we wouldn't want to be raising debt in order to pay dividends, et cetera. We're very clear that we should have a leverage target or ceiling, and I've touched on it already, that we would stay below 1.8 net debt to EBITDA ratio, and we would stay within the investment grade zone.
It's important if you're going to use levered free cash flow, you have this tension, this other metric that keeps constraint there. That's the reason we've gone down that road. Those are the metrics we're going to use going forward, and the management committee and Board have been very supportive with that. Where have the numbers got to? I'm pleased to say, despite the fact that we've more than halved our ASK growth over this period, we still deliver a 15% return on invested capital. I'm pleased also to say that our operating margin is still in the 12%-15% range, and most of the time in the top half of that range. In terms of our ASK growth, we've talked about that. EPS growth, just slightly down.
We guided 12%+ before guiding 10%. That's not a huge surprise given the fact that we've taken out so many ASKs. The levered free cash flow averaged EUR 2.1 billion, which is very healthy. Gross CapEx, we've talked about through the EUR 4.7 billion. As I say, net debt to EBITDA up to 1.8, keeping that investment grade. I think it's been a good test for us to say if we took out so much capacity, would the numbers hold up? The numbers have held up when we've gone through the planning exercise. That brings me to one last thought, which is: What's our cash return to shareholders thinking? This is what we've said. I think this is what we said at the half too. Our cash priorities are around organic growth, then commitment to sustained dividend, then inorganic growth.
We're not making any new announcements on this today. We are having conversations with the Board. We're having conversations with MC as to what is the right way forward for us. We think there's more flexibility than we've had in the past. We think with the pensions changes that enable us more flexibility to move cash up to the group. There is a possibility and an ability to maybe do something different going forward. That's something that we would revisit when we come to the full-year results rather than right now. This slide I'm not going to talk to, but we've provided you this guidance in the past, and we wanted to give you that guidance again. Those are the five boxes. The narrative that we've gone through is we've built a strong core, we're maintaining and strengthening it. We think we're poised to exploit opportunities.
We think we are resilient, all with a view to delivering strong cash generation. That's the conclusion, basically. We've gone through this process. We're pleased that we've managed to hold to our targets. That's it from me. I'll hand you over to Luis now to talk about something far more interesting. There you go.
Okay. Good morning, everybody. I am sure that you heard last Monday to Willie and Steve talking about this transaction. I'm going to be brief. I think the first thing to say is that this operation fits perfectly in what Alistair said this morning. You know that the strategy of the group is to have a portfolio of world-class brands. To develop our positioning, our global positioning in the world and in our core markets. To try to leverage our platform to try to improve our cost and also to be more effective. If I have to group all the advantages of this operation, I would say that we can group in three topics: Madrid hub, customers, and our people. If I start with Madrid hub, Madrid hub is weaker than the major European hubs that we compete with them.
We have less flights, we have less international destinations, we serve less countries. It's a hub that is oriented to the Atlantic, but mainly to South Atlantic. With that size, it's difficult to compete with the big ones. With this operation, we are going to have 63 aircraft, long-haul aircraft, so we are going to be very similar to the 65 that KLM has. We are sure that we are going to develop a 360 degrees hub because we are going to look to other regions that now are impossible for us, and we are pretty sure that, for example, traffic from Asia to Latin America through Madrid is something that can be developed for sure. One thing that is also important, Willie said at the beginning that Madrid has capacity to grow. That's true for sure.
We are having now a problem in the peak times of the hub. We are arriving to a limit there. When we will combine the two hubs structure between Air Europa and Iberia, I am sure that we can create a smoother hub, and then if we reduce the peaks, we are going to develop even more, the airport. Talking about the customers, I'm not going to cover this slide. I'm going to cover this one. That is a new one that you didn't see on Monday. First thing is to say that the Spanish international air platform market will remain highly competitive. We can see here the market share by airline in Spain in international traffic. We see that Ryanair, even with this operation, will have 20% of the market share, and IAG will move from 17% to 19%.
If we look to the domestic market, we need to take into consideration that in Spain, we have a lot of kilometers of high-speed train. Spain is the first country in Europe in number of kilometers of high-speed train, and is the third one in the world. When we compare, when we see the domestic market, we need to take into consideration that mode of transport. In the right-hand side, you can see the domestic market share to/from Madrid, including the high-speed train. You see that, even with this operation, high-speed train will have 53% of the market, and IAG will move from 26% to 37%. If we only look to the domestic market share by airline in Spain, we will move from 52% to 66%. Other important thing is the network.
The combined network that we are going to generate is going to be a huge opportunity for our customers. Combining the unique destinations that we fly in Iberia and the unique destinations that Air Europa has, we are going to have around 1,000 O&D, new O&Ds that we are going to serve with only one stop. Our customers, they are going to have more flexibility, better schedules, and more choices. They are going to enjoy a modern fleet because we are going to have all the new fleet that, as Steve said before, we are now joining in Iberia, the A350s, but also we are going to have the 787 that Air Europa is incorporating in the fleet. That will help also to the objectives of sustainability that Willie said before.
We consider also that the dual brand strategy in Madrid is key in order to attend the different customer segments needs that we have there. Finally, the IAG platform will help us to provide more opportunities to our customers. We are sure that we are going to reduce the cost structure, and with that reduction, we will invest more in all the things related with the customer. For example, the VIP lounges or the connectivity of the aircraft, etc. Also, to be more efficient in cost, will allow us to be more competitive in prices as we have been during the last years. I think we have an opportunity also in the loyalty program that Drew said before. Combining the loyalty programs, we are going to give much more opportunities to our customer. Customers, sorry.
Finally, talking about our people, I think this is a huge opportunity for them. If we create something stronger, it's something that is going to help to protect the employment. I am sure that we are going to develop further opportunities for everybody working in the group. As we have seen also before, IAG has a track record of developing the investments that we have done during these years. Vueling, Aer Lingus are examples of business that we have developed, and now they are much bigger than when we started those operations. I am sure we are going to generate a lot of opportunities for our people. One last thing is that after the announcement, the main unions and the main travel agencies, they have said that they are supporting this operation. I think that is because they say this in the same way we see.
They see that this is good for Madrid hub. They think it's good for the economy and also for tourism. It's good for all our customers. It's good also for all our employees. Thank you. Now I'm going to hand over to Willie, really? Okay.
Okay. I'm not going to summarize everything you've heard today, but I hope you've got a flavor of what it is we've been saying for some time. We've clearly structured this group well. Make no secret of the fact that we learned from what others did well and what others did not so well. We've got the right structure, we've got the right people, we've got a deep pool of talent. Where we want to, we can attract people into the business to supplement the talent that we have. We're well prepared for anything that comes at us. We see a softening economic environment, and therefore, we're adjusting our growth plans. We still see growth, and that's an important point to make. We're moderating our growth.
Even in that environment, as you've seen from the presentation from Steve, we will be generating very significant amounts of cash to be able to ensure that our shareholders get rewarded for their faith and their investment in our business. Our three-year plan is robust. I think we've been very clear in terms of what it is we need to do. We're building on a very strong track record of performance. We're pursuing further inorganic growth, which is why we created IAG in the first place. We think the acquisition of Air Europa is going to be really exciting for IAG. Very important, as you've just heard from Luis, we think it's great for Spain, we think it's excellent for Madrid. This will move Madrid into a position to be able to be a global hub rather than just a European hub.
This is a good news story. We have to engage with various different groups, including the competition regulators. That activity is going to take place over the coming months, and we hope to close this deal in the second half of next year. A lot to look forward to in 2020. Clearly some challenges ahead, but everything you've seen today should convince you that this is a business that is well-positioned to take advantage of any opportunity that comes our way. More importantly, this is a business that's in an extremely well-positioned, particularly relative to our competitors, to deal with any problems, any downturn, any challenges that might come our way in the future. Steve is going to join me up here. I think Andrew is going to deal with the questions. We have some microphones. The rest of the management committee are here.
They're all going to be available to answer your questions. We have a couple of other people from IAG who may step in if their bosses can't answer the questions eloquently. I'm assuming they will. I'll hand over to Andrew now, and then we'll take Q&A for about an hour, Andrew.
Yeah, we've got till 1:30 P.M., so about 50 min. Can I make it just a maximum of two questions, preferably just one.
Okay, thank you very much. Carolina Dores from Morgan Stanley. I'll start with two. One is real quick. On Avios, it's the GBP 600 million of free cash flow. Is that compared to the GBP 2.1 billion of cash flows available for distribution? If it is, my question is, this is around 25% of the group's free cash flow. How much can it grow? Can it be 30%, 40%, or 25% is the maximum proportion of free cash flow that Avios can get? My second question is for Willie. I saw an interview where you said that within two years you don't plan to be in your position. I guess, have you started talks of succession plans?
Okay. Let me deal with the second one while Steve and Drew. I foolishly, when I was much younger, said I would retire when I was 55. Then when I got towards 55, I realized that was a silly thing to do. Having put it out there, it's clearly been an issue that a lot of people have asked me about over the last few years. I'm 58 now. I think, in fact, some people have written some articles saying I have retired. I haven't. I'm still here. I think to be fair to everybody, and especially the Board, who have been incredibly supportive of me, I have indicated that I'm clearly getting closer to retirement rather than further away from it.
The Board has been working for some time, as you would expect them to do, on succession planning, not just for my role, but for all of the senior positions within the business. I still love what I do, but my intention is to be retired within the next two years. As to when that point will come, it'll be something that I have to discuss with the chairman and the rest of the Board. Yeah, I'm going to keep a promise. I'll be retired by the age of 60, before I'm 60. I'll be 60 on the 25th of October in two years' time, and I intend to retire by then.
On that happy note. Thank you. In terms of the free, it reminds me a bit of when I was running the cargo business because I would show the cargo contribution and make it look like I'm generating all of the profit for the whole Group. I think the reality to Drew's point is, Avios supports that level of free cash flow undoubtedly. Is all of that free cash flow in the Avios business? No, it's not. Some of that's sitting in other parts of the subsidiary. I think at the heart of your question is, can the business grow more? Drew, I don't know whether you want to comment on what you think the growth prospects are.
Drew is going to say, "Yes, it can".
I think the growth prospects are very good. More seriously, though, the thing that will dial up our ability to generate more cash is the degree of penetration of frequent flyers we get into our businesses, that 33% number. If you get that up to 50%, those plans that we have with that level of cash flow don't assume that we'll get to 50%. If we do get to 50%, there are multiplying effects across the whole piece. Collection goes up, the attractiveness to third parties goes up, and that's what drives that third-party cash flow. Yeah, I think the answer is yes. I think we've got plans in place which will grow that penetration. I would like to be able to do that faster, and that's what we're planning on doing.
I think this is one of the important reasons why we've said in terms of how we're structured today and how we're structured into the future. I don't think businesses, particularly airlines, fully appreciated the value that can be generated from frequent flyer programs, loyalty programs. A lot of the models were based on issuing points and then hoping people don't redeem them. What we've learned, particularly since Drew has taken over, the detailed analysis of the data is reinforced in the presentation that he gave you. The more engaged you can get your customers in this, the more value you can create. We're taking a fresh view on this.
To really exploit it, we need to move the whole culture in relation to loyalty away from where it's traditionally been within the airlines to a point that we can be more effective doing this centrally. The reason I say that is because, and this is no disrespect to people in the airline, often the decision-making in relation to these loyalty programs has been at low levels within the business, where they don't fully appreciate the financials associated with it. That was something that became clear to me when I joined BA. I don't think the people there really appreciated the value of the points. I used to see a customer would write a letter to complain, and we'd answer that by saying, "Here's some points." Or at one time, "Here's air miles." Somebody would write a complimentary letter, we give them air miles.
Quite honestly, people just didn't value. Inside the business, they didn't value what they were doing. They didn't understand that this was money and that this money was something that could be absolutely capitalized on. I think Drew and his team have been able to reinforce the real value that's in this, and we're really excited about it. As we said, to fully exploit this, I think what we've got to do is recognize that we now have a center of excellence within Avios, a center of excellence within IAG Loyalty, and that's why we're looking at changing the way we manage that program to ensure we can fully exploit the value that we believe is there.
Okay.
Hi, it's Rishika from Barclays. My first question is on one of the very early slides you presented at the beginning around taking some of the processes that you do currently at the OpCo level or in the hybrid kind of format towards more IAG Group level. I was just wondering, do you think that the team within IAG is well invested? I know obviously you've added in the CIO role and sounds like you've upgraded the Avios team. Is there more investment in people, whether it's senior management or bodies that's necessary at IAG Group? My second question is just on sustainability. I think it's very clear and it comes across well, what the group is trying to do over the next kind of few years to help the environment.
I wanted to ask a bit more about what support you think you need from the wider ecosystem. Maybe things like greater policy support in areas such as in the fuels or more support from infrastructure. What else is required within the wider system to help airlines deliver what they are trying to deliver on the topic of sustainability? Thank you.
Yeah. I think in relation to talent, I believe we have the talent within the business. As Drew said when he gave his presentation, he's changed the management team and he's changed the emphasis and the expertise. I think one of the things we've realized is to do this properly, you need to have professionals, you need to have experts who understand it, particularly when it comes to data analytics. You've got to have the right tools, you've got to have the right infrastructure, but you have to have the right people. It's difficult to make the case that you can grow those people internally. You've recruited somebody to do something completely different, and you turn them into a world-class data analyst. Our view is no. We believe that there are resources that we will need to bring into the business.
That's the great thing about us. We are a very attractive group to work for, and we have no difficulty attracting people to join us. Yes, we think there will be a change in emphasis in some areas where we will need to bring further talent within the business. On sustainability, there are things that could help us. The one thing I would say, and I don't normally say things positive about politicians, but I think the message has landed here in the U.K. We've got the government to acknowledge that financial support for the development of a sustainable aviation biofuel is important. Previously, there was financial support for sustainable biofuels for road transport. In reality, there is a more credible alternative available for road transport through electrification that isn't available to us.
Further support in the area of research and development, particularly where it pertains to sustainable biofuels, I think is important in the short term. We are making progress, and we are landing the message. We've just got to make sure that the message around what our industry is doing and what we're doing within the industry is heard and understood, particularly by our customers, because we need to make them feel comfortable about continuing to fly with us. We believe they should be comfortable about continuing to fly with us. That's a story that needs to be told in a better way than maybe we've done in the past.
Hi, it's Andrew Lobbenberg from HSBC. Can I ask on Air Europa, as you look to a future combining Air Europa into the family and with the other Spanish brands, is it going to be a case that the network and fleet ends up being slightly smaller than it would otherwise have been as you consolidate the overlaps between them? Or is it a case that it will grow faster as you might look to the example of Aer Lingus, which took off its growth as you go forward? My second question would be around the industrial dispute that plays out at BA with the pilots. I think if we look into the causes of it, there was a very hot debate around profit sharing, and there seemed a lot of enthusiasm for profit sharing from the pilot group, and that was obviously a debate.
What's your attitude, rather than getting necessarily into the weeds of the dispute specifically, which you shouldn't want to do anyway, I'm sure. What's your attitude towards embracing profit share or resisting it across the group or at the OpCo?
On Air Europa, I'm not going to say too much about Air Europa other than to point to, as you've done yourself, Andrew, what it is we've done with Aer Lingus. Where Aer Lingus had what I would describe as an ambitious plan to grow, which as a standalone entity would have been risky. What we've done with Aer Lingus is not only have we supported what was for them an ambitious plan, but we've actually accelerated it. We believe that that opportunity exists within Spain as well. Strengthening the Madrid hub to make the hub more efficient and a genuine global hub. In the same way as with Aer Lingus, what has facilitated the very strong transatlantic growth in Aer Lingus is making Dublin a transatlantic hub. There's a lot of work that we need to do in relation to Air Europa.
Clearly, we have stated that we need to rationalize the number of brands we're operating. Luis's very clear dual brand strategy at the Madrid hub is an effective model for us, and we fully support that, and we think that's right based on everything that we have seen so far. Clearly operating with the number of brands we have in that segment of the market doesn't make sense. There is work that we will do, and we'll share that with you. Our focus between now and closing this deal will be making sure that those other parties that are going to examine this are clear and understand what it is we're doing. Alex is here. I'm going to let him comment a little bit about BA, just so you get a flavor of where it is. Our attitude to profit share is very clear.
We already engage in profit share, and we've no issue with this. The business has to be sustainable, as I've said in the presentations on environmental grounds and on financial grounds. We want people to be excited about working here, and we want people to be excited about what it is we're doing in the future. It's got to be done on a reasonable basis, and it's got to be done on the basis of guaranteeing the sustainability. I've always said that one of the greatest challenges that the airline industry has had is the boom to bust, where we've been too short-term focused on short-term profitability rather than long-term sustainable profitability. That's what we want to do, and I think that's what we've done very successfully. We want the best people working for us. We want them to be excited about working for us.
We want them to be committed to serving our customers. We want them to be committed to going out of their way to make sure our customers are delighted with everything we do. We believe that's the future for IAG. We've got a great story to tell, and it's an exciting group to be part of. I've no doubt that that's where we will get to. Alex, do you want to just comment briefly?
Yeah. Perhaps a very super short comment because I shouldn't be commenting whilst we are having discussions with ACAS, the ACAS with the pilot union. I would only say that progress has been made, and we're very hopeful that we will reach an agreement at some point. I think Christmas is a good day to be looking forward to it. Progress has been made, and again, lots of discussions taking place in the background at the moment.
Thank you. Neil Glynn from Credit Suisse. If I could also take two. The first one with respect to your position with Qatar Airways. I guess it's nearly five years since they took the stake. They're obviously your largest shareholder. I can see positives and negatives, and I'm interested in your view in terms of how they influence your strategic position going forward. On the negative side, they're obviously the largest non-EU shareholder, which is a little bit of a question mark at the moment. Of course, their relationship with American also, I presume, prompts challenges in some areas. I can also see opportunities in terms of potentially cooperating with some other Qatar Airways investments, even Air Italy. I'm interested in terms of how you put those pieces together, whether it's working for you now and what the opportunity is in the future.
Tied to that, the non-EU shareholding or share purchase block at the moment. I presume it's an area of focus to ultimately get that removed. Interested in your thoughts on latest developments there and is there any kind of timeline to think about?
On Qatar, they don't influence our strategic thinking at all. They're very supportive as shareholders, we don't have any consultation with them in terms of where the business is going. The first they would have heard about the Air Europa acquisition was when we announced it publicly. They're a very good long-term financial investor, as I would see it. Does that interfere with other things? The relationship between Qatar and American is fun. I have a front row seat to it because I often get invited in to sort of referee between Doug and Akbar, which is great fun. I think what you're seeing, which is very interesting, the investment by Delta in LATAM, where Qatar is a 10% shareholder, and the impact that that has on American's relationship with LATAM tells you that things have changed.
I think you're going to see a very different-- I would expect to see a different attitude from American towards Qatar as a result of that. The three big U.S. carriers clearly aligned themselves, led by Delta, to oppose Qatar Airways, while at the same time, they were doing everything to support themselves. I think you'll see a change in attitude there. Qatar, we don't consult with them on any of the strategic issues. They're an investor. We give them information in the same way as we give every other investor. In relation to the non-EU shareholding, I can just refer you back to what the chairman said at the beginning. The restrictions that we have in place at the moment we want to see removed. There is a lot of activity going on.
I'd love to be able to share it with you, I don't think that would be constructive at this stage because clearly we need to have constructive dialogue with a number of relevant authorities first. There is a lot of activity going on behind the scenes, and we're confident that we will get to the right place. Chris Haynes, our General Counsel, will probably tell me now to stop talking at this point. Maybe Chris, I don't know if you want to say anything. No, he doesn't. He just stares at me and reinforces his view that I should stop talking at this stage.
Hi, it's James Hollins from Exane BNP. Very sorry you're blowing the final whistle, Willie, soon. Good to see you're still dressing a man half your age.
I'm not going to answer your question.
Actually, given you're leaving, you're dead to me already. My question Sorry, this isn't a stand-up. My question is for Javier and Luis. For Luis, actually, I don't want to sound sycophantic, but is there really much more you can do at Iberia? Clearly, some of that data on the ASKs versus staff cuts. I suppose more directly, is there a Plan de Futuro 3? Might that deliver even more impressive performance from Iberia? Then on to Javier and Vueling. Clearly, there's no growth next year, but I think the chart shows there is some growth over the next few years. I was wondering if you could just run us through the underlying performance. Clearly, Barcelona is difficult. Some of the routes you're doing are difficult.
Really sort of the controllable performance in terms of cost, in terms of I suppose Barcelona outbound in particular. Thanks.
Okay. Well, I'll consider whether I let Luis and Javier answer those questions. I'm still in control here. Maybe Javier. Yeah. If you want to come up here towards the front while Luis just addresses the Iberia issues first. Luis, you go first.
I go first? Okay. Talking about Iberia, you know that our transformation is based in the Plan de Futuro, a plan to give precisely that, a future to the company. We have organized the plan in several phases. The first one was more related with labor issues, productivity, which we saw before the reduction in headcount and the productivity that we have achieved during these years. The second part was more based in suppliers, what we can do with the platform of the group. This third phase of the Plan de Futuro that we are developing right now is more based in the digital transformation of the company, innovations, and all the things that we can do to reach the excellence. That is the name that we have given to this phase.
We are sure that even in this competitive environment that we have right now, because as you know, some of the markets that we are flying, like Argentina and others in South America, are not in the best situation right now. We are pretty sure that with all the initiatives we are putting together in the new plan, we are going to continue with this performance of the company over the last years.
Okay. In the question of Vueling not growing next year and the reduced growth for the following years, I would say, first of all, that's something that we are seeing. We are seeing our competitors also flexing down and being cautious in front of the sometimes challenging circumstances in some of the markets. In particular, some of our bigger competitor in Spain, they have announced also that they will be not growing, even flexing down 1% in Spain. Having said that, it doesn't mean that we are not continue building leadership positions. A zero growth doesn't mean that we are not, let me put it that way, growing in some of our spots. We are being cautious in some others, but we are growing in some of the places where we feel that we can have accretive profit growth.
The other thing I would highlight is that the company, we do have flexibility. We have proved each year that we are able to flex down capacity in a very agile way. I think that our fixed cost is not big. We've been able to manage that without bringing down also and stripping down the cost. It doesn't mean that we don't have the ability also to flex that up if we feel that we see good opportunities. That's something that could happen eventually, that we can see good opportunities in the market and then we can flex up if that is the case.
Hi, Stephen Furlong from Davy. Just wanted to ask about brands. Willie alluded to it on the Air Europa comments, can you actually have too many brands? Air France, I accept they were coming from a different starting point, simplifying the number of brands they have because you also talk about world-leading brands, you could have too many, perhaps, in my opinion. Maybe just the other thing, what would keep you up at night in terms of anything that you see as a negative thing that could happen, just in terms of either too much regulation or issues with competition or authorities or anything in the industry going forward? Thanks.
Thanks, Stephen. Yeah, I think our assessment is yes, we could have too many brands. I don't think the situation that we see developing, if we're successful with Air Europa, which we believe we will be. In Spain, we would then have Iberia Express, Air Europa, Vueling, and LEVEL. Then we have Aer Lingus, BA operate in there as well. If I look at just within Spain, five brands, I think that could lead to confusion. There's good reason to have all of those at this stage, but I think that's historical. That's looking backwards. I think going forward, we see that that needs to be rationalized. We're conscious of the fact that we need to have strong global brands that are well-recognized, positioned in the right segment of demand space, as you've seen from Alistair's presentation, and we believe we can do that.
Too many of them, I think, is going to create some confusion. In terms of sleep, I tell you, I sleep really well. Having seen the presentation and knowing what the team can do, will do, and are confident about doing in the future, I really do believe that this is a business that's in a great position. I look at where we were, the transition to where we've got to today, and what we can do in the future, it is exciting. I said this a couple of years ago, that I thought this was going to be the most exciting period in aviation. You look at all the challenges that we've faced in recent years, and we've come through those really strongly. When a lot of others have either fallen completely or have deteriorated in terms of their performance, our performance has continued to improve.
Yes, we have some challenges. I'm absolutely convinced with the talent we have in the business, with the structures we have, with the preparation that we've done, we're well positioned to deal with anything. On the issue of the environment, I hope you get the clear and strong message. We are totally committed to doing what's right to ensure we have a sustainable business. We've been doing a lot historically. We're going to do it even better. We will get challenged. The Panorama Programme, I'm sure, will sound fantastic for some people. It's interesting. I was just looking. BBC have a measure of efficiency that they use. I think it is right. I think they do tons of CO2 per pound of revenue. They're currently aiming to get to something, 15. We're 10,000 times more efficient on that metric than the BBC.
I don't think they're going to mention that when they talk about tankering. We actually do a lot of things really, really well. When you look at the metrics, we are very efficient, and we're getting more efficient. Not just us. I think the industry is very good. What we've got to do is make sure people understand that. More importantly, I think as an industry, we've got to recognize that there's a hell of a lot more work we need to do to ensure that we can continue to do what we've done into the future. Some of the things we've done, including tankering, may not make sense from. I can be clear with you. It doesn't make sense from an environmental point of view. Damian.
Damian Brewer, RBC. First, can I touch on Steve's presentation, in particular, you laid out a path for the cash machine with the long-term reduction in CapEx, long-term reduction in pension payments. As you think about the short-term capital allocation, clearly, your inorganic opportunities don't come on a regular basis. When they do, they potentially offer you that 15% return. If we're in a softer environment, clearly there's more M&A opportunities potentially coming. How do you or how is the Board starting to think of the trade-off between the short-term benefits of things like share buybacks and special dividends versus the long-term return on preserving capital? You've got the balance sheet to take potentially large opportunities when they come. At the end of the day, 15% on investment is better than 0% on cash.
The second question, again, kind of coming to that, bond yields continue to be down. There are indications we might see further reductions. Yet we are not really seeing reductions in the kind of prices you are paying for infrastructure. How can you actually sort of move that debate forward and make what you are paying, not just here at Heathrow, but in Spain and other facilities, start to reflect the environment we live in? Thank you.
Okay. Well, on the second one, I'll ask Sean to make a comment because we've actually seen some success in relation to that with Dublin. As you may know, the Commission for Aviation Regulation in Ireland has just issued its final determination in relation to passenger charges for Dublin Airport, which is regulated. That argument was made and made very well. Sean, do you want to just give an highlight?
Thankfully, in relation to airport charges at Dublin Airport, they've fallen to about EUR 7.50 versus EUR 9.18 today. Probably the key driver down of the charges was the reduction in the weighted average cost of capital. It was 5.8% in the last determination. It's now down to 4.2%. I think that's a phenomenon that we see happening across airports more broadly, and we're ensuring that in regulated airports that we mandate that efficiency gets passed through. At the same time, we've seen the infrastructure actually being deemed to be affordable in that context. We're quite encouraged by that development.
You're absolutely right to highlight it, and it's one of the areas that we're very much focused on because I think this is an area where airports in particular have done exceptionally well in the past, and we need to see better regulation. I'm pleased to say I think we are seeing some evidence of that now. Steve, do you want to?
I'm slightly cautious in responding to that because, as I touched on earlier, it's a debate that's ongoing within the business. A couple of thoughts. One is, in some ways, the structure that we have at the moment in terms of cash return, in terms of a sustainable dividend, and then if we deem that there's excess cash, then to do something with that gives you that flexibility. I think the 1.8, as I touched on, would be our typical ceiling. If there was an opportunity that meant temporarily that you needed to go above that, then we would consider that. We went through some of those thought processes when we were looking at Norwegian. It's an ongoing debate. It's absolutely fair observation and input. I think you're going to have to wait till the full year results before I give any more insights on that.
I think one thing we would say about consolidation is the best form of consolidation is when the weak disappear, and we're seeing that. I think Alistair demonstrated that in his presentation. In the past where weak airlines were able to convince somebody to acquire them, we're not seeing that anymore. We're very clear on that. I can assure you, I don't know, Alistair could tell you here some of the names. I keep telling him, "Don't tell me because I'm not interested." Everybody's phoning Alistair to say, "We'd love you to acquire us." We can quickly look at these and say there's no sustainable future for these airlines. Where we see those opportunities, we will pursue them. We're not going to pursue weak airlines that can't demonstrate a sustainable path to achieving the targets that we have. I think you're right.
There will be a lot of opportunity, but I think most of the opportunity that's going to come in the next couple of years will be weak, inefficient, subscale airlines disappearing, and you won't see people standing by to try and invest in them to keep them going. There may be some exceptions to that. Alitalia is always an exception to the rule. We firmly believe that now is the time to stand back and let the weak fail and let them disappear.
Savi.
Hey. Savi Syth from Raymond James. Just two maybe shorter questions. One on LEVEL. You had some time to kind of expand LEVEL here. You've seen a lot of kind of this long-haul, low-cost model not work out at other carriers, and just wanted to get your updated thoughts on LEVEL's future and how that's incorporated in the organization. The short question I had actually was on Aer Lingus, the margin for Aer Lingus and the target came down. I thought I was a little curious given how well Aer Lingus has been performing and just kind of wondering what was behind that.
I think I'll let Sean comment on that, it has come down, but it's still at an exceptionally high level. I think we did point out in terms of return on invested capital that Aer Lingus had a significant benefit from some very capital-efficient aircraft that would need to be replaced. Sean?
I think, yeah, the Aer Lingus margins I think are still industry leading because we'll be in the 13%-15% range and probably at the top quartile of the group. I think operating margin is, again, very healthy, and we're committed to sustain it at that level. I think ROIC was 26% last year. I think some of that is probably a degree of a capital holiday on short haul in particular. I think even with a refleeting plan that would kick in over the next five years, we're in a range of 22%-23%. Again, I think our ROIC is in very, very good health. I think the other thing which is happening, of course, is we've been transforming from being more short-haul to more long-haul, and we do see more sustainable returns and great performance from the long-haul business.
I think by any measure, the Aer Lingus metrics are in pretty good health, but ROIC is moderating to something which is again above average, but probably more representative sustainable through the cycle.
Fernando Candela is here. I'm not going to call on him to comment because he's only had the role of CEO at Level for a very short period of time. Just to say, what we have seen there is that we still believe in this business model. It is a model that is highly dependent on low cost and having the ability to stimulate new markets through price. It has been performing in line with expectation in some markets. We were having an excellent performance from Barcelona to Buenos Aires until the currency was devalued. That has clearly impacted on the short-term profitability because we were operating with about 70% point of sale from Argentina. When you've seen the devaluation in the peso, that's clearly impacted when we translate that into a euro profitability. France was a little bit behind.
The competitive landscape in Paris was worse than we thought it would be and didn't shake out as fast as we thought it would. That's happening now. You've seen Aigle Azur has failed, and XL has failed. They lasted a bit longer than we thought, but they're gone. Going back to what I said earlier, nobody's stepping in to recover them. They're out of the market. That rationalizes the capacity. What we were seeing in France, and I think it's supported by some of the things that Javier was saying, the market wasn't being stimulated as much as we had expected through price. I think that was specific to Paris. In the main, we see the model working, but it's been challenged by short-term issues that have impacted on currency in Argentina and by some capacity issues in France.
Fernando, I'm sure, will be delighted to present at next Capital Markets and I commit him to doing that and for future years as well under Antonio.
Thanks. It's Jarrod Castle from UBS. No Capital Markets Day would be complete without the third runway. Do you want to give a bit of an update in terms of if there's been a narrowing of views between where you stand and Heathrow? Also just on the back end of the fleet program, if there was a third runway, how we should think about this. Just secondly, just on LEVEL. You showed on slide 151 the current operating companies and some of the targets in terms of ROIC margin. You've given the capacity for LEVEL, do you think we'll get to a stage where you show ROIC and margin for LEVEL? Thanks.
On the third runway, yeah, I remain very clear that if it can be built in a cost-effective manner, then it would be good. I have zero confidence that Heathrow can build it in a cost-effective manner. I think all of the stuff we've heard recently about Virgin is complete. Yeah. You look at Virgin, their profitability, nonexistent. The balance sheet, nonexistent. The idea that they're going to be able to grow the business to sustain the slots that they say that they want, it just doesn't add up. Quite honestly, nothing in relation to the third runway adds up when you look at it on a cold analysis of the cost. If it happens, I'll be surprised. I think the challenges are getting greater and greater.
It's absolutely clear that Heathrow as a company cannot build the third runway anywhere close to the price guarantees that they've given. They can't even get close to it. The environmental challenges are much greater today than they have been. I think we're looking at a situation where political support for it will be questionable, environmental support for it will be zero, and financial support for it, I think is extremely difficult and waning by the day. I had said 50/50 in the most recent interview I did. I can't see the odds being any better than that, and probably the odds are declining that Heathrow will be built, or the third runway will be built. If it is, I'm standing in the middle of a taxiway, you're sitting watching me being overtaken by an airplane, but it comes right through here.
This building will be gone, which will be another reason why we will not be holding Capital Markets Day here. On Level, yeah. Look, we believe we can get to the margins. If we can't, we'll be honest with you, and we'll say, "We've looked, we've tried, we've failed, and we'll stop it." We remain committed, and we remain convinced that there is a profitable segment that is not properly served at the moment. It is limited in terms of its size, but there is a profitable segment that we believe we can operate in, and we can generate margins and achieve the targets that we've set for the other airlines in the Group. If we can't, we will not do it.
Jaime?
Thanks. Jaime Rowbotham from Deutsche Bank. Two questions, one for Willie on sustainability and one for Steve on free cash. Willie, on sustainability, part four of the path to net zero emissions by 2050 was a lot of the areas like CORSIA, which are going to cost IAG. Do you take a sort of optimistic view at all on your customers footing any of the bill there by offsetting their own emissions? Do you take a more bearish view that the cost will all lie with IAG? Linked to that, you talked about having to do things differently, and it just struck me, we've heard a lot about loyalty today, that things like GBP 0.50 fares to go to Amsterdam, and I know people will have done a lot of hard graft earning the Avios and required to go with it.
Fares like that might strike people as slightly controversial in a world where we're trying to encourage less emissions. Do you think loyalty might have to change at all or Avios alongside sustainability? Then Steve, on the free cash, obviously the move to guiding on levered free cash flow is very welcome. Just to make sure I've understood the point, when you guide to EUR 2.1 billion on average, it would be a lot easier to get there if you did sell and lease back on all your aircraft versus on none. Is the working assumption still 50/50 like it was before, or has that changed? Thanks.
On sustainability, we see some evidence of customers wanting to do this themselves. In fact, it's clear that, particularly with corporate travel, a number of our corporates are already doing it. I think when they see what we're doing, and I think this is where, again, we want better engagement with our corporates so they can understand if we've already done the offsetting, they don't need to do it. If they want to do it, and in some cases they do, because they want to be able to report that they're doing it, then we're not double counting. There is definitely some appetite for that. I think what's more important is that we accept responsibility for it and we start taking the measures to ensure that everybody is covered. Looking forward, we believe that you've got to price carbon into everything you do.
The EU ETS, I think a ton of carbon today is about EUR 25 per ton. That's much higher than it was a few years ago. It will get higher still. As Steve said, we're factoring that into our plans. In everything we're doing, we're pricing carbon in there. Carbon will be more expensive going forward. It has to be. Therefore, we're looking at this in the context of just blending it into the oil price. Importantly, we've demonstrated, you've seen the charts there. We were growing our profitability as the oil price was increasing. This is an industry that can be profitable in a high oil price, and whether that's a blended oil carbon price environment. That's why we're comfortable that we can do both. We can be financially sustainable and environmentally sustainable. You've asked a great question.
Is there a disconnect between loyalty and what we're doing on sustainability? I don't believe there is, because what you've got to remember is that in many cases, what we're trying to do here is we're trying to fill these seats that otherwise would be empty. That leads to the incremental cost of carriage in terms of incremental fuel burn and incremental CO2. If you take that flight I did to Toronto, the basic weight of that aircraft before we put the payload on Board, from memory, was about 152 tons. We then had 39 tons of payload. You're actually burning fuel just to fly the aircraft empty. With just the crew and the seats, you're burning fuel to do that. The more seats you fill, the more efficient from an energy intensity point of view it is. I looked at it.
We had 26 empty seats. The incremental fuel burn for those 26 seats would have come to about 410 kg of fuel for the flight. That would have translated into 50 kg of CO2 per passenger if all of those seats were filled. We're looking at it in terms of the incremental CO2 being produced. What we see there is there's no disconnect between what it is we're trying to do. In many cases, as Drew pointed out, these points are being redeemed by people who are flying. It's just that they can now fly for a cheaper price because we're using part cash and Avios. Even the fares that Drew was showing you there, it's looking at what's the incremental fuel burn associated with carrying those passengers, given that the seats, had they not done it, were probably going to be empty.
You know what our seat factors are around, what, 86%, 87%. We still got a lot of empty seats on the aircraft. That's where the industry has been criticized, and that's where we were poor in the past. Do you think historically, seat factors were in the 70s, low 70s, in fact. You're flying this aircraft around with a lot of empty seats because flying was only available to the privileged few, the rich. It wasn't available to everybody. We've got to be more and more efficient. This is an opportunity for us to increase our seat factors to ensure that those seats don't go empty and that people can look at their loyalty.
Yes, recognizing that it does generate an incremental fuel burn and an incremental CO2, and ensuring that we then have in the scenario that we pointed out, schemes that will offset that or where we're already paying for that, so that we can wrap this all together and make a coherent and consistent story around everything it is that we're doing. If we see a disconnect, then we'll address it. We don't see one in relation to this. We have debated this one quite a bit, and we will continue to debate it to ensure that we're doing things that are sensible.
On the free cash flow, a few thoughts on that. I did an exercise to look at, does the financing shape look different in this plan versus last plan? It's broadly the same at the moment, that should give you some comfort. I wanted to put the principles up there because I think we should be making the right economic decisions. Interestingly enough, one of the challenges with using net CapEx and then equity free cash flow, the way that we defined it in the past, was it actually prejudiced against, say, things like JOLCOs, et cetera. I wanted it to be a more level playing field across the Board. Particularly, if you've got, I don't know, 777-9x, I think that will be a sort of spine of the fleet for a long time.
An aircraft like that, I'd want people to be thinking about, should that be a JOLCO where we're going to be having this aircraft for 20+ years? We should be, otherwise we shouldn't be buying them. The way we've structured those metrics now will make that an easier decision for a CFO or the treasury team or myself. There's not a radical change underneath. I think it's better to have proper guiding principles. Actually, I think it will create better decisions, what we've done.
Thank you.
Hi. Thank you, Malte. Some comments, I think. Two questions that are very short. You still have multiple loyalty programs, probably the only airline group which still has or runs multiple ones. What's the rationale of particularly having a known for Iberia and Aer Lingus and British Airways instead of having one which promotes the IAG brand as well? The second one, particularly if you look at multiple brands in Madrid, how would you think that it would be rational to even put it on the long haul to kind of at least semi-premium brands if you would put also Air Europa and then kind of mix at least or closer to a premium brand? Particularly if you want to also fly to other areas like Africa or Asia more, wouldn't it then be rational to have just one big hub brand?
Drew, do you want to deal with the loyalty?
Yeah, sure. Single program, that's a topic that's come up. I think that there is no rationale to not have a single platform. That's what we're in the middle of doing now. We're moving all the tech from the disparate programs all onto the same platform, so that when we've done that, we have optionality to choose whether we want a single program or not. I think the big debate is what value do the brands in their home market bring that might be diluted down if it was called something different.
If you look at what the hotel companies have done, the Bonvoy, the Hilton Honors, and IHG Rewards, the difference between hotels and us is that we have a center of gravity where large numbers of customers are around our main hubs in our home markets, and that's where the value of the home airline brands really adds significant value. If we are going to move to a single program, I think we need to work out the answer to that question about how you blend the brands into that program so that you don't lose out what is, in shorthand, in the U.K., people think of the BA Exec Club, and you would lose that if you went to a single program. What could replace it that would be better? Does that make sense?
Thanks, Drew. On the airline brands, we're very clear. All the research we've done, and we've done quite a lot of research in this area, tells us that a dual brand strategy at a hub like Madrid is actually the most effective way forward, given that we see different demand spaces, as Alastair presented. We think you get greater clarity around what the brand stands for. We've seen in the past that. Take BA as an example. Alex has talked about this previously. Trying to compete or be competitive and attractive in every segment just dilutes the value of the brand. You've got to be clear in terms of what your brand stands for, what your customer proposition is, and then deliver consistently to that.
We think, in a hub like Madrid, there is scope for a dual brand, particularly with the network as we see it developing going forward. Having five brands, we think that's too much. A dual brand, we think is absolutely right in the long-haul segment. We will do a lot of research. That's the advantage in having some time here to assess the positioning of the brands and the performance of the brands before we decide on what it is we're going to do in terms of rationalizing brands. It is clear to us that we will have to rationalize the number of brands that we have operating in the Spanish market when we go forward. We've got time to address that.
Alex?
Alex Paterson from Peel Hunt. Two from me as well, please. Firstly, just on the fuel savings, clearly you're investing in more fuel-efficient fleet, as are some of your, in fact, nearly all of your competitors and peers. Do you expect to retain all of the savings from that, or do you think they will be shared with customers? Secondly, just regarding the dividend, looking at your levered free cash flow to the cost of your dividend, it's getting on for 4x . You're looking at 10% or more earnings growth in the next few years, but your dividend was flat at the interim stage. Should we think about dividend perhaps being flat in years where your profits are flat or down and growing to match the earnings growth when you have upside?
On the fuel savings, I think it's important to point out that, yes, our competitors are investing. We're going to get a greater step change. Going back to what I said, we took a conscious decision, not to skip a generation, but to not commit fully to a generation of aircraft, recognizing that there was another generation of aircraft that would be even more fuel efficient coming along. We'll get a bigger step change in the fuel saving than our competitors. History will tell you that some of this will definitely be passed on to the customer. We believe that given the position that we're in, that we will retain an element of that our competitors won't be able to retain. That's why I think there is a tailwind for us in relation to the fuel benefit as Steve presented in his chart.
On the dividends Steve mentioned, he can comment on as well. We're going to do a lot more work on this. We've had great engagement with the Board. We've had some very constructive dialogue. That needs to continue because we have had some significant changes, Steve said in his presentation, with regard to the pension. That gives us greater flexibility going forward. The interim dividend was, if you like, under the old rules. I think going forward, we want to assess the situation under the new environment. The new environment, as you'll have seen from Steve's presentation, is different to where we've been in the past.
Nothing to add to that, really. I'll refer you to my answer to Damian. It's a discussion that's ongoing.
Gerald?
Thanks. Gerald Khoo from Liberum. Can I ask a few questions about alliances? Do alliances still have material value to you? Obviously, there's been some disruption with LATAM looking to leave non-, and I think all is not necessarily peaceful within non-. What value do they bring? Are they still the future? Do you see any value in the strategy that Delta's pursuing in terms of investment in other airlines, equity stakes? Finally, can you remind us what the situation is with Aer Lingus and the transatlantic joint business? Has there been any progress there, please?
Okay. I've been very clear. I think alliances are a poor substitute for genuine M&A activity. Given some of the restrictions that apply in our industry, they exist. They're all about revenue synergies. Anybody who tells you that there's a cost benefit or any cost synergy, they're misleading you. Yes, there is a role to play. I think if there was an alternative, people will pursue it. I think the structure of the alliances, I've always said the structure's fragile, and we have seen people leave one and join another. That's going to continue. There is a role for them to play in the current environment, and I expect that to continue. Will it change? I've absolutely no doubt that it will. I don't think LATAM leaving oneworld is the end of that. I give some credit to Delta.
We've talked about this before, and I've often debated this with investors. If we see that we can generate strategic value by taking a minority stake in another airline, then we would have to consider it. Taking a minority stake without having some form of control or some influence over what the airline is going to do has no value whatsoever because you may as well do that. You can invest if you want to. The idea that I would pay a premium to invest on your behalf and get nothing in relation to control back for that premium just doesn't make sense.
If Delta can genuinely exercise control through their minority investment, then I think that is a sensible way forward. They've done that in relation to Virgin, but it's a minority investment on paper only. As everybody knows, they control the airline, but they effectively own it as well. They've done so pretty well with Aeroméxico. I wait to see what influence they will exert over LATAM with the 20% stake, given some of the other investors there as well. I give them credit because I think they do deserve credit for some of the things they do, but we only see that making sense where you get an element of control. If you can't get control or influence, then you're like Etihad. You think you have control, they take your money, they spend it, and then they tell you to get lost.
We're not going to do that. On Aer Lingus, the process is ongoing, so we're working with the U.S. authorities. As you know, we've no control over the timing of that, but we continue to work with the regulators to seek approval to bring Aer Lingus into the transatlantic joint business.
Okay, last question.
Hi. Olfa Taamallah from Oddo BHF. My question is around the short time maybe, Q4 and Q1. Just wondering given the uncertainties again around the Brexit, no clear timetable, and ongoing election, how you are doing today in managing the change in demand dynamics, and what are the action implemented in order to safeguard the pricing? Thank you.
Sorry. I didn't quite hear, but in relation to Brexit? Look, we're digging into our figures all the time to see can we identify a Brexit impact in anything that we're seeing, and quite honestly, we can't. I know some of our competitors have said they see a Brexit impact. We genuinely cannot see anything that we can directly relate to Brexit. The one thing that I think is directly related to Brexit is U.K. GDP, you've seen the forecast for next year, depending on who you listen to, is a bit softer. Still growing, U.K. GDP growth. Ultimately, we do see U.K. GDP impacting on everybody. What's important to highlight, and I think is different for us, is we're really more dependent on London and the London economy rather than the U.K. economy.
I think that's why some of our competitors have seen an impact that we haven't seen, because they're more exposed to the rest of the U.K. outside of London. The London economy is a different economy to the U.K. economy in general. We're not seeing any impact. We can't identify any negatives in any trends, customer behavior, corporate behavior. Everything that we're witnessing at the moment is in line with what we would expect it to be, and nothing that we can associate directly with Brexit. Given that we've gone through quite a period of uncertainty in relation to Brexit, we don't see that changing going forward. The political environment is the political environment. We just get on and run the business. We adapt and we continue to improve regardless of who's out there challenging us.
We're confident that, if you like, the worst of Brexit we've seen already, and the uncertainty associated with it is embedded in the business. We can't see anything that we can say, "This is impacting on our bookings," because there's nothing there. Nothing in the fourth quarter, as we said when we did the third quarter results. I think that's it, because I know there's food, lunch available for you, and the carbon associated with that has been factored into offsetting. Can I just thank you again. Appreciate so many of you coming along to hear what it is we've had to say. Obviously, a lot of information that's been made available to you, and I know those of you who want to follow up on that will contact Andrew and the team over the coming weeks.
We look forward to talking to you when we release our full year results in, I think the end of February of next year. Thank you very much.