Piotr BobulaIAG GBS

Credit Matters VI – The Deep Dive

Diving into Airlines

Diving into AirlinesAirline industry work under regulations of The International Air Transport

Association (IATA, 83 %) and regional agreements

IATA assures settlement and risk management tools

Carriers measure capacity by ASK and fight for Revenue per ASK (RASK)

Airlines create alliances (One World, Star Alliance) and Groups

Low-cost or New Generation Carriers (NGC) are growing

International (Consolidated) Airlines Group = IAG was funded in 2010

Care & Carry

A (big) Question

What airlines are part of IAG?

a) British Airways, Iberia, Aer Lingus, Iberia Express, Vueling, IAG Cargo

b) BOAC, Iberia, Iberia Express, Vueling, Level, Aer Lingus, Alitalia

c) British Airways, Iberia, Aer Lingus, Iberia Express, Vueling, Level

d) British Airways, Iberia, Aer Lingus, Qatar, Iberia Express, Vueling, Level

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IAG - Not only Airlines: IAG Cargo, Avios, IAG GBS (Q4 2014), subsidiaries

Hub – based flight schedule model

2016 numbers: +100 M passengers flown to 279 destinations on 548 aircraft

2017: IAG started long-haul NGC (low-cost) LEVEL …and a new trend

… Group RASK for 2016: 7.56 for 298,431 ASK

Numbers and facts

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Top 50 EU companies as at Dec.2015Data supplied by Bureau van Dijk

ReceivablesEur th

Sales Eur th

EBITDA Eur th

Employees

Airlines 29,072,735 148,767,019 34,924,115 594,651

Pharma. & Medical Dev. 63,069,485 329,313,010 86,038,384 893,823

FMCG 11,193,047 137,249,593 9,252,732 275,462

Automotive 70,066,731 1,149,270,725 101,517,725 2,814,514

Total 173,401,998 176,460,0347 231,732,956 4,578,450

Comparing European Verticals

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Major Challenges

Acting at a thin profit margin and high risk our industry is facing:

- Dynamic political situation (government as one of major partners)

- Terrorism (absolute need to secure passengers and cargo)

- Fuel pricing

- Law changes (e.g. EU directives on Passenger Compensation) - High competition and push for cost reduction (Low-cost carriers)

- Exchange rates and fraud attempts

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Bringing value

By 2 facts - of being setup set up and set up here IAG GBS is bringing:

Talents from a developed corporate labour market

Cost savings by consolidation and efficiencies

Change of thinking – aligned with New Generation members of the Group

Seamless process from ticket booking until flow or compensatedQuick reaction to ad hoc challenges

Proof that GBS can be focused on high-value activities and absorb key roles

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Airline industry AR structure

Revenue (Sales) Accounting processFuture sales reportingGSA and GHA as intermediaryTravel Agents and businesses

IATA ICH-BSP-CASS

Credit Card sales

Non-IATA

agents

Receivables

Pax Revenue Accounting

Cargo Revenue Accounting

Engineering / MRO

* Revenue recognition => Billing

IATA Clearing House (ICH) for InterlineBSP and ARC for Pax CASS and CNS for CargoNon-IATA and Credit Cards

* G S A a n d G H A

*

Settlement and Risk Management

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Collection Tips

3 tips from IAG GBS on Sales Ledger / Debt Management

USE the technology / tools you have – no excuse if these bring no stability (!)

Act proactively to be able to react when needed (structure above all)

Work with your Sales teams – you are to secure the same sales and the world is your

area

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Re-Act ! Case study 1

Top European sports team going for their game in the finals

Weekend flight cancelled in one of IAG hubs

Clear prestige / PR case

GBS mobilize Procurement, PtP * and TreasuryCharter organized (contract, payment)

Double - victory

* aka ‘The Dark Side’ Care & Carry

Re-Act ! Case study 2

Recently 2nd biggest German airline filed for bankruptcy

Alert raised by one OpCo and channelled through GBS

C2C team checked ICH and other balances on in-scope airlines

Customer Master / Credit Block applied immediately

Early warning sent to other Group airlinesAll internal teams advised to check pending billing (revenue recognition)

Review further potential impact on Receivables (current risk, legal procedure)

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A (big) Question part 2What will be on your mind during your next air travel? (control question)

a) Tight conditions in managing airline business

b) Your travel schedule and planned holidays

c) How GBS can add value to the business in airlines

d) Difference between Low-Cost (NGC) and Full-Service

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Any questions?

Piotr BobulaIAG GBSTelephone: +48 512898369, +48 795510054E-mail: piotr.bobula@iaggbs.com

Thank youSource data supplied by