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"fact-600": { "value": "846000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:Equity", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "fact-601": { "value": "1 Background and general information International Consolidated Airlines Group S.A. (hereinafter \u2018International Airlines Group\u2019, \u2018IAG\u2019 or the \u2018Group\u2019) is a leading European airline group, formed to hold the interests of airline and ancillary operations. IAG (hereinafter the \u2018Company\u2019) is a Spanish company registered in Madrid and was incorporated on December 17, 2009. The registered address of IAG is El Caser\u00edo, Zona industrial 2, Camino de La Mu\u00f1oza s/n, 28042, Madrid, Spain . On January 21, 2011 British Airways Plc and Iberia L\u00edneas A\u00e9reas de Espa\u00f1a S.A. Operadora (hereinafter \u2018British Airways\u2019 and \u2018Iberia\u2019 respectively) completed a merger transaction becoming the first two airlines of the Group. Vueling Airlines S.A. (\u2018Vueling\u2019) was acquired on April 26, 2013, and Aer Lingus Group Plc (\u2018Aer Lingus\u2019) on August 18, 2015. A list of the subsidiaries of the Group is included in the Group investments section. IAG shares are traded on the London Stock Exchange\u2019s main market for listed securities and also on the stock exchanges of Madrid, Barcelona, Bilbao and Valencia (the \u2018Spanish Stock Exchanges\u2019), through the Spanish Stock Exchanges Interconnection System (Mercado Continuo Espa\u00f1ol). 2 Significant accounting policies Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards as endorsed by the European Union (IFRSs as endorsed by the EU). The consolidated financial statements are rounded to the nearest million unless otherwise stated. These financial statements have been prepared on a historical cost convention except for certain financial assets and liabilities, including the \u20ac825 million convertible bond due 2028, derivative financial instruments and other equity investments that are measured at fair value. The notes to the financial statements for the prior year include reclassifications that were made to conform to the current year presentation. The Group\u2019s financial statements for the year to December 31, 2022 were authorised for issue, and approved by the Board of Directors on February 23, 2023. Going concern At December 31, 2022, the Group had total liquidity of \u20ac13,999 million (December 31, 2021: total liquidity of \u20ac11,986 million), comprising cash, cash equivalents and interest-bearing deposits of \u20ac9,599 million, \u20ac3,284 million of committed and undrawn general facilities and a further \u20ac1,116 million of committed and undrawn aircraft specific facilities. At December 31, 2022, the Group has no financial covenants associated with its loans and borrowings. In its assessment of going concern, the Group has modelled two scenarios referred to below as the Base Case and the Downside Case over the period to June 30, 2024 (the \u2018going concern period\u2019). The tenor of the going concern period encapsulates the seasonality of the Group\u2019s operations. The Group\u2019s three-year business plan, used in the creation of the Base Case, was prepared for and approved by the Board in December 2022. The business plan takes into account the Board\u2019s and management\u2019s views on the anticipated continued recovery from the COVID-19 pandemic and the wider economic and geopolitical environments on the Group\u2019s businesses across the going concern period. The key inputs and assumptions underlying the Base Case include: \u2022 capacity recovery modelled by geographical region (and in certain regions, by key destinations) with capacity gradually increasing from 97 per cent in quarter 1 2023 (compared to the equivalent period in 2019) to pre-pandemic levels by the end of the going concern period; \u2022 passenger unit revenue per ASK is forecast to continue to remain above the levels obtained in 2019 throughout the going concern period, which is based on, amongst other assumptions, higher ticket prices to reflect both higher fuel prices and cost inflation; \u2022 the Group has assumed that the committed and undrawn general facilities of \u20ac3.3 billion will not be drawn over the going concern period. The availability of certain of these facilities reduces over time, with \u20ac3.2 billion being available to the Group at the end of the going concern period; \u2022 the Group has assumed that \u20ac1.0 billion of the committed and undrawn aircraft specific facilities of \u20ac1.1 billion would be available to be drawn over the going concern period if required, of which \u20ac0.6 billion, relating to the EETC financing structures and other specific asset securitised financing are expected to be utilised; \u2022 the Group has assumed that the \u20ac500 million bond that matures in July 2023 will not be refinanced; \u2022 of the capital commitments detailed in note 15, \u20ac4.4 billion is due to be paid over the going concern period; \u2022 in addition to the \u20ac0.6 billion of committed aircraft financing, the Group has forecast securing approximately 100 per cent, or \u20ac4.9 billion, of the aircraft financing required that is currently uncommitted, to align with the timing and payments for these aircraft deliveries. This loan to value assumption is consistent with the level of financing the Group has been able to achieve recently, including over the course of the COVID-19 pandemic to date; and \u2022 the acquisition of the remaining shares in Air Europa Holdings, that the Group does not currently own, shall receive the relevant approvals and complete during the going concern period. The Downside Case applies stress to the Base Case to model adverse commercial and operational impacts as the Group\u2019s capacity recovers over the going concern period, represented by: reduced levels of capacity operated in each month, including reductions of at least 25 per cent for three months during 2023 to reflect the risk of more severe operational disruption; reduced passenger unit revenue per ASK reflective of general pricing pressure due to the current economic backdrop; and increased operational costs reflective of inflationary pressures. In the Downside Case, over the going concern period capacity would be ten per cent down when compared to the Base Case. The Downside Case assumes that \u20ac350 million of the \u20ac3,284 million of available general credit facilities are required to be drawn. The Directors consider the Downside Case to be a severe but plausible scenario. While not incorporated in the Downside Case, the Group has modelled the impact of further deteriorations in capacity operated and yield, as well as increases in the price of jet fuel by 20 per cent and a reduction in the forecast loan to value to 80 per cent of the uncommitted financing, but has also considered further mitigating actions, such as reducing operating and capital expenditure and deferring currently forecast early repayments of loans and borrowings. The Group expects to be able to continue to secure financing for future aircraft deliveries and in addition has further potential mitigating actions, including asset disposals, it would pursue in the event of adverse liquidity experience. NOTES TO THE ACCOUNTS For the year to December 31, 2022 1 Background and general information International Consolidated Airlines Group S.A. (hereinafter \u2018International Airlines Group\u2019, \u2018IAG\u2019 or the \u2018Group\u2019) is a leading European airline group, formed to hold the interests of airline and ancillary operations. IAG (hereinafter the \u2018Company\u2019) is a Spanish company registered in Madrid and was incorporated on December 17, 2009. The registered address of IAG is El Caser\u00edo, Zona industrial 2, Camino de La Mu\u00f1oza s/n, 28042, Madrid, Spain. On January 21, 2011 British Airways Plc and Iberia L\u00edneas A\u00e9reas de Espa\u00f1a S.A. Operadora (hereinafter \u2018British Airways\u2019 and \u2018Iberia\u2019 respectively) completed a merger transaction becoming the first two airlines of the Group. Vueling Airlines S.A. (\u2018Vueling\u2019) was acquired on April 26, 2013, and Aer Lingus Group Plc (\u2018Aer Lingus\u2019) on August 18, 2015. A list of the subsidiaries of the Group is included in the Group investments section. IAG shares are traded on the London Stock Exchange\u2019s main market for listed securities and also on the stock exchanges of Madrid, Barcelona, Bilbao and Valencia (the \u2018Spanish Stock Exchanges\u2019), through the Spanish Stock Exchanges Interconnection System (Mercado Continuo Espa\u00f1ol). 2 Significant accounting policies Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards as endorsed by the European Union (IFRSs as endorsed by the EU). The consolidated financial statements are rounded to the nearest million unless otherwise stated. These financial statements have been prepared on a historical cost convention except for certain financial assets and liabilities, including the \u20ac825 million convertible bond due 2028, derivative financial instruments and other equity investments that are measured at fair value. The notes to the financial statements for the prior year include reclassifications that were made to conform to the current year presentation. The Group\u2019s financial statements for the year to December 31, 2022 were authorised for issue, and approved by the Board of Directors on February 23, 2023. Going concern At December 31, 2022, the Group had total liquidity of \u20ac13,999 million (December 31, 2021: total liquidity of \u20ac11,986 million), comprising cash, cash equivalents and interest-bearing deposits of \u20ac9,599 million, \u20ac3,284 million of committed and undrawn general facilities and a further \u20ac1,116 million of committed and undrawn aircraft specific facilities. At December 31, 2022, the Group has no financial covenants associated with its loans and borrowings. In its assessment of going concern, the Group has modelled two scenarios referred to below as the Base Case and the Downside Case over the period to June 30, 2024 (the \u2018going concern period\u2019). The tenor of the going concern period encapsulates the seasonality of the Group\u2019s operations. The Group\u2019s three-year business plan, used in the creation of the Base Case, was prepared for and approved by the Board in December 2022. The business plan takes into account the Board\u2019s and management\u2019s views on the anticipated continued recovery from the COVID-19 pandemic and the wider economic and geopolitical environments on the Group\u2019s businesses across the going concern period. The key inputs and assumptions underlying the Base Case include: \u2022 capacity recovery modelled by geographical region (and in certain regions, by key destinations) with capacity gradually increasing from 97 per cent in quarter 1 2023 (compared to the equivalent period in 2019) to pre-pandemic levels by the end of the going concern period; \u2022 passenger unit revenue per ASK is forecast to continue to remain above the levels obtained in 2019 throughout the going concern period, which is based on, amongst other assumptions, higher ticket prices to reflect both higher fuel prices and cost inflation; \u2022 the Group has assumed that the committed and undrawn general facilities of \u20ac3.3 billion will not be drawn over the going concern period. The availability of certain of these facilities reduces over time, with \u20ac3.2 billion being available to the Group at the end of the going concern period; \u2022 the Group has assumed that \u20ac1.0 billion of the committed and undrawn aircraft specific facilities of \u20ac1.1 billion would be available to be drawn over the going concern period if required, of which \u20ac0.6 billion, relating to the EETC financing structures and other specific asset securitised financing are expected to be utilised; \u2022 the Group has assumed that the \u20ac500 million bond that matures in July 2023 will not be refinanced; \u2022 of the capital commitments detailed in note 15, \u20ac4.4 billion is due to be paid over the going concern period; \u2022 in addition to the \u20ac0.6 billion of committed aircraft financing, the Group has forecast securing approximately 100 per cent, or \u20ac4.9 billion, of the aircraft financing required that is currently uncommitted, to align with the timing and payments for these aircraft deliveries. This loan to value assumption is consistent with the level of financing the Group has been able to achieve recently, including over the course of the COVID-19 pandemic to date; and \u2022 the acquisition of the remaining shares in Air Europa Holdings, that the Group does not currently own, shall receive the relevant approvals and complete during the going concern period. The Downside Case applies stress to the Base Case to model adverse commercial and operational impacts as the Group\u2019s capacity recovers over the going concern period, represented by: reduced levels of capacity operated in each month, including reductions of at least 25 per cent for three months during 2023 to reflect the risk of more severe operational disruption; reduced passenger unit revenue per ASK reflective of general pricing pressure due to the current economic backdrop; and increased operational costs reflective of inflationary pressures. In the Downside Case, over the going concern period capacity would be ten per cent down when compared to the Base Case. The Downside Case assumes that \u20ac350 million of the \u20ac3,284 million of available general credit facilities are required to be drawn. The Directors consider the Downside Case to be a severe but plausible scenario. While not incorporated in the Downside Case, the Group has modelled the impact of further deteriorations in capacity operated and yield, as well as increases in the price of jet fuel by 20 per cent and a reduction in the forecast loan to value to 80 per cent of the uncommitted financing, but has also considered further mitigating actions, such as reducing operating and capital expenditure and deferring currently forecast early repayments of loans and borrowings. The Group expects to be able to continue to secure financing for future aircraft deliveries and in addition has further potential mitigating actions, including asset disposals, it would pursue in the event of adverse liquidity experience. Having reviewed the Base Case, the Downside Case and additional sensitivities, the Directors have a reasonable expectation that the Group has sufficient liquidity to continue in operational existence over the going concern period and hence continue to adopt the going concern basis in preparing the consolidated financial statements for year to December 31, 2022. In adopting the going concern basis of accounting, the consolidated financial statements have been prepared without the inclusion of a material uncertainty, which has been removed since the Annual report and accounts 2021. The removal of the material uncertainty arises from the reduction in uncertainty over the going concern period due to both the continued recovery subsequent to the COVID-19 pandemic and the strength of the Group\u2019s liquidity at December 31, 2022. Consolidation The Group financial statements include the financial statements of the Company and its subsidiaries, each made up to December 31, together with the attributable share of results and reserves of associates and joint ventures, adjusted where appropriate to conform to the Group\u2019s accounting policies. Subsidiaries are consolidated from the date of their acquisition, which is the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group applies the acquisition method to account for business combinations. The consideration paid is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the Consolidated balance sheet. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, as at the acquisition date the acquirer\u2019s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the Income statement. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. All intragroup account balances, including intragroup profits, are eliminated in preparing the consolidated financial statements. Unconsolidated structured entities The Group regularly uses sale and leaseback transactions to finance the acquisition of aircraft. In certain instances the Group will undertake several such sale and leaseback transactions at once through Enhanced Equipment Trust Certificates (EETCs). Under each of these financing structures, a company or companies (the EETC Issuer) are established to facilitate such financing on behalf of a number of unrelated investors. In certain of these financing structures, additional special purpose vehicles (the Lessor SPV) are established to provide additional financing from a number of further unrelated investors to the EETC Issuer. The proceeds from the issuance of the EETCs by the EETC Issuer, and where relevant the proceeds obtained from the Lessor SPV, are then used to purchase aircraft solely from the Group. The Group will then enter into fixed rate lease arrangements (which meet the recognition criteria of Asset financed liabilities) with the EETC Issuer, or where relevant the Lessor SPV, with payments made by the Group to the EETC Issuer, or the Lessor SPV, distributed, through a trust, to the aforementioned unrelated investors. The main purpose of the trust structure is to enhance the credit-worthiness of the Group\u2019s debt obligations through certain bankruptcy protection provisions and liquidity facilities, and also to lower the Group\u2019s total borrowing cost. The EETC Issuer and the Lessor SPV are established solely with the purpose of providing the asset-backed financing and upon maturity of such financing are expected to have no further activity. The relevant activities of the EETC Issuer and the Lessor SPV are restricted to pre- established financing agreements and the retention of the title of the associated financed aircraft. Accordingly, the Group has determined that each EETC Issuer and the Lessor SPVs are structured entities. Under the contractual terms of the financing structures, the Group has no exposure to losses in these entities, does not own any of the share capital of the EETC Issuer or the Lessor SPV, does not have any representation on the respective boards and has no ability to influence decision making. In addition to the above, such financial transactions expose the Group to no further significant financial or economic risks, such as no variability over time in interest rates. In considering the aforementioned facts, management has concluded that the Group does not have access to variable returns from the EETC Issuers and Lessor SPVs because its involvement is limited to the payment of principal and interest under the arrangement and, therefore, it does not control the EETC Issuers or the Lessor SPVs and as such does not consolidate them. Further information as to the financial impact of these financial transactions is given in note 25. Segmental reporting Operating segments are reported in a manner consistent with how resource allocation decisions are made by the chief operating decision- maker. The chief operating decision-maker, who is responsible for resource allocation and assessing performance of the operating segments, has been identified as the IAG Management Committee. Foreign currency translation a Functional and presentation currency Items included in the financial statements of each of the Group\u2019s entities are measured using the functional currency, being the currency of the primary economic environment in which the entity operates. In particular, British Airways and IAG Loyalty have a functional currency of pound sterling. The Group\u2019s consolidated financial statements are presented in euros, which is the Group\u2019s presentation currency. b Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency using the rate of exchange prevailing on the date of the transaction. Monetary foreign currency balances are translated into the functional currency at the rates ruling at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement, except where hedge accounting is applied. Foreign exchange gains and losses arising on the retranslation of monetary assets and liabilities classified as non- current on the Balance sheet are recognised within Net currency retranslation (charges)/credits in the Income statement. All other gains and losses arising on the retranslation of monetary assets and liabilities are recognised in operating profit. c Group companies The net assets of foreign operations are translated into euros at the rate of exchange ruling at the balance sheet date. Profits and losses of such operations are translated into euros at average rates of exchange during the year. The resulting exchange differences are taken directly to a separate component of equity (Currency translation reserve) until all or part of the interest is sold, when the relevant portion of the cumulative exchange difference is recognised in the Income statement. Property, plant and equipment Property, plant and equipment are held at cost. The Group has a policy of not revaluing property, plant and equipment. Depreciation is calculated to write off the cost less the estimated residual value on a straight-line basis, over the economic life of the asset. Residual values, where applicable, are reviewed annually against prevailing market values for equivalently aged assets and depreciation rates adjusted accordingly on a prospective basis. a Fleet All aircraft are stated at the fair value of the consideration given after taking account of manufacturers\u2019 credits. Fleet assets owned or right of use (\u2018ROU\u2019) assets are disaggregated into separate components and depreciated at rates calculated to write down the cost of each component to the estimated residual value at the end of their planned operational lives (which is the shorter of their useful life or lease term) on a straight-line basis. Depreciation rates are specific to aircraft type, based on the Group\u2019s fleet plans, within overall parameters of 23 years and up to 5 per cent residual value for shorthaul aircraft and between 23 and 29 years (depending on aircraft) and up to 5 per cent residual value for longhaul aircraft. Right of use assets are depreciated over the shorter of the lease term and the aforementioned depreciation rates. Where the lease includes a purchase option, at the discretion of the Group, where it is expected that the purchase option will be exercised, the associated right of use asset is depreciated using the aforementioned depreciation rates to reflect the reasonably certain life of the aircraft, irrespective of the lease term. Cabin interior modifications, including those required for brand changes and relaunches, are depreciated over the lower of 12 years and the remaining economic life of the aircraft, whether owned or leased. Aircraft and engine spares acquired on the introduction or expansion of a fleet, as well as rotable spares purchased separately, are carried as property, plant and equipment and generally depreciated in line with the fleet to which they relate. Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life between major overhaul. All other replacement spares and other costs relating to maintenance of fleet assets (including maintenance provided under \u2018pay-as-you-go\u2019 contracts) are charged to the Income statement on consumption or as incurred respectively. b Other property, plant and equipment Provision is made for the depreciation of all property, plant and equipment. Property, with the exception of freehold land, is depreciated over its expected useful life over periods not exceeding 50 years, or in the case of leasehold properties, over the duration of the lease if shorter, on a straight-line basis. Equipment is depreciated over periods ranging from four to 20 years. c Capitalisation of interest on progress payments Interest costs attributed to progress payments made on account of aircraft and other qualifying assets under construction are capitalised and added to the cost of the asset concerned. All other borrowing costs are recognised in the Income statement in the year in which they are incurred. d Liquidated damages Liquidated damages are recognised in the Income statement only to the extent that they relate to compensation for loss of income and/or incremental operating costs, when a contractual entitlement exists, the amounts can be reliably measured and the receipt is virtually certain. When liquidated damages do not relate to compensation for loss of income and/or incremental operating costs, the amounts are recorded as a reduction in the cost of the associated aircraft in the Balance sheet and depreciated over the life of the aircraft. e Leases The Group leases various aircraft, properties, equipment and other assets. The lease terms of these assets are consistent with the determined useful economic life of similar assets within property, plant and equipment. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified tangible asset for a period in exchange for consideration. The Group has elected not to apply such consideration where the contract relates to an intangible asset, such as for landing rights or IT software, in which case payments associated with the contract are expensed as incurred. Leases are recognised as a ROU asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued b Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency using the rate of exchange prevailing on the date of the transaction. Monetary foreign currency balances are translated into the functional currency at the rates ruling at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement, except where hedge accounting is applied. Foreign exchange gains and losses arising on the retranslation of monetary assets and liabilities classified as non- current on the Balance sheet are recognised within Net currency retranslation (charges)/credits in the Income statement. All other gains and losses arising on the retranslation of monetary assets and liabilities are recognised in operating profit. c Group companies The net assets of foreign operations are translated into euros at the rate of exchange ruling at the balance sheet date. Profits and losses of such operations are translated into euros at average rates of exchange during the year. The resulting exchange differences are taken directly to a separate component of equity (Currency translation reserve) until all or part of the interest is sold, when the relevant portion of the cumulative exchange difference is recognised in the Income statement. Property, plant and equipment Property, plant and equipment are held at cost. The Group has a policy of not revaluing property, plant and equipment. Depreciation is calculated to write off the cost less the estimated residual value on a straight-line basis, over the economic life of the asset. Residual values, where applicable, are reviewed annually against prevailing market values for equivalently aged assets and depreciation rates adjusted accordingly on a prospective basis. a Fleet All aircraft are stated at the fair value of the consideration given after taking account of manufacturers\u2019 credits. Fleet assets owned or right of use (\u2018ROU\u2019) assets are disaggregated into separate components and depreciated at rates calculated to write down the cost of each component to the estimated residual value at the end of their planned operational lives (which is the shorter of their useful life or lease term) on a straight-line basis. Depreciation rates are specific to aircraft type, based on the Group\u2019s fleet plans, within overall parameters of 23 years and up to 5 per cent residual value for shorthaul aircraft and between 23 and 29 years (depending on aircraft) and up to 5 per cent residual value for longhaul aircraft. Right of use assets are depreciated over the shorter of the lease term and the aforementioned depreciation rates. Where the lease includes a purchase option, at the discretion of the Group, where it is expected that the purchase option will be exercised, the associated right of use asset is depreciated using the aforementioned depreciation rates to reflect the reasonably certain life of the aircraft, irrespective of the lease term. Cabin interior modifications, including those required for brand changes and relaunches, are depreciated over the lower of 12 years and the remaining economic life of the aircraft, whether owned or leased. Aircraft and engine spares acquired on the introduction or expansion of a fleet, as well as rotable spares purchased separately, are carried as property, plant and equipment and generally depreciated in line with the fleet to which they relate. Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life between major overhaul. All other replacement spares and other costs relating to maintenance of fleet assets (including maintenance provided under \u2018pay-as-you-go\u2019 contracts) are charged to the Income statement on consumption or as incurred respectively. b Other property, plant and equipment Provision is made for the depreciation of all property, plant and equipment. Property, with the exception of freehold land, is depreciated over its expected useful life over periods not exceeding 50 years, or in the case of leasehold properties, over the duration of the lease if shorter, on a straight-line basis. Equipment is depreciated over periods ranging from four to 20 years. c Capitalisation of interest on progress payments Interest costs attributed to progress payments made on account of aircraft and other qualifying assets under construction are capitalised and added to the cost of the asset concerned. All other borrowing costs are recognised in the Income statement in the year in which they are incurred. d Liquidated damages Liquidated damages are recognised in the Income statement only to the extent that they relate to compensation for loss of income and/or incremental operating costs, when a contractual entitlement exists, the amounts can be reliably measured and the receipt is virtually certain. When liquidated damages do not relate to compensation for loss of income and/or incremental operating costs, the amounts are recorded as a reduction in the cost of the associated aircraft in the Balance sheet and depreciated over the life of the aircraft. e Leases The Group leases various aircraft, properties, equipment and other assets. The lease terms of these assets are consistent with the determined useful economic life of similar assets within property, plant and equipment. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified tangible asset for a period in exchange for consideration. The Group has elected not to apply such consideration where the contract relates to an intangible asset, such as for landing rights or IT software, in which case payments associated with the contract are expensed as incurred. Leases are recognised as a ROU asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. Right of use assets At the lease commencement date a ROU asset is measured at cost comprising the following: the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date less any lease incentives received; and any initial direct costs. In addition, at the lease commencement date a ROU asset will incorporate unavoidable restoration costs, such as the removal of airline- specific branding and configuration, to return the asset to its original condition, for which a corresponding amount is recognised withi n Provisions. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If ownership o f the ROU asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Lease liabilities Lease liabilities are initially measured at their present value, which includes the following lease payments: fixed payments (including in- substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the Group under residual value guarantees; the exercise price of a purchase option if the Group is reasonably certain to exercise that option; payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option; and payments to be made under reasonably certain extension options. Aircraft lease payments are discounted using the interest rate implicit in the lease. The interest rate implicit in the lease is the discount rate that, at the inception of the lease, causes the aggregate present value of the minimum lease payments and the unguaranteed residual value to be equal to the fair value of the leased asset and any initial indirect costs of the lessor. For aircraft leases these inputs are either observable in the contract or readily available from external market data. The initial direct costs of the lessor are considered to be immaterial. If the interest rate implicit in the lease cannot be determined, the Group entity\u2019s incremental borrowing rate is used. Each lease payment is allocated between the principal and finance cost. The finance cost is charged to the Income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification of the lease contract, a re-assessment of the lease term (specifically in regard to assumptions regarding extension and termination options) and changes in variable lease payments that are based on an index or a rate. Amounts excluded from recognition as lease liabilities The Group has elected not to recognise ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less and those leases of low-value assets. Payments associated with short-term leases and leases of low-value assets are recognised on a straight line basis as an expense in the Income statement. Short-term leases are leases with a lease term of 12 months or less, that do not contain a purchase option. Low-value assets comprise IT equipment and small items of office furniture. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is re-assessed and adjusted against the ROU asset. Extension options are included in a number of aircraft, property and equipment leases across the Group and are reflected in the lease payments where the Group is reasonably certain that it will exercise the option. The Group is also exposed to variable lease payments based on usage or revenue generated over a defined period. Such variable lease payments are expensed to the Income statement as incurred. Sale and leaseback transactions The Group regularly uses sale and lease transactions to finance the acquisition of aircraft. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. The principal criterion for assessing whether a sale has occurred or not, is whether the contract contains the option, at the discretion of the Group, to repurchase the aircraft over the lease term; with the existence of such a repurchase option resulting in a sale having been deemed not to have occurred; and if no such repurchase option exists, then a sale is deemed to have occurred. The following defines the accounting for such transactions: \u2022 if a sale is determined to have occurred, then the associated asset is de-recognised and a ROU asset and lease liability are recognised. The ROU asset recognised is based on the proportion of the previous carrying amount of the asset that is retained. Any gain or loss is restricted to the amount that relates to the rights that have been transferred to the counter-party to the transaction; and \u2022 where a sale is determined to have not occurred, the asset is retained on the balance sheet within Property, plant and equipment and an Asset financed liability recognised equal to the financing proceeds. Cash flow presentation \u2013 lease liabilities Lease payments are presented as follows in the Consolidated cash flow statement: \u2022 where the proceeds received from sale and leaseback transactions represent the fair value of the asset being transferred, the total proceeds are presented within cash flows from investing activities. Where the proceeds received from sale and leaseback transactions exceed the fair value of the asset being transferred, the element of the proceeds equivalent to the fair value of the asset being transferred is presented within investing activities and the amount of proceeds in excess of the fair value is presented within financing activities; \u2022 the repayments of the principal element of lease liabilities are presented within cash flows from financing activities; \u2022 the payments of the interest element of lease liabilities are included within cash flows from operating activities; and \u2022 the payments arising from variable elements of a lease, short-term leases and low-value assets are presented within cash flows from operating activities. Cash flow presentation \u2013 asset financed liabilities Payments associated with asset financed liabilities are presented as follows in the Consolidated cash flow statement: \u2022 the proceeds received asset financed liabilities are presented within cash flows from financing activities; \u2022 the repayments of the principal element of asset financed liabilities are presented within cash flows from financing activities; and \u2022 the payments of the interest element of asset financed liabilities are included within cash flows from operating activities. COVID-19 related rent concessions On May 28, 2020, the IASB issued \u2018COVID-19 Related Rent Concessions \u2013 amendments to IFRS 16 Leases\u2019. The EU subsequently adopted the amendment on October 9, 2020. The amendment provides a practical expedient for lessees, up to June 30, 2021, not to assess whether a COVID-19 related rent concession is a lease modification. On March 31, 2021, the IASB extended the period for the application of these concessions through to June 30, 2022. The EU subsequently adopted the amendment on August 31, 2021. The extended amendment is effective for annual reporting periods commencing on or after April 1, 2021 and the Group has elected to adopt this amendment for the year to December 31, 2022. Lessor accounting From time to time the Group will lease, to third parties, specific assets, including certain property, plant and equipment. On inception of the lease, the Group determines whether each lease is a finance lease or an operating lease. In order to make this determination, the Group assesses whether the lease transfers substantially all of the risks and rewards of ownership to the lessee. Factors in making this assessment include, but are not limited to, whether the lease term is for the major part of the economic life of the underlying asset and whether the underlying asset transfers to the lessee or the lessee has the option to purchase the underlying asset at the end of the lease. Where substantially all of the risks and rewards of ownership have been transferred, then the lease is recorded as a finance lease, otherwise it is recorded as an operating lease. Intangible assets a Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration paid over the net fair value of the identifiable assets and liabilities of the acquiree. Where the net fair value of the identifiable assets and liabilities of the acquiree is in excess of the consideration paid, a gain on bargain purchase is recognised immediately in the Income statement. For the purpose of assessing impairment, goodwill is grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is tested for impairment annually and whenever indicators exist that the carrying value may not be recoverable. b Brands Brands arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. Long established brands that are expected to be used indefinitely are not amortised but assessed annually for impairment. c Customer loyalty programmes Customer loyalty programmes arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. A customer loyalty programme with an expected useful life is amortised over the expected remaining useful life. Established customer loyalty programmes that are expected to be used indefinitely are not amortised but assessed annually for impairment. d Landing rights Landing rights acquired in a business combination are recognised at fair value at the acquisition date. Landing rights acquired from other airlines are capitalised at cost. Capitalised landing rights based outside of the UK and the EU are amortised on a straight-line basis over a period not exceeding 20 years. Capitalised landing rights based within the UK and the EU are not amortised, as regulations provide that these landing rights are perpetual. e Contract-based intangibles Contract based intangibles acquired in a business combination are recognised initially at fair value at the acquisition date and amortised over the remaining life of the contract. f Software The cost to purchase or develop computer software that is separable from an item of related hardware is capitalised separately and amortised on a straight-line basis generally over a period not exceeding five years, with certain specific software development s amortised over a period of up to ten years. g Emissions allowances Where an operating company purchases emissions allowances these amounts are recognised at cost and recorded within Intangible assets. As an operating company emits CO 2 equivalent and builds up an obligation to the relevant authorities, a provision is recognised. Emissions allowances recorded within Intangible assets are not revalued or amortised but are tested for impairment whenever indicators exist that the carrying value may not be recoverable. For those obligations arising for which the operating company has purchased emission allowances to offset the emissions, the provision is recognised at the weighted average cost of the intangible asset. For those obligations arising for which the operating company has not yet purchased emission allowances to offset the emissions, the provision is recognised at the market price of the allowances required at the reporting date. As the provision is recognised, a corresponding amount is recorded in the Income statement within Fuel, oil costs and emission charges. The Group\u2019s emissions obligation, recognised as a separate liability, is extinguished when the associated emission certificates are surrendered, which is typically within 12 months of the reporting date. From time to time the Group enters into sale and repurchase transactions for specified emission allowances. Such transactions do not meet the recognition criteria of a sale under IFRS 15 and accordingly the asset is retained on the balance sheet within Intangible assets and an Other financing liability recognised equal to the proceeds received. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued COVID-19 related rent concessions On May 28, 2020, the IASB issued \u2018COVID-19 Related Rent Concessions \u2013 amendments to IFRS 16 Leases\u2019. The EU subsequently adopted the amendment on October 9, 2020. The amendment provides a practical expedient for lessees, up to June 30, 2021, not to assess whether a COVID-19 related rent concession is a lease modification. On March 31, 2021, the IASB extended the period for the application of these concessions through to June 30, 2022. The EU subsequently adopted the amendment on August 31, 2021. The extended amendment is effective for annual reporting periods commencing on or after April 1, 2021 and the Group has elected to adopt this amendment for the year to December 31, 2022. Lessor accounting From time to time the Group will lease, to third parties, specific assets, including certain property, plant and equipment. On inception of the lease, the Group determines whether each lease is a finance lease or an operating lease. In order to make this determination, the Group assesses whether the lease transfers substantially all of the risks and rewards of ownership to the lessee. Factors in making this assessment include, but are not limited to, whether the lease term is for the major part of the economic life of the underlying asset and whether the underlying asset transfers to the lessee or the lessee has the option to purchase the underlying asset at the end of the lease. Where substantially all of the risks and rewards of ownership have been transferred, then the lease is recorded as a finance lease, otherwise it is recorded as an operating lease. Intangible assets a Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration paid over the net fair value of the identifiable assets and liabilities of the acquiree. Where the net fair value of the identifiable assets and liabilities of the acquiree is in excess of the consideration paid, a gain on bargain purchase is recognised immediately in the Income statement. For the purpose of assessing impairment, goodwill is grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is tested for impairment annually and whenever indicators exist that the carrying value may not be recoverable. b Brands Brands arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. Long established brands that are expected to be used indefinitely are not amortised but assessed annually for impairment. c Customer loyalty programmes Customer loyalty programmes arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. A customer loyalty programme with an expected useful life is amortised over the expected remaining useful life. Established customer loyalty programmes that are expected to be used indefinitely are not amortised but assessed annually for impairment. d Landing rights Landing rights acquired in a business combination are recognised at fair value at the acquisition date. Landing rights acquired from other airlines are capitalised at cost. Capitalised landing rights based outside of the UK and the EU are amortised on a straight-line basis over a period not exceeding 20 years. Capitalised landing rights based within the UK and the EU are not amortised, as regulations provide that these landing rights are perpetual. e Contract-based intangibles Contract based intangibles acquired in a business combination are recognised initially at fair value at the acquisition date and amortised over the remaining life of the contract. f Software The cost to purchase or develop computer software that is separable from an item of related hardware is capitalised separately and amortised on a straight-line basis generally over a period not exceeding five years, with certain specific software developments amortised over a period of up to ten years. g Emissions allowances Where an operating company purchases emissions allowances these amounts are recognised at cost and recorded within Intangible assets. As an operating company emits CO 2 equivalent and builds up an obligation to the relevant authorities, a provision is recognised. Emissions allowances recorded within Intangible assets are not revalued or amortised but are tested for impairment whenever indicators exist that the carrying value may not be recoverable. For those obligations arising for which the operating company has purchased emission allowances to offset the emissions, the provision is recognised at the weighted average cost of the intangible asset. For those obligations arising for which the operating company has not yet purchased emission allowances to offset the emissions, the provision is recognised at the market price of the allowances required at the reporting date. As the provision is recognised, a corresponding amount is recorded in the Income statement within Fuel, oil costs and emission charges. The Group\u2019s emissions obligation, recognised as a separate liability, is extinguished when the associated emission certificates are surrendered, which is typically within 12 months of the reporting date. From time to time the Group enters into sale and repurchase transactions for specified emission allowances. Such transactions do not meet the recognition criteria of a sale under IFRS 15 and accordingly the asset is retained on the balance sheet within Intangible assets and an Other financing liability recognised equal to the proceeds received. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the value by which the asset\u2019s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less cost to sell and value-in-use. Non-financial assets other than goodwill that were subject to an impairment are reviewed for possible reversal of the impairment at each reporting date. a Property, plant and equipment, including Right of use assets The carrying value is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable and the cumulative impairment losses are shown as a reduction in the carrying value of property, plant and equipment. b Intangible assets Intangible assets are held at cost and are either amortised on a straight-line basis over their economic life, or they are deemed to have an indefinite economic life and are not amortised. Indefinite life intangible assets are tested annually for impairment or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. Investments in associates and joint ventures An associate is an undertaking in which the Group has a long-term equity interest and over which it has the power to exercise significant influence. Where the Group cannot exercise control over an entity in which it has a shareholding greater than 51 per cent, the equity interest is treated as an associated undertaking. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates and joint ventures are accounted for using the equity method, and initially recognised at cost. The Group\u2019s interest in the net assets of associates and joint ventures is included in Investments accounted for using the equity method in the Balance sheet and its interest in their results is included in the Income statement, below operating result. The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership. Financial instruments a Financial assets and liabilities Financial assets and financial liabilities are classified, upon initial recognition, as measured at amortised cost, at fair value through other comprehensive income (OCI), or fair value through profit or loss. Financial assets and financial liabilities are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets and financial liabilities. The classification of financial assets and financial liabilities at initial recognition depends on the financial assets\u2019 and financial liabilities\u2019 contractual cash flow characteristics and the Group\u2019s business model for managing them. In order for a financial asset and financial liability to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. A financial asset or financial liability that is not SPPI is classified and measured at fair value through profit or loss. This assessment is performed on an instrument by instrument basis. The Group\u2019s business model for managing financial assets and financial liabilities establishes how it manages its financial assets and financial liabilities in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets and financial liabilities classified and measured at amortised c ost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets and financial liabilities classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Long term borrowings Long-term borrowings are recorded at amortised cost, including lease liabilities which contain interest rate swaps that are closely related to the underlying financing and as such are not accounted for as an embedded derivative. Convertible debt Convertible bonds are classified as either compound financial instruments or hybrid financial instruments depending on the settlement alternatives upon redemption. Where the bondholders exercise their equity conversion options and the Group has no alternative other than to settle the convertible bonds into a fixed number of ordinary shares of the Company, then the bonds are classified as a compound financial instrument. Where the Group has an alternative settlement mechanism to the convertible bonds that permits settlement in cash, then the convertible instrument is classified as a hybrid financial instrument. Convertible bonds that are classified as compound financial instruments consist of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt, and is subsequently recorded on an amortised cost basis using the effective interest method until extinguished on conversion or maturity of the bonds, and is recognised within Long-term borrowings. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in the equity portion of the convertible bond in Other reserves and is not subsequently remeasured. The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this value and the interest paid is added to the carrying amount of the liability. Convertible bonds that are classified as hybrid financial instruments consist only of a liability component recognised within Long-term borrowings. At the date of issue, the entirety of the convertible bonds is accounted for at fair value with subsequent fair value gains or losses recorded within Long-term borrowings. The fair value of such financial instruments is obtained from their respective quoted prices in active markets, with the portion of the change in fair value attributable to changes in the credit risk of the convertible bonds recognised in Other comprehensive income and the portion of the change in fair value attributable to market conditions recognised in the Income statement within Finance costs. Issue costs associated with compound financial instruments are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying values at the date of issue. The portion relating to the equity component is charged directly against equity. Issue costs associated with hybrid financial instruments are expensed immediately to the Income statement. Other equity investments Other equity investments are non-derivative financial assets including listed and unlisted investments, excluding interests in associates and joint ventures. On initial recognition, these equity investments are irrevocably designated as measured at fair value through Other comprehensive income. They are subsequently measured at fair value, with changes in fair value recognised in Other comprehensive income with no recycling of these gains and losses to the Income statement when the investment is sold or a change in the structure of transaction changes its classification as an Other equity instrument. Dividends received on other equity investments are recognised in the Income statement. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Interest-bearing deposits Interest-bearing deposits, principally comprising funds held with banks and other financial institutions with contractual cash flows that are SPPI, and held in order to collect contractual cash flows, are carried at amortised cost using the effective interest method. Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation. b Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits with any qualifying financial institution repayable on demand or maturing within three months of the date of acquisition and which are subject to an insignificant risk of change in value. c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is en tered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued Convertible bonds that are classified as hybrid financial instruments consist only of a liability component recognised within Long-term borrowings. At the date of issue, the entirety of the convertible bonds is accounted for at fair value with subsequent fair value gains or losses recorded within Long-term borrowings. The fair value of such financial instruments is obtained from their respective quoted prices in active markets, with the portion of the change in fair value attributable to changes in the credit risk of the convertible bonds recognised in Other comprehensive income and the portion of the change in fair value attributable to market conditions recognised in the Income statement within Finance costs. Issue costs associated with compound financial instruments are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying values at the date of issue. The portion relating to the equity component is charged directly against equity. Issue costs associated with hybrid financial instruments are expensed immediately to the Income statement. Other equity investments Other equity investments are non-derivative financial assets including listed and unlisted investments, excluding interests in associates and joint ventures. On initial recognition, these equity investments are irrevocably designated as measured at fair value through Other comprehensive income. They are subsequently measured at fair value, with changes in fair value recognised in Other comprehensive income with no recycling of these gains and losses to the Income statement when the investment is sold or a change in the structure of transaction changes its classification as an Other equity instrument. Dividends received on other equity investments are recognised in the Income statement. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Interest-bearing deposits Interest-bearing deposits, principally comprising funds held with banks and other financial institutions with contractual cash flows that are SPPI, and held in order to collect contractual cash flows, are carried at amortised cost using the effective interest method. Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation. b Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits with any qualifying financial institution repayable on demand or maturing within three months of the date of acquisition and which are subject to an insignificant risk of change in value. c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. When a derivative is designated as a hedging instrument and that instrument expires, is sold or is restructured, if the initial forecast transaction is still expected to occur, any cumulative gain or loss remains in the cash flow hedge reserve until such time as the hedge item impacts the Income statement. Where there is a change in the risk management objective, then hedge accounting is discontinued and the associated cumulative gain or loss arising prior to the change in risk management objective remains in the cash flow hedge reserve until such time as the underlying hedged item impacts the Income statement had the risk management objective continued to have been met. Where a forecast transaction which was previously determined to be highly probable and for which hedge accounting applied, is no longer expected to occur, hedge accounting is discontinued and the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified to the Income statement. Each operating company enters into foreign currency derivative contracts, that are not designated in a hedge relationship, in order to mitigate foreign exchange movements on financial liabilities designated in currencies other than the presentational currency of each operating company, including but not limited to, lease liabilities. Movements in the fair value of such derivatives are recognised in the Income statement in the period in which they occur and are presented within Net currency retranslation charges. Exchange gains and losses on monetary investments are taken to the Income statement unless the item has been designated and is assessed as an effective hedging instrument. Exchange gains and losses on non-monetary investments are reflected in equity. d Cash flow hedges Changes in the fair value of derivative financial instruments designated as in a hedge relationship of a highly probable expected future transaction are assessed for effectiveness and accordingly recorded in the Cash flow hedge reserve within equity. Hedge effectiveness Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: (i) there is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument; (ii) the effect of credit risk does not dominate the value changes that result from that economic relationship; and (iii) the hedge ratio is aligned with the requirements of the Group\u2019s risk management strategy and in all instances is maintained at a ratio of 1:1. Sources of ineffectiveness include the following: \u2022 in hedges of fuel purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; \u2022 in hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; and \u2022 in hedges of interest rate payments, ineffectiveness may arise if there are differences in the critical terms between the interest rate derivative instrument and the underlying hedged item, or if there are changes in the credit risk of the Group or the derivative counterparty. Ineffectiveness is recorded within the Income statement as Realised/unrealised (losses)/gains on derivatives not qualifying for hedge accounting and presented within Other non-operating charges. Reclassification adjustments Gains and losses accumulated in the Cash flow hedge reserve within equity are reclassified from the Cash flow hedge reserve when the hedged item affects the Income statement as follows: \u2022 where the forecast hedged item results in the recognition of expenses within the Income statement (such as the purchase of jet fuel for which both fuel and the associated foreign currency derivatives are designated as the hedging instrument), the accumulated gains and losses recorded in both the cash flow hedge reserve and the cost of hedging reserve are reclassified and included in the Income statement within the same caption as the hedged item is presented. Such reclassification occurs in the same period as the hedged item is recognised in the Income statement; \u2022 where the forecast hedged item results in the recognition of a non-financial asset (such as the purchase of aircraft for which foreign currency derivatives are designated as the hedging instrument or where the purchase of jet fuel gives rise to the recognition of fuel inventory in storage facilities), or a non-financial liability (such as the sales in advance of carriage for which both foreign currency derivatives and non-financial derivative instruments are designated as the hedging instrument), the accumulated gains and losses recorded within both the cash flow hedge reserve and the cost of hedging reserve are included in the initial cost of the asset and liability, respectively. These gains or losses are recorded in the Income statement as the non-financial asset and the non-financial liability affects the Income statement (which for aircraft is through Depreciation over the expected life of the aircraft, for fuel inventory through Fuel, oil costs and emission charges and for sales in advance of carriage through Passenger revenue when the flight is flown); and \u2022 where the forecast hedged items results in the recognition of a financial asset or liability (such as variable rate debt for which interest rate swaps are designated as the hedging instrument), the accumulated gains and losses recorded within the cash flow hedge reserve are reclassified to Interest expense within the Income statement at the same time as the interest expense arises on the hedged item. Further information on the risk management activities of the Group is given in note 28d. e Interest rate benchmark reform In 2020 the Group adopted the amendments to IFRS 9 and IFRS 7 relating to the interest rate benchmark reform Phase 1, (\u2018Phase 1\u2019) and in 2021 the Group adopted the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to the interest rate benchmark reform Phase 2 (\u2018Phase 2\u2019). The Phase 1 amendments provide temporary relief from applying certain hedge accounting requirements to hedging relationships directly affected by Interbank Offered Rates (\u2018IBOR\u2019) reform. The reliefs have the effect that IBOR reform does not cause hedge accounting to terminate prior to contracts being amended. Where transition to an alternative benchmark rate has taken place, the Group ceases to apply the Phase 1 amendments and instead applies the Phase 2 amendments. Hedge accounting Where the Group continues to apply the Phase 1 amendments, the following reliefs are applied: \u2022 when considering the highly probable requirement, the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the Group\u2019s hedged long-term borrowings are based, do not change as a result of IBOR reform; \u2022 in assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the cash flows of the hedged long-term borrowings and the interest rate swaps that hedge them are based, are not altered by IBOR reform; and \u2022 the Group has not recycled the cash flow hedge reserve relating to the period after the IBOR reform is expected to take effect. When the Group ceases to apply the Phase 1 amendments, the Group amends its hedge designation to reflect changes which are required by IBOR reform, but only to make one or more of the following changes: \u2022 designating an alternative benchmark rate (contractually or non-contractually specified) as the hedged risk; \u2022 amending the description of the hedged item, including the description of the designated portion of the cash flows being hedged; or \u2022 amending the description of the hedging instrument. The associated hedge documentation is updated to reflect these changes in designation by the end of the reporting period in which the changes are made. Such amendments do not give rise to the hedge relationship being discontinued. When the Group transitions to an alternative benchmark rate, the accumulated amounts within the cash flow hedge reserve are determined to be based on the alternative benchmark rate and no reclassification adjustments are made from the cash flow hedge reserve to the Income statement. Long-term borrowings and lease liabilities Phase 2 of the amendments requires that, for financial instruments measured using amortised cost measurement, changes to the basis for determining the contractual cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest rate prospectively. No gain or loss is recognised upon transition to the new benchmark. The expedient is only applicable to direct changes that are required by interest rate benchmark reform. For lease liabilities where there is a change to the basis for determining the contractual cash flows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reflects the change in the interest rate where the change is required by IBOR reform. Further information on the management of and uncertainty arising from interest rate reform is given in note 27i. No amounts have been recorded in the current or prior periods as a result of these amendments. Employee benefit plans a Pension obligations The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior years. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior years. The benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. The discount rate is the yield at the balance sheet date on AA-rated corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. When the net obligation calculation results in an asset for the Group, the recognition of an asset is limited to the present value of any future refunds, net of the relevant taxes, from the plan or reductions in future contributions to the plan (\u2018the asset ceiling\u2019). The fair value of the plan assets is based on market price information and, in the case of quoted securities, is the published bid price. The fair value of insurance policies which exactly match the amount and timing of some or all benefits payable under the scheme are deemed to be the present value of the related obligations. Longevity swaps are measured at their fair value. Current service costs are recognised within employee costs in the year in which they arise. Past service costs are recognised in the event of a plan amendment or curtailment, or when the Group recognises related restructuring costs or severance obligations. The net interest is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest and other expenses related to the defined benefit plans are recognised in the Income statement. Remeasurements, comprising IAS 19 gains and losses, the effect of the asset ceiling (excluding interest) and the return on plan assets (excluding interest), are recognised immediately in Other comprehensive income. Remeasurements are not reclassified to the Income statement in subsequent periods. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued e Interest rate benchmark reform In 2020 the Group adopted the amendments to IFRS 9 and IFRS 7 relating to the interest rate benchmark reform Phase 1, (\u2018Phase 1\u2019) and in 2021 the Group adopted the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to the interest rate benchmark reform Phase 2 (\u2018Phase 2\u2019). The Phase 1 amendments provide temporary relief from applying certain hedge accounting requirements to hedging relationships directly affected by Interbank Offered Rates (\u2018IBOR\u2019) reform. The reliefs have the effect that IBOR reform does not cause hedge accounting to terminate prior to contracts being amended. Where transition to an alternative benchmark rate has taken place, the Group ceases to apply the Phase 1 amendments and instead applies the Phase 2 amendments. Hedge accounting Where the Group continues to apply the Phase 1 amendments, the following reliefs are applied: \u2022 when considering the highly probable requirement, the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the Group\u2019s hedged long-term borrowings are based, do not change as a result of IBOR reform; \u2022 in assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the cash flows of the hedged long-term borrowings and the interest rate swaps that hedge them are based, are not altered by IBOR reform; and \u2022 the Group has not recycled the cash flow hedge reserve relating to the period after the IBOR reform is expected to take effect. When the Group ceases to apply the Phase 1 amendments, the Group amends its hedge designation to reflect changes which are required by IBOR reform, but only to make one or more of the following changes: \u2022 designating an alternative benchmark rate (contractually or non-contractually specified) as the hedged risk; \u2022 amending the description of the hedged item, including the description of the designated portion of the cash flows being hedged; or \u2022 amending the description of the hedging instrument. The associated hedge documentation is updated to reflect these changes in designation by the end of the reporting period in which the changes are made. Such amendments do not give rise to the hedge relationship being discontinued. When the Group transitions to an alternative benchmark rate, the accumulated amounts within the cash flow hedge reserve are determined to be based on the alternative benchmark rate and no reclassification adjustments are made from the cash flow hedge reserve to the Income statement. Long-term borrowings and lease liabilities Phase 2 of the amendments requires that, for financial instruments measured using amortised cost measurement, changes to the basis for determining the contractual cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest rate prospectively. No gain or loss is recognised upon transition to the new benchmark. The expedient is only applicable to direct changes that are required by interest rate benchmark reform. For lease liabilities where there is a change to the basis for determining the contractual cash flows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reflects the change in the interest rate where the change is required by IBOR reform. Further information on the management of and uncertainty arising from interest rate reform is given in note 27i. No amounts have been recorded in the current or prior periods as a result of these amendments. Employee benefit plans a Pension obligations The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior years. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior years. The benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. The discount rate is the yield at the balance sheet date on AA-rated corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. When the net obligation calculation results in an asset for the Group, the recognition of an asset is limited to the present value of any future refunds, net of the relevant taxes, from the plan or reductions in future contributions to the plan (\u2018the asset ceiling\u2019). The fair value of the plan assets is based on market price information and, in the case of quoted securities, is the published bid price. The fair value of insurance policies which exactly match the amount and timing of some or all benefits payable under the scheme are deemed to be the present value of the related obligations. Longevity swaps are measured at their fair value. Current service costs are recognised within employee costs in the year in which they arise. Past service costs are recognised in the event of a plan amendment or curtailment, or when the Group recognises related restructuring costs or severance obligations. The net interest is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest and other expenses related to the defined benefit plans are recognised in the Income statement. Remeasurements, comprising IAS 19 gains and losses, the effect of the asset ceiling (excluding interest) and the return on plan assets (excluding interest), are recognised immediately in Other comprehensive income. Remeasurements are not reclassified to the Income statement in subsequent periods. b Severance obligations Severance obligations are recognised when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises a provision for severance payments when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without realistic possibility of withdrawal, or providing severance payments as a result of an offer made to encourage voluntary redundancy. Other employee benefits are recognised when there is deemed to be a present obligation. Taxation Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the balance sheet date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: \u2022 where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; \u2022 in respect of taxable temporary differences associated with investments in subsidiaries or associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and \u2022 deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the Income statement. Inventories Inventories are valued at the lower of cost and net realisable value. Such cost is determined by the weighted average cost method. Inventories include mainly aircraft spare parts, repairable aircraft engine parts and fuel held in storage facilities. Share-based payments The Group operates a number of equity-settled, share-based payment plans, under which the Group awards equity instruments of the Group for services rendered by employees. The fair value of the share-based payment plans is measured at the date of grant using a valuation model provided by external specialists. The resulting cost, as adjusted for the expected and actual level of vesting of the plan, is charged to the Income statement over the period in which the options vest. At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management\u2019s best estimate of the achievement or otherwise of non-market conditions, and accordingly the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous balance sheet date is recognised in the Income statement with a corresponding entry in equity. Provisions Provisions are made when an obligation exists for a present liability in respect of a past event and where the amount of the obligation can be reliably estimated and where it is considered probable that an outflow of economic resources will be required to settle the obligation. Where it is not considered probable that there will be an outflow of economic resources required to settle the obligation, the Group does not recognise a provision, but discloses the matter as a contingent liability. The Group assesses whether each matter is probable of there being an outflow of economic resources to settle the obligation at each reporting date. Employee leaving indemnities and other employee provisions are recorded for flight crew who, meeting certain conditions, have the option of being placed on reserve or of taking early retirement. The Group is obligated to remunerate these employees until they reach the statutory retirement age. The calculation is performed by independent actuaries using the projected unit credit method. Other employee related provisions are recognised for direct expenditures of business reorganisation such as severance payments (restructuring provisions) where plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken at the balance sheet date. Restoration and handback provisions arising on inception of a lease are recognised as a provision with a corresponding amount recognised as part of the ROU asset. Any subsequent change in estimation relating to such costs are reflected in the ROU asset. Maintenance and handback provisions that occur through usage or through the passage of time are recognised as such activity occurs, with a corresponding expense recorded in the Income statement. Any subsequent change in estimation are recognised in the Income statement. The method for determining legal claims provisions is determined on a claim by claim basis. Where a claim includes a significant population of items, the weighted average provision is estimated by determining all potential outcomes and the probability of their occurrence. Where a claim relates to a single item, then the Group determines the associated provision by applying the most likely outcome giving consideration to alternative outcomes. Where an individual claim is significant, the disclosure of quantitative information is restricted to the extent that it does not prejudice the outcome of the claim. If the effect is material, expected future cash flows are discounted using a rate that reflects, where appropriate, the risks specific to the provision. Where discounting is used, the effect of unwinding the discount rate is recognised as a finance cost in the Income statement. Revenue recognition Passenger revenue The Group\u2019s revenue primarily derives from transportation services for both passengers and cargo. Revenue is recognised when the transportation service has been provided. Passenger tickets are generally paid for in advance of transportation and are recognised, net of discounts, as Deferred revenue on ticket sales in current liabilities until either the customer has flown or, for flexible tickets, when unused ticket revenue is recognised or the ticket expires unused. At the time of expected travel, revenue is recognised in relation to flexible tickets where a customer can reschedule the date of intended travel, that are not expected to be used, a term referred to as \u2018unused flexible tickets\u2019. This revenue is recognised based on the terms and conditions of the ticket and analysis of historical experience. For these unused flexible tickets, revenue is recognised only when the risk of a significant reversal of revenue is remote based on the terms and conditions of the ticket and analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. Where a flight is cancelled, the passenger is entitled to either compensation, a refund, changing to an alternative flight or the receipt of a voucher. Where compensation is issued to the customer, such payments are presented net within Passenger revenue against the original ticket purchased. Where the Group provides a refund to a customer, Deferred revenue on ticket sales is reduced and no amount is recorded within revenue. Where a voucher is issued it is retained within Deferred revenue on ticket sales until such time as it is redeemed for a flight or it expires, at which time it is recorded within Passenger revenue. The Group also recognises revenue by estimating the amount of vouchers that are not expected to be redeemed prior to expiry using analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. The amount of such revenue recognised is constrained, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Payments received in relation to certain ancillary services regarding passenger transportation, such as change fees, are not considered to be distinct from the performance obligation to provide the passenger flight. Payments relating to these ancillary services are recognised in Deferred revenue on ticket sales in current liabilities until the customer has flown. The Group considers whether it is an agent or a principal in relation to passenger transportation services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. The Group acts as an agent where (i) it collects various taxes, duties and fees assessed on the sale of tickets to passengers and remits these to the relevant taxing authorities; and (ii) where it provides interline services to airline partners outside of the Group. Commissions earned in relation to agency services are recognised as revenue when the underlying goods or services have been transferred to the customer. In all other instances, the Group considers it acts as the principal in relation to passenger transportation services. Cargo revenue The Group has identified a single performance obligation in relation to cargo services and the associated revenue is measured at its standalone selling price and recognised on satisfaction of the performance obligation, which occurs on the fulfilment of the transportation service. Other revenue The Group has identified several performance obligations in relation to services that give rise to revenue being recognised within Other revenue. These services, their performance obligations and associated revenue recognition include: \u2022 the provision of maintenance services and overhaul services for engines and airframes, where the Group is engaged to enhance an asset while the customer retains control of the asset. Accordingly, the performance obligations are satisfied, and revenue recognised, over time. The Group estimates the proportion of the contract completed at the reporting date and recognises revenue based on the percentage of completion of the contract; \u2022 the provision of ground handling services, where the performance obligations are fulfilled when the services are provided; \u2022 the provision of holiday and hotel services, where the performance obligations are satisfied over time as the customer receives the benefit of the service; and \u2022 brand and marketing activities, where the performance obligations are satisfied as the associated activities occur. Customer loyalty programmes The Group operates four loyalty programmes: the British Airways Executive Club, Iberia Plus, Vueling Club and the Aer Lingus Aer Club. The customer loyalty programmes award travellers Avios to redeem for various rewards, primarily redemption travel, including flights, hotels and car hire. Avios are also sold to commercial partners to use in loyalty activity. Avios issuance When issued, the standalone selling price of an Avios is recorded within Deferred revenue on ticket sales in current liabilities until the customer redeems the Avios. The standalone selling price of Avios is based on the value of the awards for which the points could be redeemed. The Group also recognises revenue associated with the proportion of Avios which are not expected to be redeemed, referred to as \u2018breakage\u2019, based on the results of modelling using historical experiences and expected future trends in customer behaviour, up until the reporting date. The amount of such revenue recognised is limited, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Where the issuance of Avios arises from travel on the Group\u2019s airlines, the consideration received from the customer may differ to the aggregation of the relative standalone selling prices. In such instances the allocation of the consideration to each performance obligation is undertaken on a proportional basis using the relative standalone selling prices. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued Revenue recognition Passenger revenue The Group\u2019s revenue primarily derives from transportation services for both passengers and cargo. Revenue is recognised when the transportation service has been provided. Passenger tickets are generally paid for in advance of transportation and are recognised, net of discounts, as Deferred revenue on ticket sales in current liabilities until either the customer has flown or, for flexible tickets, when unused ticket revenue is recognised or the ticket expires unused. At the time of expected travel, revenue is recognised in relation to flexible tickets where a customer can reschedule the date of intended travel, that are not expected to be used, a term referred to as \u2018unused flexible tickets\u2019. This revenue is recognised based on the terms and conditions of the ticket and analysis of historical experience. For these unused flexible tickets, revenue is recognised only when the risk of a significant reversal of revenue is remote based on the terms and conditions of the ticket and analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. Where a flight is cancelled, the passenger is entitled to either compensation, a refund, changing to an alternative flight or the receipt of a voucher. Where compensation is issued to the customer, such payments are presented net within Passenger revenue against the original ticket purchased. Where the Group provides a refund to a customer, Deferred revenue on ticket sales is reduced and no amount is recorded within revenue. Where a voucher is issued it is retained within Deferred revenue on ticket sales until such time as it is redeemed for a flight or it expires, at which time it is recorded within Passenger revenue. The Group also recognises revenue by estimating the amount of vouchers that are not expected to be redeemed prior to expiry using analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. The amount of such revenue recognised is constrained, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Payments received in relation to certain ancillary services regarding passenger transportation, such as change fees, are not considered to be distinct from the performance obligation to provide the passenger flight. Payments relating to these ancillary services are recognised in Deferred revenue on ticket sales in current liabilities until the customer has flown. The Group considers whether it is an agent or a principal in relation to passenger transportation services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. The Group acts as an agent where (i) it collects various taxes, duties and fees assessed on the sale of tickets to passengers and remits these to the relevant taxing authorities; and (ii) where it provides interline services to airline partners outside of the Group. Commissions earned in relation to agency services are recognised as revenue when the underlying goods or services have been transferred to the customer. In all other instances, the Group considers it acts as the principal in relation to passenger transportation services. Cargo revenue The Group has identified a single performance obligation in relation to cargo services and the associated revenue is measured at its standalone selling price and recognised on satisfaction of the performance obligation, which occurs on the fulfilment of the transportation service. Other revenue The Group has identified several performance obligations in relation to services that give rise to revenue being recognised within Other revenue. These services, their performance obligations and associated revenue recognition include: \u2022 the provision of maintenance services and overhaul services for engines and airframes, where the Group is engaged to enhance an asset while the customer retains control of the asset. Accordingly, the performance obligations are satisfied, and revenue recognised, over time. The Group estimates the proportion of the contract completed at the reporting date and recognises revenue based on the percentage of completion of the contract; \u2022 the provision of ground handling services, where the performance obligations are fulfilled when the services are provided; \u2022 the provision of holiday and hotel services, where the performance obligations are satisfied over time as the customer receives the benefit of the service; and \u2022 brand and marketing activities, where the performance obligations are satisfied as the associated activities occur. Customer loyalty programmes The Group operates four loyalty programmes: the British Airways Executive Club, Iberia Plus, Vueling Club and the Aer Lingus Aer Club. The customer loyalty programmes award travellers Avios to redeem for various rewards, primarily redemption travel, including flights, hotels and car hire. Avios are also sold to commercial partners to use in loyalty activity. Avios issuance When issued, the standalone selling price of an Avios is recorded within Deferred revenue on ticket sales in current liabilities until the customer redeems the Avios. The standalone selling price of Avios is based on the value of the awards for which the points could be redeemed. The Group also recognises revenue associated with the proportion of Avios which are not expected to be redeemed, referred to as \u2018breakage\u2019, based on the results of modelling using historical experiences and expected future trends in customer behaviour, up until the reporting date. The amount of such revenue recognised is limited, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Where the issuance of Avios arises from travel on the Group\u2019s airlines, the consideration received from the customer may differ to the aggregation of the relative standalone selling prices. In such instances the allocation of the consideration to each performance obligation is undertaken on a proportional basis using the relative standalone selling prices. The Group has contractual arrangements with non-Group airlines and non-air partners for the issuance and redemption of Avios, for which it has identified the following performance obligations: Companion vouchers Certain non-air partners issue their card holders with companion vouchers, which forms part of the variable consideration of the overall contract, depending on the level of expenditure by the card holders, for redemption on the airlines of the Group for the same flight and class of cabin as the underlying fare being purchased. The Group estimates the standalone selling price of the companion voucher performance obligation, using valuation techniques, by reference to the amount that a third party would be prepared to pay in an arm\u2019s length transaction. Brand and marketing activities For both air and non-air partners, the Group licenses the Avios and the airline brands for certain activities, such as the creation of co- branded credit cards. In addition, the Group has certain contractual arrangements whereby it commits to provide marketing services to the members of the loyalty schemes on behalf of those partners. For the provision of both brand and marketing services, the partner receives benefits incremental to the issuance of Avios. The Group estimates the standalone selling price of the brand and marketing performance obligations, using valuation techniques, by reference to the amount that a third party would be prepared to pay in an arm\u2019s length transaction for access to comparable brands for the period over which they use the brand. For brand services, as the Group considers that the partner has the right to use the brand, revenue is recognised as the brand service is provided and not over time. For marketing performance obligations, revenue is recognised as the marketing activities occur based on when the partner receives the benefit of those services. Upfront payments Where a partner makes an upfront payment to the Group which does not relate to any specific performance obligation, then the Group considers such payments as advance payments for future goods and services and the associated revenue is recognised as those goods and services are provided, as detailed above. In such instances the payment is allocated across all of the performance obligations over the contract term. The Group estimates the expected level of Avios to be issued over the contract term using experience, historical and expected future trends, and allocates the payments to the relevant performance obligations accordingly. At each reporting date, the Group updates its estimate of the number of Avios expected to be issued over the total contract term and recognises a cumulative catch-up adjustment where necessary. When a partner makes an upfront payment to the Group, the Group assesses whether such a payment is representative of a significant financing event. Where a significant financing component is identified, the Group estimates a market rate of interest that an arm\u2019s length financial liability of similar size and tenor would yield. The Group recognises the imputed interest as a Finance expense in the Income statement. Other considerations The Group considers whether it is an agent or a principal in relation to the loyalty services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. In particular, the Group acts as an agent where customers redeem their Avios on interline partner flights outside of the Group, where the fees payable to the interline partner are presented net against the associated release of the Deferred revenue from ticket sales. Exceptional items Exceptional items are those that in management\u2019s view need to be separately disclosed by virtue of their size or nature and where such presentation is relevant to an understanding of the Group\u2019s financial performance. While management has defined a list of items and a quantitative threshold that would merit categorisation as exceptional that has been established through historical experience, the Group retains the flexibility to add additional items should their size or nature merit such presentation. The accounting policy in respect of exceptional items and classification of an item as exceptional is approved by the Board, through the Audit and Compliance Committee. The financial performance of the Group is monitored by the Management Committee and the Board on a pre-exceptional basis to enable comparison to prior reporting periods as well as to other selected companies, and also for making strategic, financial and operational decisions. The exceptional items recorded in the Income statement include, but are not limited to, items such as significant settlement agreements with the Group\u2019s pension schemes; significant restructuring; the impact of business combination transactions that do not contribute to the ongoing results of the Group; significant discontinuance of hedge accounting; legal settlements; individually significant tax transactions; and the impact of the sale, disposal or impairment of an asset or investment in a business. Where exceptional items are separately disclosed, the resultant tax impact is additionally separately disclosed. Certain exceptional items may cover more than a single reporting period, such as significant restructuring events, but not more than two reporting periods. Further information is given in the Alternative performance measures section. Government grants Government grants are recognised where there is reasonable assurance that the grant will be received. Loans provided and/or guaranteed by governments that represent market rates of interest are recorded at the amount of the proceeds received and recognised within Borrowings. Those loans provided and/or guaranteed by governments that represent below market rates of interest are measured at inception at their fair value and recognised within Borrowings, with the differential to the proceeds received recorded within Deferred income and released to the relevant financial statement caption in the Income statement on a systematic basis. Grants that compensate the Group for expenses incurred are recognised in the Income statement in the relevant financial statement caption on a systematic basis in the periods in which the expenses are recognised. Critical accounting estimates, assumptions and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These judgements, estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results in the future may differ from judgements and estimates upon which financial information has been prepared. These underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Estimates The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: a Employee benefit obligations, employee leaving indemnities, other employee related restructuring At December 31, 2022 the Group recognised \u20ac2,334 million in respect of employee benefit assets (2021: \u20ac1,775 million) and \u20ac217 million in respect of employee benefit obligations (2021: \u20ac285 million). Further information on employee benefit obligations is disclosed in note 32. The cost of employee benefit obligations, employee leaving indemnities and other employee-related provisions is determined using the valuation requirements of IAS 19. These valuations involve making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these schemes, such assumptions are subject to significant uncertainty. The assumptions relating to these schemes are disclosed in note 32. The Group determines the assumptions to be adopted in discussion with qualified actuaries. Any difference between these assumptions and the actual outcome will impact future net assets and total comprehensive income. The sensitivity to changes in pension assumptions is disclosed in note 32. Under the Group\u2019s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) defined benefit schemes, increases to pensions are based on the annual Government Pension Increase (Review) Orders, which since 2011 have been based on the Consumer Prices Index (CPI). Additionally, in APS there is provision for the Trustee to pay increases up to the level of the Retail Prices Index (RPI), subject to certain affordability tests. Historically market expectations for RPI could be derived by comparing the prices of UK Government fixed-interest and index-linked gilts, with CPI assessed by considering the Bank of England\u2019s inflation target and comparison of the construction of the two inflation indices. In November 2020, the UK Government and UK Statistics Authority (UKSA) confirmed alignment of RPI with CPIH (a variant of CPI) from February 2030. In assessing RPI and CPI inflation from investment market data, allowance has been made for alignment of RPI with CPIH from 2030 and, therefore, effectively no gap between RPI and CPI inflation from that date. CPI inflation before 2030 is assumed to be 1 per cent per annum below RPI inflation. b Revenue recognition At December 31, 2022 the Group recognised \u20ac7,644 million (2021: \u20ac6,552 million) in respect of deferred revenue on ticket sales of which \u20ac2,630 million (2021: \u20ac2,820 million) related to customer loyalty programmes. Further information on deferred revenue from ticket sales is included in note 23. Passenger revenue Passenger revenue is recognised when the transportation service is provided. At the time of transportation, revenue is also recognised in respect of unused tickets and is estimated based on the terms and conditions of the tickets and historical experience. The Group considers that there is no reasonably possible change to unused ticket assumptions that would have a material impact on Passenger revenue recorded in the year. Historically, where a voucher has been issued to a customer in the event of a flight cancellation, the Group estimated, based on historical experience, the level of such vouchers not expected to be used prior to expiry and recognised revenue accordingly. During 2020 and 2021, due to the significant level of flight cancellations arising from COVID-19, the Group issued a greater volume of vouchers than it would have otherwise done so. In addition, given the uncertainty as to the timing of customers redeeming these vouchers, the Group was unable to estimate with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the historical expiry trends over the period of the pandemic. Accordingly, for the years ended December 31, 2020, and December 31, 2021, the Group did not recognise revenue arising from those vouchers issued due to COVID-19 related cancellations until either the voucher was redeemed or it expired. During 2022, while the recovery from COVID-19 has seen much lower levels of voucher issuance and high levels of voucher redemption, the Group\u2019s operating companies\u2019 voucher programmes have had limited voucher expiry in 2022, with the majority not expected until 2023 at the earliest. Accordingly, the Group has had insufficient historical expiry experience relating to vouchers issued during the pandemic and therefore has not applied any breakage to existing voucher liabilities as it cannot confirm that there would not be a subsequent significant reversal of revenue if it were to do so. Customer loyalty schemes Revenue associated with the issuance of Avios under customer loyalty programmes is based on the relative standalone selling prices of the related performance obligations (brand, marketing and Avios), determined using estimation techniques. The transaction price of brand and marketing services is determined using specific brand valuation methodologies. The transaction price of an Avios is determined as the price of the rewards against which they can be redeemed and is reduced to take account of the proportion of Avios that are not expected to be redeemed by customers. During 2020 and 2021, due to the significant restrictions imposed on the ability of customers to redeem Avios coupled with the disruption in the patterns of redemption caused by COVID-19, the Group considered that the trends experienced since the start of the COVID-19 pandemic were not reflective of the long-term expected patterns of redemption and accordingly, the Group was unable to determine with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the redemption trends over the period of the pandemic. Accordingly, for the years to December 31, 2020 and December 31, 2021, the Group continued to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. While 2022 has seen all operating companies recover from the COVID-19 pandemic, there remains uncertainty as to whether recent redemption data is representative of long-term behavioural trends and accordingly the Group cannot confirm that there would not be a subsequent significant reversal of revenue if the level of redemption estimates were to be updated to reflect behaviours during the COVID-19 period. Accordingly, the Group continues to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. The Group estimates the number of Avios not expected to be redeemed using statistical modelling based on historical experience and expected future trends in customer behaviour. A five percentage point increase in the assumption of Avios outstanding and not expected to be redeemed would result in an adjustment to Deferred revenue from ticket sales of \u20ac95 million, with an offsetting adjustment to increase revenue and operating profit recognised in the year. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued Estimates The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: a Employee benefit obligations, employee leaving indemnities, other employee related restructuring At December 31, 2022 the Group recognised \u20ac2,334 million in respect of employee benefit assets (2021: \u20ac1,775 million) and \u20ac217 million in respect of employee benefit obligations (2021: \u20ac285 million). Further information on employee benefit obligations is disclosed in note 32. The cost of employee benefit obligations, employee leaving indemnities and other employee-related provisions is determined using the valuation requirements of IAS 19. These valuations involve making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these schemes, such assumptions are subject to significant uncertainty. The assumptions relating to these schemes are disclosed in note 32. The Group determines the assumptions to be adopted in discussion with qualified actuaries. Any difference between these assumptions and the actual outcome will impact future net assets and total comprehensive income. The sensitivity to changes in pension assumptions is disclosed in note 32. Under the Group\u2019s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) defined benefit schemes, increases to pensions are based on the annual Government Pension Increase (Review) Orders, which since 2011 have been based on the Consumer Prices Index (CPI). Additionally, in APS there is provision for the Trustee to pay increases up to the level of the Retail Prices Index (RPI), subject to certain affordability tests. Historically market expectations for RPI could be derived by comparing the prices of UK Government fixed-interest and index-linked gilts, with CPI assessed by considering the Bank of England\u2019s inflation target and comparison of the construction of the two inflation indices. In November 2020, the UK Government and UK Statistics Authority (UKSA) confirmed alignment of RPI with CPIH (a variant of CPI) from February 2030. In assessing RPI and CPI inflation from investment market data, allowance has been made for alignment of RPI with CPIH from 2030 and, therefore, effectively no gap between RPI and CPI inflation from that date. CPI inflation before 2030 is assumed to be 1 per cent per annum below RPI inflation. b Revenue recognition At December 31, 2022 the Group recognised \u20ac7,644 million (2021: \u20ac6,552 million) in respect of deferred revenue on ticket sales of which \u20ac2,630 million (2021: \u20ac2,820 million) related to customer loyalty programmes. Further information on deferred revenue from ticket sales is included in note 23. Passenger revenue Passenger revenue is recognised when the transportation service is provided. At the time of transportation, revenue is also recognised in respect of unused tickets and is estimated based on the terms and conditions of the tickets and historical experience. The Group considers that there is no reasonably possible change to unused ticket assumptions that would have a material impact on Passenger revenue recorded in the year. Historically, where a voucher has been issued to a customer in the event of a flight cancellation, the Group estimated, based on historical experience, the level of such vouchers not expected to be used prior to expiry and recognised revenue accordingly. During 2020 and 2021, due to the significant level of flight cancellations arising from COVID-19, the Group issued a greater volume of vouchers than it would have otherwise done so. In addition, given the uncertainty as to the timing of customers redeeming these vouchers, the Group was unable to estimate with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the historical expiry trends over the period of the pandemic. Accordingly, for the years ended December 31, 2020, and December 31, 2021, the Group did not recognise revenue arising from those vouchers issued due to COVID-19 related cancellations until either the voucher was redeemed or it expired. During 2022, while the recovery from COVID-19 has seen much lower levels of voucher issuance and high levels of voucher redemption, the Group\u2019s operating companies\u2019 voucher programmes have had limited voucher expiry in 2022, with the majority not expected until 2023 at the earliest. Accordingly, the Group has had insufficient historical expiry experience relating to vouchers issued during the pandemic and therefore has not applied any breakage to existing voucher liabilities as it cannot confirm that there would not be a subsequent significant reversal of revenue if it were to do so. Customer loyalty schemes Revenue associated with the issuance of Avios under customer loyalty programmes is based on the relative standalone selling prices of the related performance obligations (brand, marketing and Avios), determined using estimation techniques. The transaction price of brand and marketing services is determined using specific brand valuation methodologies. The transaction price of an Avios is determined as the price of the rewards against which they can be redeemed and is reduced to take account of the proportion of Avios that are not expected to be redeemed by customers. During 2020 and 2021, due to the significant restrictions imposed on the ability of customers to redeem Avios coupled with the disruption in the patterns of redemption caused by COVID-19, the Group considered that the trends experienced since the start of the COVID-19 pandemic were not reflective of the long-term expected patterns of redemption and accordingly, the Group was unable to determine with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the redemption trends over the period of the pandemic. Accordingly, for the years to December 31, 2020 and December 31, 2021, the Group continued to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. While 2022 has seen all operating companies recover from the COVID-19 pandemic, there remains uncertainty as to whether recent redemption data is representative of long-term behavioural trends and accordingly the Group cannot confirm that there would not be a subsequent significant reversal of revenue if the level of redemption estimates were to be updated to reflect behaviours during the COVID-19 period. Accordingly, the Group continues to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. The Group estimates the number of Avios not expected to be redeemed using statistical modelling based on historical experience and expected future trends in customer behaviour. A five percentage point increase in the assumption of Avios outstanding and not expected to be redeemed would result in an adjustment to Deferred revenue from ticket sales of \u20ac95 million, with an offsetting adjustment to increase revenue and operating profit recognised in the year. c Income taxes At December 31, 2022 the Group recognised \u20ac1,282 million in respect of deferred tax assets (2021: \u20ac1,282 million). Further information on current and deferred tax is disclosed in note 10. The Group is subject to income taxes in numerous jurisdictions. Estimates are required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain because it may be unclear how tax law applies to a particular transaction or circumstance. Where the Group determines that it is more likely than not that the tax authorities would accept the position taken in the tax return, amounts are recognised in the financial statements on that basis. Where the amount of tax payable or recoverable is uncertain, the Group recognises a liability based on either: the Group\u2019s judgement of the most likely outcome; or, when there is a wide range of possible outcomes, a probability-weighted average approach. The Group recognises deferred tax assets only to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Management uses judgement, including the consideration of past and current operating performance and the future projections of performance laid out in the approved business plan in order to assess the probability of recoverability. In exercising this judgement, while there are no time restrictions on the utilisation of historic tax losses in the principal jurisdictions in which the Group operates, future cash flow projections are forecast for a period of up to ten years from the balance sheet date, which represents the period over which it is probable that future taxable profits will be available. At December 31, 2022, the Group had unrecognised deferred tax assets of \u20ac2,084 million relating to tax losses the Group does not reasonably expect to utilise. In applying the aforementioned judgement, had the Group extended the period of future cash flow projections indefinitely, then the amount of unrecognised deferred tax assets would have reduced by \u20ac1,608 million. Conversely, if the forecast profit before tax for each operating company was reduced by two percentage points over the forecast period, the amount of the unrecognised deferred tax asset relating to tax losses would increase by \u20ac11 million. d Impairment of non-financial assets At December 31, 2022 the Group recognised \u20ac2,423 million (2021: \u20ac2,439 million) in respect of intangible assets with an indefinite life, including goodwill. Further information on these assets is included in note 17. Goodwill and intangible assets with indefinite economic lives are tested, as part of the cash-generating units to which they relate, for impairment annually and at other times when such indicators exist. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which use a weighted average multi-scenario discounted cash flow model, which are then compared to the carrying amount of the associated cash-generating unit. In determining the carrying value of each cash generating unit, the Group allocates all associated operating tangible and intangible assets, including ROU assets. In addition the Group has allocated certain liabilities to the carrying value of each CGU where those liabilities are critical to the underlying operations of the cash-generating unit and in the event of a disposal of the cash-generating unit would be required to be transferred to the purchaser. Such liabilities include lease liabilities. The Group has applied judgement in the weighting of each scenario in the discounted cash flow model and these calculations require the use of estimates in the determination of key assumptions and sensitivities as disclosed in notes 4 and 17. The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. When such indicators are identified, then non-financial assets are tested for impairment. e Engineering and other aircraft costs At December 31, 2022, the Group recognised \u20ac2,400 million in respect of maintenance, restoration and handback provisions (2021: \u20ac1,832 million). Information on movements on the provision is disclosed in note 26. The Group has a number of contracts with service providers to replace or repair engine parts and for other maintenance checks. These agreements are complex and generally cover a number of years. Provisions for maintenance, restoration and handback are made based on the best estimate of the likely committed cash outflow. In determining this best estimate, the Group applies significant judgement as to the level of forecast costs expected to be incurred when the aircraft is returned to the lessor. The assumptions of this significant judgement include aircraft utilisation, expected maintenance intervals, future maintenance costs and the aircraft\u2019s condition. The associated forecast costs are discounted to their present value. In 2021, the Group considered that there was no reasonably possible change to a single assumption that would have had a material impact on the provisions, however a combination of changes in multiple assumptions may have. In 2022, with the status of the macro-economic environment, the Group considers that a reasonable possible change in the inflation rate and discount rate assumptions of a 100 basis points increase would give rise to an increase of \u20ac51 million and a decrease of \u20ac68 million, respectively, when applied in isolation to one another. Judgements a Determining the lease term of contracts with renewal and termination options The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. Such judgement includes consideration of fleet plans which underpin approved business plans and historical experience regarding the extension of leases. After the commencement date, the Group re-assesses the lease term if there is a significant event or change in circumstances that affects the Group\u2019s ability to exercise or not to exercise the option to renew or to terminate. Further information is given in note 14. b Determining whether the Group has significant influence over Air Europa Holdings The Group applies judgement in the determination as to whether it has the power with which to participate in the decision making of, and as a result significant influence over, Air Europa Holdings, S.L. (Air Europa Holdings). Such judgement includes the consideration as to the ability of the Group to: have representation on the board of Air Europa Holdings; participate in the policy-making processes, including participation in decisions regarding dividends and other distributions; the existence of material transactions between Air Europa Holdings and the Group; enable the interchange of management personnel and provide essential technical information. In forming its judgement, the Group notes that: it does not have the ability to have representation on the board of Air Europa Holdings; it does not have the ability to participate in the policy-making processes; has not entered into material transactions outside of the normal course of business; it does not have the ability to enable the interchange of management personnel and it does not have the ability to provide essential technical information. The Group has therefore concluded that it does not have significant influence over Air Europa Holdings. Accordingly, the Group accounts for its shareholding in Air Europa Holdings as an Other equity investment and measures it at fair value through Other comprehensive income. Had the Group concluded that it does have significant influence over Air Europa Holdings, then the shareholding would have been classified as an associate, measured at fair value on inception and subsequently measured using the equity method. At December 31, 2022, the fair value of its shareholding in Air Europa Holdings was \u20ac24 million. Further information is given in note 19. New standards, amendments and interpretations The following amendments and interpretations apply for the first time in 2022, but do not have a material impact on the consolidated financial statements of the Group: \u2022 property, plant and equipment: proceeds before intended use \u2013 amendments to IAS 16 effective for periods beginning on or after January 1, 2022; \u2022 reference to the Conceptual Framework \u2013 amendments to IFRS 3 effective for periods beginning on or after January 1, 2022; \u2022 onerous contracts \u2013 cost of fulfilling a contract \u2013 amendments to IAS 37 effective for periods beginning on or after January 1, 2022; and \u2022 annual improvements to IFRS standards 2018\u20132020 \u2013 effective for periods beginning on or after January 1, 2022. The IASB and IFRIC have issued the following standards, amendments and interpretations with an effective date after the year end of these financial statements which management believe could impact the Group in future periods. The Group has assessed the impact of these standards, amendments and interpretations and it is not expected that these will have a material effect on the reported income or net assets of the Group. Unless otherwise stated, the Group plans to adopt the following standards, interpretations and amendments on the date they become mandatory: \u2022 IFRS 17 Insurance contracts - effective for periods beginning on or after January 1, 2023; \u2022 definition of accounting estimate \u2013 amendments to IAS 8 effective for periods beginning on or after January 1, 2023; \u2022 disclosure of accounting policies \u2013 amendments to IAS 1 and IFRS Practice statement 2 effective for periods beginning on or after January 1, 2023; and \u2022 deferred tax related to assets and liabilities arising from a single transaction \u2013 amendments to IAS 12 effective for periods beginning on or after January 1, 2023. On October 31, 2022, the IASB issued the amendments to IAS 1 \u2013 classification of liabilities as current or non-current (the \u2018Amendments\u2019), effective for periods beginning on or after January 1, 2024. The Amendments will require the \u20ac825 million convertible bond that matures in 2028, which as at December 31, 2022, had a carrying value of \u20ac605 million, to be reclassified from a non-current liability to a current liability with the comparative presentation as at December 31, 2023 also reclassified. The Amendments require that where the conversion feature of a convertible instrument does not meet the recognition criteria for separate presentation within equity and where the associated bond holders have the irrevocable right to exercise the conversion feature within twelve months of the balance sheet date, that such convertible instruments be presented as current. Other than this reclassification, the Amendments will not have a material effect on the reported results or net assets of the Group. 3 Significant changes and transactions in the current reporting period The financial performance and position of the Group was affected by the following significant events and transactions in the year to December 31, 2022 as detailed below: \u2022 on March 4, 2022 Aer Lingus entered into a financing arrangement with the Ireland Strategic Investment Fund (ISIF), which subsequently increased the existing \u20ac150 million of facilities to \u20ac350 million and extended the maturity to March 2025. On December 13, 2022, Aer Lingus repaid \u20ac100 million of the \u20ac150 million it had previously drawn against this facility. At December 31, 2022, \u20ac300 million of undrawn facilities remains available for draw down; \u2022 on April 12, 2022, the Group entered into an asset-financing structure, under which five aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the Iberia Pass Through Certificates, Series 2022-1, commonly referred to as EETCs. In doing so, the asset financing structure provides committed aircraft financing of \u20ac680 million; \u2022 on May 19, 2022, the Group entered into an agreement with Boeing to purchase 25 737-8200 and 25 737-10 aircraft, plus 100 options. The aircraft will be delivered between 2023 and 2027 and will be used for shorthaul fleet renewal. The fleet order was subsequently approved by shareholders on October 26, 2022; \u2022 on June 15, 2022, following approval from Sociedad Estatal de Participaciones Industriales (SEPI) (the Spanish state holding company that has a direct participation in Air Europa Holdings) and the Instituto de Cr\u00e9dito Oficial (ICO) in Spain, the Group entered into a financing arrangement with Globalia Corporaci\u00f3n Empresarial, S,A, (\u2018Globalia\u2019), whereby, the Group provided a \u20ac100 million seven-year unsecured loan. The loan was convertible for a period of two years from inception into a fixed number of the shares of Air Europa Holdings; NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 2 Significant accounting policies continued b Determining whether the Group has significant influence over Air Europa Holdings The Group applies judgement in the determination as to whether it has the power with which to participate in the decision making of, and as a result significant influence over, Air Europa Holdings, S.L. (Air Europa Holdings). Such judgement includes the consideration as to the ability of the Group to: have representation on the board of Air Europa Holdings; participate in the policy-making processes, including participation in decisions regarding dividends and other distributions; the existence of material transactions between Air Europa Holdings and the Group; enable the interchange of management personnel and provide essential technical information. In forming its judgement, the Group notes that: it does not have the ability to have representation on the board of Air Europa Holdings; it does not have the ability to participate in the policy-making processes; has not entered into material transactions outside of the normal course of business; it does not have the ability to enable the interchange of management personnel and it does not have the ability to provide essential technical information. The Group has therefore concluded that it does not have significant influence over Air Europa Holdings. Accordingly, the Group accounts for its shareholding in Air Europa Holdings as an Other equity investment and measures it at fair value through Other comprehensive income. Had the Group concluded that it does have significant influence over Air Europa Holdings, then the shareholding would have been classified as an associate, measured at fair value on inception and subsequently measured using the equity method. At December 31, 2022, the fair value of its shareholding in Air Europa Holdings was \u20ac24 million. Further information is given in note 19. New standards, amendments and interpretations The following amendments and interpretations apply for the first time in 2022, but do not have a material impact on the consolidated financial statements of the Group: \u2022 property, plant and equipment: proceeds before intended use \u2013 amendments to IAS 16 effective for periods beginning on or after January 1, 2022; \u2022 reference to the Conceptual Framework \u2013 amendments to IFRS 3 effective for periods beginning on or after January 1, 2022; \u2022 onerous contracts \u2013 cost of fulfilling a contract \u2013 amendments to IAS 37 effective for periods beginning on or after January 1, 2022; and \u2022 annual improvements to IFRS standards 2018\u20132020 \u2013 effective for periods beginning on or after January 1, 2022. The IASB and IFRIC have issued the following standards, amendments and interpretations with an effective date after the year end of these financial statements which management believe could impact the Group in future periods. The Group has assessed the impact of these standards, amendments and interpretations and it is not expected that these will have a material effect on the reported income or net assets of the Group. Unless otherwise stated, the Group plans to adopt the following standards, interpretations and amendments on the date they become mandatory: \u2022 IFRS 17 Insurance contracts - effective for periods beginning on or after January 1, 2023; \u2022 definition of accounting estimate \u2013 amendments to IAS 8 effective for periods beginning on or after January 1, 2023; \u2022 disclosure of accounting policies \u2013 amendments to IAS 1 and IFRS Practice statement 2 effective for periods beginning on or after January 1, 2023; and \u2022 deferred tax related to assets and liabilities arising from a single transaction \u2013 amendments to IAS 12 effective for periods beginning on or after January 1, 2023. On October 31, 2022, the IASB issued the amendments to IAS 1 \u2013 classification of liabilities as current or non-current (the \u2018Amendments\u2019), effective for periods beginning on or after January 1, 2024. The Amendments will require the \u20ac825 million convertible bond that matures in 2028, which as at December 31, 2022, had a carrying value of \u20ac605 million, to be reclassified from a non-current liability to a current liability with the comparative presentation as at December 31, 2023 also reclassified. The Amendments require that where the conversion feature of a convertible instrument does not meet the recognition criteria for separate presentation within equity and where the associated bond holders have the irrevocable right to exercise the conversion feature within twelve months of the balance sheet date, that such convertible instruments be presented as current. Other than this reclassification, the Amendments will not have a material effect on the reported results or net assets of the Group. 3 Significant changes and transactions in the current reporting period The financial performance and position of the Group was affected by the following significant events and transactions in the year to December 31, 2022 as detailed below: \u2022 on March 4, 2022 Aer Lingus entered into a financing arrangement with the Ireland Strategic Investment Fund (ISIF), which subsequently increased the existing \u20ac150 million of facilities to \u20ac350 million and extended the maturity to March 2025. On December 13, 2022, Aer Lingus repaid \u20ac100 million of the \u20ac150 million it had previously drawn against this facility. At December 31, 2022, \u20ac300 million of undrawn facilities remains available for draw down; \u2022 on April 12, 2022, the Group entered into an asset-financing structure, under which five aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the Iberia Pass Through Certificates, Series 2022-1, commonly referred to as EETCs. In doing so, the asset financing structure provides committed aircraft financing of \u20ac680 million; \u2022 on May 19, 2022, the Group entered into an agreement with Boeing to purchase 25 737-8200 and 25 737-10 aircraft, plus 100 options. The aircraft will be delivered between 2023 and 2027 and will be used for shorthaul fleet renewal. The fleet order was subsequently approved by shareholders on October 26, 2022; \u2022 on June 15, 2022, following approval from Sociedad Estatal de Participaciones Industriales (SEPI) (the Spanish state holding company that has a direct participation in Air Europa Holdings) and the Instituto de Cr\u00e9dito Oficial (ICO) in Spain, the Group entered into a financing arrangement with Globalia Corporaci\u00f3n Empresarial, S,A, (\u2018Globalia\u2019), whereby, the Group provided a \u20ac100 million seven-year unsecured loan. The loan was convertible for a period of two years from inception into a fixed number of the shares of Air Europa Holdings; \u2022 in the first half of 2022, the Group converted 22 Airbus A320neos options into firm orders for 17 Airbus A320neos and five Airbus A321neos; \u2022 on July 28, 2022, IAG announced a further order for more fuel-efficient Airbus A320neo family aircraft, as part of its plan to meet climate commitments. The Group converted 12 Airbus A320neo/A321neo options into firm orders and ordered a further 25 Airbus A320neo/A321neo aircraft, with the option to purchase 50 additional aircraft. The firm orders will replace existing Airbus A320ceo family aircraft and are for delivery between 2025 and 2028; the split between A320neos and A321neos will be determined nearer to delivery. The fleet order was subsequently approved by shareholders on October 26, 2022; \u2022 on August 16, 2022, the Group exercised its exchange option and converted the \u20ac100 million loan it had made to Globalia into 20 per cent of the share capital of Air Europa Holdings, which has been recognised within Other equity instruments. The fair value of the loan immediately prior to conversion was \u20ac65 million, representing a reduction of \u20ac35 million from inception, which has been recorded within the Income statement. Upon converting the loan into share capital of Air Europa Holdings, the fair value of the investment was determined to be \u20ac22 million, with the difference between the fair value of the loan immediately prior to conversion and the fair value of the equity investment immediately after conversion, representing \u20ac43 million, being recorded as a loss within the Income statement. Further details regarding the investment in Air Europa Holdings are given in note 19; \u2022 on August 23, 2022, the Group extended its $1.755 billion secured Revolving Credit Facility accessible by British Airways, Iberia and Aer Lingus, previously due to mature on March 23, 2024, by a further 12 months to March 23, 2025; \u2022 on October 21, 2022, the Group entered into an asset-financing structure, under which four aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2022-1, commonly referred to as EETCs. In doing so, the asset financing structure provides committed aircraft financing of \u20ac416 million; and \u2022 on November 17, 2022, the Group redeemed the convertible bond issued in November 2015 for its nominal value of \u20ac500 million. 4 Impact of climate change on financial reporting Significant transactions and critical accounting estimates, assumptions and judgements in the determination of the impact of climate change As a result of climate change the Group has designed and approved its Flightpath Net Zero climate strategy, which commits the Group to net zero emissions by 2050. While approved business plans currently have a duration of three years, the Flightpath Net Zero climate strategy impacts both the short, medium and long-term operations of the Group. The details regarding the inputs and assumptions used in the determination of the Flightpath Net Zero climate strategy include, but are not limited to, the following that are within the control of the Group: \u2022 the additional cost of the Group\u2019s commitment to increasing the level of Sustainable Aviation Fuels (SAF) to ten per cent by 2030 and to seventy per cent by 2050; \u2022 the cost of incurring an increase in the level of carbon offsetting and carbon capture schemes; and \u2022 the impact of introducing more fuel-efficient aircraft and being able to operate these more efficiently. In addition to these inputs and measures within the control of management, Flightpath Net Zero includes assumptions pertaining to consumers, governments and regulators regarding the following: \u2022 the impact on passenger demand for air travel as a result of both passenger trends regarding climate change and government policies; \u2022 investment and policy regarding the development of SAF production facilities; \u2022 investment and improvements in air traffic management; and \u2022 the price of carbon through the EU, Swiss and UK Emissions Trading Schemes (ETS) and the UN Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The level of uncertainty regarding the impact of these factors increases over time. Accordingly, the Group has applied critical estimation and judgement in the evaluation of the impact of climate change regarding the recognition and measurement of assets and liabilities within the financial statements. Critical accounting estimates, assumptions and judgements \u2013 cash flow forecast estimation With the Flightpath Net Zero climate strategy assessing the impact over a long-term horizon to 2050, the level of estimation uncertainty in the determination of cash flow forecasts increases over time. For those assets and liabilities, where their recoverability is dependent on long-term cash flows, the following critical accounting estimates, assumptions and judgements, to the extent they can be reliably measured, have been applied: a Long-term fleet plans and useful economic lives The Group\u2019s Flightpath Net Zero climate strategy has been developed in conjunction with the long-term fleet plans of each operating company. This includes the annual assessment of useful lives and the residual values of each aircraft type. During the course of 2020 as a result of the impact of COVID-19, the Group permanently stood down 82 aircraft (of which ten were subsequently stood back up), their associated engines and rotable inventories. These permanently stood down aircraft were older generation aircraft, that were less fuel efficient, more carbon intensive and more expensive to operate than more modern models. With the permanent standing down of these aircraft, coupled with the future committed delivery of 192 fuel efficient aircraft as detailed in note 15, the Group considers the existing fleet assets align with the long-term fleet plans to achieve its Flightpath Net Zero climate strategy. All aircraft in the fleet, and those due to be delivered in the future, have the capability to utilise SAF in their operations without impediment. Accordingly, no impairment has arisen in the current or prior year, nor have the useful lives and residual values of aircraft been amended, as a result of the Group\u2019s decarbonisation plans. b Impairment testing of the Group\u2019s cash generating units The Group applies discounted cash flow models, for each cash generating unit, derived from the cash flow forecasts from the approved three-year business plans. The Group\u2019s Flightpath Net Zero climate strategy is long-term in nature and includes commitments that will occur at differing points over this time horizon. To the extent that certain of those commitments occur over the short-term, then they have been incorporated into the three-year business plans. The Group adjusts the final year (being the third year) of these probability weighted cash flows to incorporate the impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy that are expected to occur over the medium term. These adjustments are limited to those that: (i) the Group can reliably estimate at the reporting date; (ii) only relate to the Group\u2019s existing asset base in its current condition; and (iii) incorporate legislation and regulation that is expected to be required to achieve the Group\u2019s Flightpath Net Zero climate strategy, and which is sufficiently progressed at the reporting date. As a result, the Group\u2019s impairment modelling incorporates the following aspects of the Group\u2019s Flightpath Net Zero climate strategy through to 2030, after which time the level of uncertainty regarding timing and costing becomes insufficiently reliable to estimate: (i) an increase in the level of SAF consumption of 10 per cent of the overall fuel mix; (ii) forecast cost of carbon, including SAF, ETS allowances and CORSIA allowances (all derived from externally sourced or derived information); (iii) the removal of existing free ETS allowances issued by the EU member states, Switzerland and the UK; (iv) forecast kerosene taxes applied to jet fuel for all intra EU flight activity; and (v) assumptions regarding the ability of the Group to recover these incremental costs through increased ticket pricing. In preparing the impairment models, the Group cash flow projections are prepared on the basis of using the current fleet in its current condition. The Group excludes the estimated cash flows expected to arise from future restructuring unless already committed and assets not currently in use by the Group. In addition, for the avoidance of doubt, the Group\u2019s impairment modelling excludes the following aspects of the Group\u2019s Flightpath Net Zero climate strategy: (i) the expected transition to electric and hydrogen aircraft, as well as future technological developments to jet engines and airframes; (ii) any savings from the transition to more fuel efficient aircraft other than those either in the Group\u2019s fleet or those committed orders due to be delivered over the business plan period; (iii) the benefit of the development of carbon capture technologies and enhanced carbon offsetting mechanisms; (iv) the required beneficial reforms to air traffic management regulation and legislation; and (v) the required government incentives and/or support across the supply chain. As detailed in note 17, the Group applies a long-term growth rate to these adjusted probability weighted cash flows, per CGU, and each of the long-term growth rates include a specific adjustment to reduce the rate to reflect the Group\u2019s assumptions regarding the reduced demand and elasticity impact arising from climate change. These impacts are derived with reference to external market data, industry publications and internal analysis. Given the inherent uncertainty associated with the impact of climate change, the Group has applied additional sensitivities in note 17 to reflect a more adverse impact of climate change than currently expected. This has been captured through both the downward sensitivities of the long-term growth rates, ASKs, operating margins and the increased fuel price sensitivity. c Valuation of employee benefit scheme assets The Group\u2019s employee benefit schemes are principally represented by the British Airways APS and NAPS schemes in the UK. The schemes are structured to make post-employment payments to members over the long term, with the Trustee having established both return seeking assets and liability matching assets that mature over the long-term to align with the forecast benefit payments. The assets of these schemes are invested predominantly in a diversified range of equities, bonds and property. The valuation of these assets ranges from those with quoted prices in active markets, where prices are readily and regularly available, through to those wher e the valuations are not based on observable market data, often requiring complex valuation models. The trustees of the schemes have integrated climate change considerations into their long-term decision making and reporting processes across all classes of assets, actively engaging with all fund and portfolio managers to ensure that where unobservable inputs are required into valuation models, that such valuation models incorporate long-term expectations regarding the impact of climate change. d Recoverability of deferred tax assets In determining the recoverable amounts of the Group\u2019s deferred tax assets, the Group applies the future cash flow projections for a period of up to ten years derived from the approved three-year business plans. The Group applies a medium-term growth rate subsequent to the three-year business plans, specific to each operating company. In considering the impact of the Group\u2019s Flightpath Net Zero climate strategy, management adjusts this medium-term growth rate, where applicable, to incorporate the assumed impacts on both revenue and costs to the Group. e The price of carbon through the EU, Swiss and UK Emissions Trading Schemes The EU, Swiss and the UK\u2019s ETS were established to reduce greenhouse gas emissions cost effectively. Under these schemes, companies, including the Group, are required to buy emission allowances, or are issued them under existing quotas. The Group is required to surrender these allowances to the relevant authorities annually dependent on the level of CO 2 equivalent emitted within a 12-month period. Over time the level of available emission allowances decreases in order to reduce total emissions, which has the effect of increasing the price of such allowances. The Group expects that the future price of such allowances will continue to increase and that the free allocation of emission allowances will cease. Given the relative illiquid nature of the emission allowance market there is uncertainty as to the future pricing of such allowances. As detailed in note 2, the Group accounts for the purchase of allowances as an addition to Intangible assets, which are measured at amortised cost. In addition, as the Group emits CO 2 equivalent as part of its flight operations, a provision is recorded to settle the obligation. For emissions for which the Group has already purchased allowances, the provision is valued at the weighted cost of those allowances. Where the level of emissions exceeds the amounts of allowances held, this deficit is measured at the market price of such allowances at the reporting date. At December 31, 2022, the Group has recorded ETS allowances within Intangibles assets of \u20ac407 million, representing sufficient allowances, by operating company, to settle its forecast obligations through to at least December 31, 2023. At December 31, 2022, the Group has recorded a provision for settling its 2022 emissions obligation of \u20ac132 million. 5 Segment information a Business segments The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the IAG Management Committee (IAG MC). The Group has a number of entities which are managed as individual operating companies including airline and platform functions. Each airline operates its network operations as a single business unit and the IAG MC assesses performance based on measures including operating profit, and makes resource allocation decisions for the airlines based on network profitability, primarily by reference to the passenger markets in which the companies operate. The objective in making resource allocation decisions is to optimise consolidated financial results. The Group has determined its operating segments based on the way that it treats its businesses and the manner in which resource allocation decisions are made. British Airways, Iberia, Vueling, Aer Lingus and IAG Loyalty have been identified for financial reporting purposes as reportable operating segments. LEVEL is also an operating segment but does not exceed the quantitative thresholds to be reportable and management has concluded that there are currently no other reasons why LEVEL should be separately disclosed. The platform functions of the business primarily support the airline operations. These activities are not considered to be reportable operating segments as they either earn revenues incidental to the activities of the Group and resource allocation decisions are made based on the passenger business or are not reviewed regularly by the IAG MC and are included within Other Group companies. For the year to December 31, 2022 2022 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty Other Group companies 1 Total Revenue Passenger revenue 10,523 4,002 2,584 1,665 451 233 19,458 Cargo revenue 1,239 284 \u2013 80 \u2013 12 1,615 Other revenue 848 799 14 10 322 \u2013 1,993 External revenue 12,610 5,085 2,598 1,755 773 245 23,066 Inter-segment revenue 311 426 \u2013 14 228 378 1,357 Segment revenue 12,921 5,511 2,598 1,769 1,001 623 24,423 Depreciation and amortisation charge (1,272) (371) (222) (146) (8) (59) (2,078) Impairment reversal \u2013 \u2013 8 \u2013 \u2013 \u2013 8 Operating profit/(loss) 362 382 195 45 282 (10) 1,256 Exceptional items 2 23 \u2013 8 \u2013 \u2013 \u2013 31 Operating profit/(loss) before exceptional items 339 382 187 45 282 (10) 1,225 Net non-operating costs (841) Profit before tax 415 Total assets 23,788 9,200 3,177 1,946 3,303 (2,111) 39,303 Total liabilities (20,975) (9,005) (3,774) (1,942) (2,914) 1,329 (37,281) 1 Includes eliminations on total assets of \u20ac16,159 million and total liabilities of \u20ac5,755 million. 2 For details on exceptional items refer to the Alternative performance measures section. For the year to December 31, 2021 2021 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty 1 Other Group companies 1,2 Total Revenue Passenger revenue 2,607 1,707 1,011 302 180 28 5,835 Cargo revenue 1,268 333 \u2013 65 \u2013 7 1,673 Other revenue 314 443 5 4 181 \u2013 947 External revenue 4,189 2,483 1,016 371 361 35 8,455 Inter-segment revenue 129 301 \u2013 5 77 293 805 Segment revenue 4,318 2,784 1,016 376 438 328 9,260 Depreciation and amortisation charge (1,104) (350) (240) (140) (7) (74) (1,915) Impairment (charge)/reversal (30) \u2013 13 \u2013 \u2013 \u2013 (17) Operating (loss)/profit (2,041) (220) (233) (338) 131 (64) (2,765) Exceptional items 3 151 14 29 9 \u2013 2 205 Operating (loss)/profit before exceptional items (2,192) (234) (262) (347) 131 (66) (2,970) Net non-operating costs 4 (742) Loss before tax (3,507) Total assets 20,891 6,919 2,671 1,820 3,184 (1,079) 34,406 Total liabilities (18,795) (7,062) (3,364) (1,806) (3,009) 476 (33,560) 1 In 2022, based on size thresholds the Group determined that IAG Loyalty was a reportable segment and accordingly presented the financial information of the segment separately. The prior year segment note has been re-presented to align with the current year presentation. 2 Includes eliminations on total assets of \u20ac16,023 million and total liabilities of \u20ac5,833 million. 3 For details on exceptional items refer to the Alternative performance measures section. 4 Includes \u20ac75 million of exceptional items relating to the Air Europa Holdings termination settlement payment . b Geographical analysis Revenue by area of original sale Year to December 31 \u20ac million 2022 2021 UK 7,923 2,435 Spain 4,313 2,189 USA 3,735 931 Rest of world 7,095 2,900 23,066 8,455 Assets by area December 31, 2022 \u20ac million Property, plant and equipment Intangible assets UK 12,026 1,490 Spain 5,082 1,462 USA 47 9 Rest of world 1,191 595 18,346 3,556 December 31, 2021 \u20ac million Property, plant and equipment Intangible assets UK 11,544 1,317 Spain 4,404 1,333 USA 76 13 Rest of world 1,137 576 17,161 3,239 6 Expenses by nature Operating result is arrived at after charging Depreciation, amortisation and impairment of non-current assets: \u20ac million 2022 2021 Depreciation charge on right of use assets 1,092 1,058 Depreciation charge on owned assets 748 638 Gain arising on de-designation of foreign exchange hedges recorded in Depreciation 1 (29) \u2013 Impairment reversal on owned property, plant and equipment \u2013 (4) Amortisation and impairment of intangible assets 218 178 Impairment (reversal)/charge on right of use assets (8) 20 Depreciation charge on other leasehold assets 49 42 2,070 1,932 1 Included in the Depreciation charge, not included within note 13 is a credit of \u20ac29 million relating to the de-designation of hedge accounting that had been applied to mitigate the foreign currency exposure on aircraft purchases. Cost of inventories: \u20ac million 2022 2021 Cost of inventories recognised as an expense 749 1,038 749 1,038 7 Auditor\u2019s remuneration The fees for the year to December 31, 2022, for audit and non-audit services provided by the auditor of the Group\u2019s consolidated financial statements and of certain individual financial statements of the consolidated companies, KPMG Auditores S.L., and by companies belonging to KPMG\u2019s network, were as follows: \u20ac\u2019000 2022 2021 Fees payable for the audit of the Group and individual accounts 6,378 4,860 Fees payable for other services: Audit of the Group's subsidiaries pursuant to legislation 985 532 Other services pursuant to legislation 195 431 Other audit and assurance services 1,644 569 Services relating to working capital review 1,022 776 10,224 7,168 Fees payable to the Group's auditor for the audit of the Group's pension scheme during the year total \u20ac236 thousand (2021: \u20ac182 thousand). 8 Employee costs and numbers \u20ac million 2022 2021 Wages and salaries 3,207 2,135 Social security costs 519 307 Costs related to pension scheme benefits 272 232 Share-based payment charge 39 23 Other employee costs 1 610 316 Total employee costs 4,647 3,013 1 Other employee costs include allowances and accommodation for crew. The number of employees during the year and at December 31 was as follows: 2022 2021 December 31, 2022 December 31, 2021 Average number of employees 1 Number of employees Percentage of women Average number of employees 1 Number of employees Percentage of women In the air: Cabin crew 19,801 22,278 70% 9,304 17,865 70% Pilots 7,340 7,864 7% 3,879 7,607 6% On the ground: Airports 13,798 15,087 38% 6,728 12,842 37% Corporate 11,741 13,819 49% 8,612 10,709 52% Maintenance 6,908 6,775 8% 6,345 7,448 8% Senior executives 212 221 34% 167 187 33% 59,800 66,044 44% 35,035 56,658 42% 1 The average number of employees excludes those employees who were on furlough, wage support and equivalent schemes, including the Temporary Redundancy Plan arrangements in Spain. For further details see note 34. The total average number of employees including these schemes is 61,192. The number of employees is based on actual headcount at December 31. The average manpower equivalent for 2022 was 59,505 (2021: 50,222), which includes employees on furlough, wage support and equivalent schemes, including Temporary Redundancy Plan arrangements in Spain. 9 Finance costs, income and other non-operating charges a Finance costs \u20ac million 2022 2021 Interest expense on: Bank borrowings (191) (133) Asset financed liabilities (107) (65) Lease liabilities (464) (408) Bonds 1 (83) (63) Provisions unwinding of discount (43) (12) Other borrowings 1 (102) (90) Capitalised interest on progress payments 11 3 Other finance costs (38) (62) (1,017) (830) 1 The 2021 total finance costs include a reclassification of results to conform with the current basis of presentation. A charge of \u20ac63 million has been reclassified from Other borrowings to Bonds. There is no change to total finance costs. b Finance income \u20ac million 2022 2021 Interest on other interest-bearing deposits 51 5 Other finance income 1 8 52 13 c Net change in fair value of financial instruments \u20ac million 2022 2021 Net change in the fair value of convertible bond 159 89 Net fair value losses on financial assets at fair value through profit or loss (35) \u2013 Net fair value losses on de-recognition of financial assets and recognition of other equity investment (43) \u2013 81 89 d Net financing credit/(charge) relating to pensions \u20ac million 2022 2021 Net financing credit/(charge) relating to pensions 26 (2) e Other non-operating charges \u20ac million 2022 2021 Gains on sale of property, plant and equipment and investments 1 22 59 Charge related to equity investments (note 19) (3) \u2013 Share of profits in investments accounted for using the equity method (note 18) 5 2 Realised gains on derivatives not qualifying for hedge accounting 190 37 Unrealised (losses)/gains on derivatives not qualifying for hedge accounting (82) 47 Air Europa Holdings termination settlement payment \u2013 (75) 132 70 1 2021 includes a gain of \u20ac24 million arising from the disposal of Compa\u00f1\u00eda Auxiliar al Cargo Expr\u00e9s, S.A. and Auxiliar Log\u00edstica Aeroportuaria, S.A. The Group previously owned 75 per cent of the share capital of these companies and disposed of them during the fourth quarter of 2021. The disposal led to the de- recognition of \u20ac12 million of net assets from the consolidated financial statements of the Group. 10 Tax a Tax credits/(charges) Tax credits/(charges) recognised in the Income statement, Other comprehensive income and directly in equity: 2022 2021 \u20ac million Income statement Other comprehensive income Recognised directly in equity Total Income statement Other comprehensive income Recognised directly in equity Total Current tax Movement in respect of prior years (6) \u2013 \u2013 (6) 10 \u2013 (1) 9 Movement in respect of current year (64) 3 \u2013 (61) (9) 5 \u2013 (4) Total current tax (70) 3 \u2013 (67) 1 5 (1) 5 Deferred tax Movement in respect of prior years (36) (2) \u2013 (38) (23) \u2013 \u2013 (23) Movement in respect of current year 105 (60) 5 50 518 (420) \u2013 98 Rate change/rate differences 17 (10) \u2013 7 78 61 \u2013 139 Total deferred tax 86 (72) 5 19 573 (359) \u2013 214 Total tax 16 (69) 5 (48) 574 (354) (1) 219 The current tax credit in Other comprehensive income relates to the fair value movements on the convertible bond of \u20ac2 million (2021: \u20ac5 million) and movements relating to employee benefit plans of \u20ac1 million (2021: \u20acnil). Tax recognised directly in equity relates to cash flow hedges of \u20ac5 million (2021: \u20acnil) and share-based payment schemes of \u20acnil (2021: \u20ac1 million). Within tax in Other comprehensive income is a tax credit of \u20ac8 million (2021: tax charge of \u20ac123 million) that may be reclassified to the Income statement and a tax charge of \u20ac77 million (2021: tax charge of \u20ac231 million) that will not. b Current tax asset/(liability) \u20ac million 2022 2021 Balance at January 1 (5) 53 Income statement (70) 1 Other comprehensive income 3 5 Recognised directly in equity \u2013 (1) Cash 134 (63) Exchange movements and other 2 \u2013 Balance at December 31 64 (5) Current tax asset 72 16 Current tax liability (8) (21) Balance at December 31 64 (5) NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 10 Tax a Tax credits/(charges) Tax credits/(charges) recognised in the Income statement, Other comprehensive income and directly in equity: 2022 2021 \u20ac million Income statement Other comprehensive income Recognised directly in equity Total Income statement Other comprehensive income Recognised directly in equity Total Current tax Movement in respect of prior years (6) \u2013 \u2013 (6) 10 \u2013 (1) 9 Movement in respect of current year (64) 3 \u2013 (61) (9) 5 \u2013 (4) Total current tax (70) 3 \u2013 (67) 1 5 (1) 5 Deferred tax Movement in respect of prior years (36) (2) \u2013 (38) (23) \u2013 \u2013 (23) Movement in respect of current year 105 (60) 5 50 518 (420) \u2013 98 Rate change/rate differences 17 (10) \u2013 7 78 61 \u2013 139 Total deferred tax 86 (72) 5 19 573 (359) \u2013 214 Total tax 16 (69) 5 (48) 574 (354) (1) 219 The current tax credit in Other comprehensive income relates to the fair value movements on the convertible bond of \u20ac2 million (2021: \u20ac5 million) and movements relating to employee benefit plans of \u20ac1 million (2021: \u20acnil). Tax recognised directly in equity relates to cash flow hedges of \u20ac5 million (2021: \u20acnil) and share-based payment schemes of \u20acnil (2021: \u20ac1 million). Within tax in Other comprehensive income is a tax credit of \u20ac8 million (2021: tax charge of \u20ac123 million) that may be reclassified to the Income statement and a tax charge of \u20ac77 million (2021: tax charge of \u20ac231 million) that will not. b Current tax asset/(liability) \u20ac million 2022 2021 Balance at January 1 (5) 53 Income statement (70) 1 Other comprehensive income 3 5 Recognised directly in equity \u2013 (1) Cash 134 (63) Exchange movements and other 2 \u2013 Balance at December 31 64 (5) Current tax asset 72 16 Current tax liability (8) (21) Balance at December 31 64 (5) c Deferred tax asset/(liability) \u20ac million Fixed assets Right of use assets Lease liabilities Employee leaving indemnities and others Employee benefit plans Fair value gains/ losses 1 Share- based payment schemes Tax loss carried forward and tax credits Other temporary differences Total Balance at January 1, 2022 (477) (220) 19 196 62 57 11 1,573 61 1,282 Income statement (194) 169 (9) 19 1 \u2013 6 87 7 86 Other comprehensive income 2 \u2013 \u2013 \u2013 (17) (12) (46) \u2013 3 \u2013 (72) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 5 \u2013 \u2013 \u2013 5 Exchange movements and other (9) 7 (1) (1) 3 (19) \u2013 (27) 28 (19) Balance at December 31, 2022 (680) (44) 9 197 54 (3) 17 1,636 96 1,282 Balance at January 1, 2021 (589) (248) 21 194 298 195 10 1,090 64 1,035 Income statement 106 67 (3) 9 (11) (14) 1 408 10 573 Other comprehensive income \u2013 \u2013 \u2013 (9) (237) (133) \u2013 20 \u2013 (359) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Exchange movements and other 6 (39) 1 2 12 9 \u2013 55 (13) 33 Balance at December 31, 2021 (477) (220) 19 196 62 57 11 1,573 61 1,282 1 Fair value gains/losses include both the Cash flow hedge reserve and the Cost of hedging reserve, of which the movement in relation to Other comprehensive income recognised in the Cash flow hedge reserve for 2022 was \u20ac68 million (refer to note 28d). 2 Movements in Other comprehensive income relating to post-employment benefit obligations increase the Group\u2019s tax losses by \u20ac3 million (tax value) at December 31, 2022 (2021: \u20ac20 million) and have therefore been disclosed as tax loss carried forward and tax credits in the above table. \u20ac million 2022 2021 Deferred tax asset 1,282 1,282 Deferred tax liability \u2013 \u2013 Balance at December 31 1,282 1,282 The deferred tax assets mainly arise in Spain and the UK and are expected to reverse in full beyond one year. Recognition of the deferred tax assets is supported by the expected reversal of deferred tax liabilities in corresponding periods, and projections of operating performance laid out in the management approved business plans. d Reconciliation of the total tax charge in the Income statement The tax (charge)/credit is calculated at the domestic rates applicable to pro\ufb01ts/(losses) in the country in which the profits/(losses) arise. The differences between the expected tax charge (2021: credit) and the actual tax credit (2021: credit) on the profit for the year to December 31, 2022 (2021: loss) are explained below: \u20ac million 2022 2021 Accounting profit/(loss) before tax 415 (3,507) Weighted average tax (charge)/credit of the Group 1 (102) 683 Unrecognised losses and deductible temporary differences arising in the year (2) (193) Disposal and write down of investments \u2013 8 Effect of tax rate changes 17 78 Prior year tax assets recognised 153 44 Effect of lower tax rate in the Canary Islands 5 (23) Movement in respect of prior years (42) (13) Non-deductible expenses (22) (15) Other items 9 5 Tax credit in the Income statement 16 574 1 The expected tax credit is calculated by aggregating the expected tax (charges)/credits arising in each company in the Group and changes each year as tax rates and profit mix change. The 2022 corporate tax rates for the Group's main countries of operation are Spain 25% (2021: 25%), the UK 19% (2021: 19%) and Ireland 12.5% (2021: 12.5%). e Payroll-related taxes and UK Air Passenger Duty The Group was also subject to other taxes paid during the year which are as follows: \u20ac million 2022 2021 Payroll related taxes 522 310 UK Air Passenger Duty 722 204 1,244 514 f Factors that may affect future tax charges Unrecognised deductible temporary differences and losses \u20ac million 2022 2021 Income tax losses Spanish corporate income tax losses 1,596 1,993 Openskies SASU trading losses 405 390 UK trading losses 72 72 Other trading losses 11 3 2,084 2,458 Other losses and temporary differences Spanish deductible temporary differences 481 648 UK capital losses 343 361 Irish capital losses 17 17 841 1,026 None of the unrecognised temporary differences have an expiry date. Further information with regard to the sensitivity of the recoverability of deferred tax assets is given in note 2. Unrecognised temporary differences \u2013 investment in subsidiaries and associates No deferred tax liability has been recognised in respect of \u20ac823 million (2021: \u20ac617 million) of temporary differences relating to subsidiaries and associates. The Group either controls the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future or no tax consequences would arise from their reversal to a material extent. Tax rate changes On March 3, 2021 the UK Chancellor of the Exchequer announced that legislation would be introduced in the Finance Bill 2021 to set the main rate of corporation tax at 25 per cent from April 2023. On May 24, 2021 the Finance Bill was substantively enacted, which has led to the remeasurement of deferred tax balances and will increase the Group's future current tax charge accordingly. As a result of the remeasurement of deferred tax balances in UK entities, a credit of \u20ac17 million (2021: \u20ac78 million credit) is recorded in the Income statement and a charge of \u20ac10 million (2021: \u20ac61 million credit) is recorded in Other comprehensive income. On October 8, 2021 Ireland announced that it would increase the rate of corporation tax for certain multinational businesses to 15 per cent with effect from 2023. This expected tax rate change has not been reflected in these results because it has not yet been substantively enacted. The effect of the proposed rate change is not expected to be material over the period of the management approved business plan. Tax policy developments The Group is monitoring the OECD\u2019s proposed two-pillar solution to address the tax challenges arising from the digitalisation of the economy. This proposed reform to the international tax system addresses the geographical allocation of profits for the purposes of taxation and is designed to ensure that multinational enterprises will be subject to a minimum 15 per cent effective tax rate. On December 15, 2022, the Council of the European Union formally adopted the EU Pillar Two Directive. Member States are expected to transpose the Directive into national law by the end of 2023 and effective from 2024. The Group is continuing to assess the implications of the reform and these will be determined when the relevant legislation is finalised. g Tax-related contingent liabilities The Group has certain contingent liabilities that could be reliably estimated, across all taxes, at December 31, 2022 amounting to \u20ac110 million (December 31, 2021: \u20ac106 million). No material losses are likely to arise from such contingent liabilities. As such the Group does not consider it appropriate to make a provision for these amounts. Included in the tax related contingent liabilities are the following: Merger gain Following tax audits covering the period 2011 to 2014, the Spanish Tax Authorities issued a corporate income tax assessment to the Company regarding the merger in 2011 between British Airways and Iberia. The maximum exposure in this case is \u20ac98 million (December 31, 2021: \u20ac95 million), being the amount in the tax assessment with an estimate of the interest accrued on that assessment through to December 31, 2022. The Company appealed the assessment to the Tribunal Econ\u00f3mico-Administrativo Central or \u2018TEAC\u2019 (Central Administrative Tax Tribunal). On October 23, 2019, the TEAC ruled in favour of the Spanish Tax Authorities. The Company subsequently appealed this ruling to the Audiencia Nacional (National High Court) on December 20, 2019, and on July 24, 2020 filed submissions in support of its case. The Company does not expect a hearing at the National High Court until late 2023 at the earliest. The Company disputes the technical merits of the assessment and ruling of the TEAC, both in terms of whether a gain arose and in terms of the quantum of any gain. The Company believes that it has strong arguments to support its appeals. The Company does not consider it appropriate to make a provision for these amounts and accordingly has classified this matter as a contingent liability. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 10 Tax continued e Payroll-related taxes and UK Air Passenger Duty The Group was also subject to other taxes paid during the year which are as follows: \u20ac million 2022 2021 Payroll related taxes 522 310 UK Air Passenger Duty 722 204 1,244 514 f Factors that may affect future tax charges Unrecognised deductible temporary differences and losses \u20ac million 2022 2021 Income tax losses Spanish corporate income tax losses 1,596 1,993 Openskies SASU trading losses 405 390 UK trading losses 72 72 Other trading losses 11 3 2,084 2,458 Other losses and temporary differences Spanish deductible temporary differences 481 648 UK capital losses 343 361 Irish capital losses 17 17 841 1,026 None of the unrecognised temporary differences have an expiry date. Further information with regard to the sensitivity of the recoverability of deferred tax assets is given in note 2. Unrecognised temporary differences \u2013 investment in subsidiaries and associates No deferred tax liability has been recognised in respect of \u20ac823 million (2021: \u20ac617 million) of temporary differences relating to subsidiaries and associates. The Group either controls the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future or no tax consequences would arise from their reversal to a material extent. Tax rate changes On March 3, 2021 the UK Chancellor of the Exchequer announced that legislation would be introduced in the Finance Bill 2021 to set the main rate of corporation tax at 25 per cent from April 2023. On May 24, 2021 the Finance Bill was substantively enacted, which has led to the remeasurement of deferred tax balances and will increase the Group's future current tax charge accordingly. As a result of the remeasurement of deferred tax balances in UK entities, a credit of \u20ac17 million (2021: \u20ac78 million credit) is recorded in the Income statement and a charge of \u20ac10 million (2021: \u20ac61 million credit) is recorded in Other comprehensive income. On October 8, 2021 Ireland announced that it would increase the rate of corporation tax for certain multinational businesses to 15 per cent with effect from 2023. This expected tax rate change has not been reflected in these results because it has not yet been substantively enacted. The effect of the proposed rate change is not expected to be material over the period of the management approved business plan. Tax policy developments The Group is monitoring the OECD\u2019s proposed two-pillar solution to address the tax challenges arising from the digitalisation of the economy. This proposed reform to the international tax system addresses the geographical allocation of profits for the purposes of taxation and is designed to ensure that multinational enterprises will be subject to a minimum 15 per cent effective tax rate. On December 15, 2022, the Council of the European Union formally adopted the EU Pillar Two Directive. Member States are expected to transpose the Directive into national law by the end of 2023 and effective from 2024. The Group is continuing to assess the implications of the reform and these will be determined when the relevant legislation is finalised. g Tax-related contingent liabilities The Group has certain contingent liabilities that could be reliably estimated, across all taxes, at December 31, 2022 amounting to \u20ac110 million (December 31, 2021: \u20ac106 million). No material losses are likely to arise from such contingent liabilities. As such the Group does not consider it appropriate to make a provision for these amounts. Included in the tax related contingent liabilities are the following: Merger gain Following tax audits covering the period 2011 to 2014, the Spanish Tax Authorities issued a corporate income tax assessment to the Company regarding the merger in 2011 between British Airways and Iberia. The maximum exposure in this case is \u20ac98 million (December 31, 2021: \u20ac95 million), being the amount in the tax assessment with an estimate of the interest accrued on that assessment through to December 31, 2022. The Company appealed the assessment to the Tribunal Econ\u00f3mico-Administrativo Central or \u2018TEAC\u2019 (Central Administrative Tax Tribunal). On October 23, 2019, the TEAC ruled in favour of the Spanish Tax Authorities. The Company subsequently appealed this ruling to the Audiencia Nacional (National High Court) on December 20, 2019, and on July 24, 2020 filed submissions in support of its case. The Company does not expect a hearing at the National High Court until late 2023 at the earliest. The Company disputes the technical merits of the assessment and ruling of the TEAC, both in terms of whether a gain arose and in terms of the quantum of any gain. The Company believes that it has strong arguments to support its appeals. The Company does not consider it appropriate to make a provision for these amounts and accordingly has classified this matter as a contingent liability. IAG Loyalty VAT In the year ended December 31, 2022 and through to the date of this report, His Majesty\u2019s Revenue and Customs (HMRC) has issued notices of VAT assessments for the 13 months ended March 2019 to Avios Group (AGL) Limited, a controlled undertaking of the Group trading as IAG Loyalty. At December 31, 2022 and through to the date of these financial statements HMRC\u2019s enquiries into IAG Loyalty\u2019s VAT position remain at an early stage. The Group has reviewed the position with its advisors and considers it has strong arguments to support its VAT accounting, including having received rulings previously from HMRC on the matter, and therefore does not consider it probable that an adverse ruling will eventuate. Given the above the Group does not consider it appropriate to record any provision. It is further not possible to estimate reliably any exposure that may arise from this matter until HMRC\u2019s enquiries are further progressed. The Group expects further developments of these matters during the remainder of 2023. 11 Earnings per share \u20ac million 2022 2021 Earnings/(losses) attributable to equity holders of the parent for basic earnings/(losses) per share 431 (2,933) Income statement impact of convertible bonds (104) \u2013 Diluted earnings/(losses) attributable to equity holders of the parent and diluted earnings/(losses) per share 327 (2,933) 2022 Number \u2018000 2021 Number \u2018000 Weighted average number of ordinary shares in issue 4,958,420 4,963,945 Weighted average number of ordinary shares in issue for diluted earnings/(losses) per share 5,344,152 4,963,945 \u20ac cents 2022 2021 Basic earnings/(losses) per share 8.7 (59.1) Diluted earnings/(losses) per share 6.1 (59.1) The effect of the assumed conversion of the \u20ac825 million convertible bond 2028 and outstanding employee share schemes have a dilutive impact on the earnings per share for the year to December 31, 2022 due to the reported profit after tax for the year, but are antidilutive for the year to December 31, 2021 due to the reported loss after tax for the year, and therefore have not been included in the diluted loss per share calculation for 2021. For information relating to Adjusted earnings/(losses) per share refer to the Alternative performance measures section. 12 Dividends The Directors propose that no dividend be paid for the year to December 31, 2022 (2021: \u20acnil). The future dividend capacity of the Group is dependent on the liquidity requirements and the distributable reserves of the Group\u2019s main operating companies and their capacity to pay dividends to the Company, together with the Company\u2019s distributable reserves and liquidity. Certain debt obligations place restrictions or conditions on the payment of dividends from the Group\u2019s main operating companies to the Company, including a loan to British Airways partially guaranteed by UKEF and loans to Iberia and Vueling partially guaranteed by the Instituto de Cr\u00e9dito Oficial (ICO) in Spain; these loans can be repaid early without penalty at the election of each company. In Spain, Iberia and Vueling are not permitted to make dividend payments in the reporting period in which they are in receipt of Expedientes de Regulaci\u00f3n Temporal de Empleo or \u2018ERTE\u2019 (Temporary Employment Regulation Records). British Airways agreed with the Trustee of its main UK defined benefit pension scheme (NAPS) as part of the triennial valuation as at March 31, 2021 that, subject to the over-funding protection mechanism, no dividends will be paid to IAG before December 31, 2023 and that any dividends paid to IAG from January 1, 2024 through to September 30, 2025, will trigger a pension contribution of 50 per cent of the amount of the dividend. Further details on the British Airways dividend restrictions agreed with NAPS are given in note 32a. 13 Property, plant and equipment \u20ac million Fleet Property Equipment Total Cost Balance at January 1, 2021 26,936 2,982 1,501 31,419 Additions 709 38 37 784 Modification of leases 236 (2) (26) 208 Disposals (3,035) (74) (135) (3,244) Reclassifications (4) \u2013 (1) (5) Transfers to Non-current assets held for sale (note 16) (111) \u2013 \u2013 (111) Exchange movements 1,265 181 74 1,520 Balance at December 31, 2021 25,996 3,125 1,450 30,571 Additions 3,765 61 101 3,927 Modification of leases 241 129 \u2013 370 Disposals (1,700) (406) (120) (2,226) Reclassifications (4) \u2013 \u2013 (4) Transfers to Non-current assets held for sale (note 16) (44) \u2013 \u2013 (44) Exchange movements (552) (73) (31) (656) December 31, 2022 27,702 2,836 1,400 31,938 Depreciation and impairment Balance at January 1, 2021 11,571 1,282 1,035 13,888 Depreciation charge for the year 1,500 154 84 1,738 Impairment (reversal)/charge for the year 1 (3) 19 \u2013 16 Disposals (2,699) (63) (105) (2,867) Modification of leases \u2013 \u2013 (14) (14) Transfers to Non-current assets held for sale (note 16) (91) \u2013 \u2013 (91) Exchange movements 602 81 57 740 Balance at December 31, 2021 10,880 1,473 1,057 13,410 Depreciation charge for the year 1,642 168 79 1,889 Impairment reversal for the year 1 (8) \u2013 \u2013 (8) Disposals (857) (403) (107) (1,367) Transfers to Non-current assets held for sale (note 16) (25) \u2013 \u2013 (25) Exchange movements (247) (32) (28) (307) December 31, 2022 11,385 1,206 1,001 13,592 1 For details regarding the impairment reversal on fleet assets refer to the Alternative performance measures section. For details regarding the operating segment in which the impairment (reversal)/charge arose, refer to note 5. Net book values December 31, 2022 16,317 1,630 399 18,346 December 31, 2021 15,116 1,652 393 17,161 Analysis at December 31, 2022 Owned 7,242 833 338 8,413 Right of use assets (note 14) 7,993 684 20 8,697 Progress payments 1,071 113 40 1,224 Assets not in current use 11 \u2013 1 12 Property, plant and equipment 16,317 1,630 399 18,346 Analysis at December 31, 2021 Owned 5,736 916 330 6,982 Right of use assets (note 14) 8,626 640 37 9,303 Progress payments 748 96 26 870 Assets not in current use 6 \u2013 \u2013 6 Property, plant and equipment 15,116 1,652 393 17,161 NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 13 Property, plant and equipment \u20ac million Fleet Property Equipment Total Cost Balance at January 1, 2021 26,936 2,982 1,501 31,419 Additions 709 38 37 784 Modification of leases 236 (2) (26) 208 Disposals (3,035) (74) (135) (3,244) Reclassifications (4) \u2013 (1) (5) Transfers to Non-current assets held for sale (note 16) (111) \u2013 \u2013 (111) Exchange movements 1,265 181 74 1,520 Balance at December 31, 2021 25,996 3,125 1,450 30,571 Additions 3,765 61 101 3,927 Modification of leases 241 129 \u2013 370 Disposals (1,700) (406) (120) (2,226) Reclassifications (4) \u2013 \u2013 (4) Transfers to Non-current assets held for sale (note 16) (44) \u2013 \u2013 (44) Exchange movements (552) (73) (31) (656) December 31, 2022 27,702 2,836 1,400 31,938 Depreciation and impairment Balance at January 1, 2021 11,571 1,282 1,035 13,888 Depreciation charge for the year 1,500 154 84 1,738 Impairment (reversal)/charge for the year 1 (3) 19 \u2013 16 Disposals (2,699) (63) (105) (2,867) Modification of leases \u2013 \u2013 (14) (14) Transfers to Non-current assets held for sale (note 16) (91) \u2013 \u2013 (91) Exchange movements 602 81 57 740 Balance at December 31, 2021 10,880 1,473 1,057 13,410 Depreciation charge for the year 1,642 168 79 1,889 Impairment reversal for the year 1 (8) \u2013 \u2013 (8) Disposals (857) (403) (107) (1,367) Transfers to Non-current assets held for sale (note 16) (25) \u2013 \u2013 (25) Exchange movements (247) (32) (28) (307) December 31, 2022 11,385 1,206 1,001 13,592 1 For details regarding the impairment reversal on fleet assets refer to the Alternative performance measures section. For details regarding the operating segment in which the impairment (reversal)/charge arose, refer to note 5. Net book values December 31, 2022 16,317 1,630 399 18,346 December 31, 2021 15,116 1,652 393 17,161 Analysis at December 31, 2022 Owned 7,242 833 338 8,413 Right of use assets (note 14) 7,993 684 20 8,697 Progress payments 1,071 113 40 1,224 Assets not in current use 11 \u2013 1 12 Property, plant and equipment 16,317 1,630 399 18,346 Analysis at December 31, 2021 Owned 5,736 916 330 6,982 Right of use assets (note 14) 8,626 640 37 9,303 Progress payments 748 96 26 870 Assets not in current use 6 \u2013 \u2013 6 Property, plant and equipment 15,116 1,652 393 17,161 The net book value of property comprises: \u20ac million 2022 2021 Freehold 469 495 Right of use assets (note 14) 684 640 Long leasehold improvements with a contractual life in excess of 50 years 301 311 Short leasehold improvements with a contractual life of less than 50 years 176 206 Property 1,630 1,652 At December 31, 2022, bank and other loans of the Group are secured on owned fleet assets with a net book value of \u20ac3,931 million (2021: \u20ac3,081 million). 14 Leases a Amounts recognised in the Consolidated balance sheet Property, plant and equipment includes the following amounts relating to right of use assets: \u20ac million Fleet Property Equipment Total Cost Balance at January 1, 2021 14,008 893 99 15,000 Additions 240 15 \u2013 255 Modifications of leases 236 (2) (26) 208 Disposals (72) (12) (1) (85) Reclassifications 1 (759) \u2013 \u2013 (759) Exchange movements 565 55 2 622 December 31, 2021 14,218 949 74 15,241 Additions 586 28 1 615 Modification of leases 241 129 \u2013 370 Disposals (214) (171) (2) (387) Reclassifications 1 (849) \u2013 (24) (873) Exchange movements (232) (24) \u2013 (256) December 31, 2022 13,750 911 49 14,710 Depreciation and impairment Balance at January 1, 2021 4,884 198 43 5,125 Depreciation charge for the year 963 87 8 1,058 Impairment charge for the year 2 4 16 \u2013 20 Disposals (71) (4) (1) (76) Modification of leases \u2013 \u2013 (14) (14) Reclassifications 1 (394) \u2013 \u2013 (394) Exchange movements 206 12 1 219 December 31, 2021 5,592 309 37 5,938 Depreciation charge for the year 991 93 8 1,092 Impairment reversal for the year 2 (8) \u2013 \u2013 (8) Disposals (191) (170) (1) (362) Reclassifications 1 (528) \u2013 (14) (542) Exchange movements (99) (5) (1) (105) December 31, 2022 5,757 227 29 6,013 Net book value December 31, 2022 7,993 684 20 8,697 December 31, 2021 8,626 640 37 9,303 1 Amounts with a net book value of \u20ac331 million (2021: \u20ac365 million) were reclassified from ROU assets to Owned Property, plant and equipment at the cessation of the respective leases. The assets reclassified relate to leases with purchase options that were grandfathered as ROU assets upon transition to IFRS 16, for which the Group had been depreciating over the expected useful life of the aircraft, incorporating the purchase option. 2 For details regarding the impairment (reversal)/charge on fleet assets refer to the Alternative performance measures section. Interest-bearing long-term borrowings includes the following amount relating to lease liabilities: \u20ac million 2022 2021 January 1 9,637 10,024 Additions 639 310 Modifications of leases 378 208 Repayments (1,886) (1,855) Interest expense 464 400 Disposals (28) (8) Exchange movements 415 558 December 31 9,619 9,637 Current 1,766 1,521 Non-current 7,853 8,116 b Amounts recognised in the Consolidated income statement \u20ac million 2022 2021 Amounts not included in the measurement of lease liabilities Variable lease payments 2 1 Expenses relating to short-term leases 39 26 Amounts expensed as a result of the recognition of ROU assets and lease liabilities Interest expense on lease liabilities 464 400 Gains/(losses) arising from sale and leaseback transactions 1 (6) Depreciation charge for the year 1,092 1,058 Impairment (reversal)/charge for the year (8) 20 During 2020 the IASB issued \u2018COVID-19 related rent concessions \u2013 amendment to IFRS 16 Leases\u2019 to provide a practical expedient to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions for those lease modifications arising as a direct result of COVID-19. During 2021, the IASB extended the period for the application of the practical expedient. The Group has applied this practical expedient to all such modifications in the preparation of the consolidated financial statements. The net impact on the Income statement for 2022 was \u20acnil (2021: credit of \u20ac8 million) reflecting the changes to lease payments that arose from such concessions. c Amounts recognised in the Consolidated cash flow statement \u20ac million 2022 2021 1 Cash flows arising from transactions giving rise to lease liabilities Total cash outflows arising from lease liabilities \u2013 aircraft 1,699 1,711 Total cash outflows arising from lease liabilities \u2013 other 178 137 Total cash inflows arising from sale and leaseback transactions \u2013 aircraft 718 213 Cash flows arising from transactions that do not give rise to the recognition of lease liabilities Total cash outflows arising from short-term leases, low-value assets and variable lease payments 41 27 Total cash outflows arising from asset financed liabilities 292 209 1 During 2022, the Group has re-presented cash flow amounts to disclose amounts arising from all contractual leases as opposed to only those that give rise to right of use assets and lease liabilities. The Group is not exposed to future cash outflows as at December 31, 2022 and December 31, 2021, for which no amount has been recognised in relation to leases not yet commenced to which the Group is committed. d Maturity profile of the lease liabilities The maturity profile of the lease liabilities is disclosed in note 27f. e Extension options The Group has certain leases which contain extension options exercisable by the Group prior to the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The Group assesses at lease commencement whether it is reasonably certain to exercise the extension options. The Group is exposed to future cash outflows (on an undiscounted basis) at December 31, 2022, for which no amount has been recognised, for potential extension options of \u20ac945 million (2021: \u20ac795 million) due to it not being reasonably certain that these leases will be extended. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 14 Leases continued Interest-bearing long-term borrowings includes the following amount relating to lease liabilities: \u20ac million 2022 2021 January 1 9,637 10,024 Additions 639 310 Modifications of leases 378 208 Repayments (1,886) (1,855) Interest expense 464 400 Disposals (28) (8) Exchange movements 415 558 December 31 9,619 9,637 Current 1,766 1,521 Non-current 7,853 8,116 b Amounts recognised in the Consolidated income statement \u20ac million 2022 2021 Amounts not included in the measurement of lease liabilities Variable lease payments 2 1 Expenses relating to short-term leases 39 26 Amounts expensed as a result of the recognition of ROU assets and lease liabilities Interest expense on lease liabilities 464 400 Gains/(losses) arising from sale and leaseback transactions 1 (6) Depreciation charge for the year 1,092 1,058 Impairment (reversal)/charge for the year (8) 20 During 2020 the IASB issued \u2018COVID-19 related rent concessions \u2013 amendment to IFRS 16 Leases\u2019 to provide a practical expedient to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions for those lease modifications arising as a direct result of COVID-19. During 2021, the IASB extended the period for the application of the practical expedient. The Group has applied this practical expedient to all such modifications in the preparation of the consolidated financial statements. The net impact on the Income statement for 2022 was \u20acnil (2021: credit of \u20ac8 million) reflecting the changes to lease payments that arose from such concessions. c Amounts recognised in the Consolidated cash flow statement \u20ac million 2022 2021 1 Cash flows arising from transactions giving rise to lease liabilities Total cash outflows arising from lease liabilities \u2013 aircraft 1,699 1,711 Total cash outflows arising from lease liabilities \u2013 other 178 137 Total cash inflows arising from sale and leaseback transactions \u2013 aircraft 718 213 Cash flows arising from transactions that do not give rise to the recognition of lease liabilities Total cash outflows arising from short-term leases, low-value assets and variable lease payments 41 27 Total cash outflows arising from asset financed liabilities 292 209 1 During 2022, the Group has re-presented cash flow amounts to disclose amounts arising from all contractual leases as opposed to only those that give rise to right of use assets and lease liabilities. The Group is not exposed to future cash outflows as at December 31, 2022 and December 31, 2021, for which no amount has been recognised in relation to leases not yet commenced to which the Group is committed. d Maturity profile of the lease liabilities The maturity profile of the lease liabilities is disclosed in note 27f. e Extension options The Group has certain leases which contain extension options exercisable by the Group prior to the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The Group assesses at lease commencement whether it is reasonably certain to exercise the extension options. The Group is exposed to future cash outflows (on an undiscounted basis) at December 31, 2022, for which no amount has been recognised, for potential extension options of \u20ac945 million (2021: \u20ac795 million) due to it not being reasonably certain that these leases will be extended. f Lessor accounting The Group leases out certain of its property, plant and equipment. The Group has classified those leases that transfer substantially all of the risks and rewards of ownership to the lessee as finance leases and those leases that do not transfer substantially all of the risks and rewards of ownership to the lessee as operating leases. Finance leases Rental income from finance leases recognised by the Group in 2022 was \u20ac4 million (2021: \u20acnil). Rental income is recorded within Property, IT and other within the Income statement. The following table sets out a maturity analysis of finance lease receipts, showing the undiscounted lease receipts to be received after the reporting date: \u20ac million 2022 2021 Within one year 2 4 One to two years 6 5 Two to five years \u2013 2 More than five years \u2013 \u2013 Total 8 11 15 Capital expenditure commitments Capital expenditure authorised and contracted but not provided for in the accounts, including outstanding aircraft commitments, at December 31, 2022 amounted to \u20ac13,749 million (December 31, 2021: \u20ac10,911 million). The outstanding aircraft commitments including the expected delivery timeframes, totalling \u20ac13,484 million (2021: \u20ac10,813 million), are as follows: Aircraft future deliveries at December 31 2022 1 2021 1 Airbus A320 (from 2023 to 2028) 45 22 Airbus A321 (from 2023 to 2028) 46 20 Airbus A321 XLR (from 2024 to 2026) 14 14 Airbus A350-900 (from 2023 to 2030) 7 16 Airbus A350-1000 (from 2023 to 2024) 5 10 Boeing 777-9 (from 2026 to 2028) 18 18 Boeing 787-10 (from 2023 to 2024) 7 10 Boeing 737-8200 (from 2024 to 2025) 25 \u2013 Boeing 737-10 (from 2026 to 2027) 25 \u2013 Total 192 110 1 Capital commitments exclude options to purchase additional aircraft. In May 2022, the Group agreed to purchase 25 Boeing 737-8200 and 25 737-10 aircraft, with 100 options to purchase further such aircraft. In addition, in July 2022, the Group agreed to exercise its option over 12 Airbus A320neos/A321neos and to purchase 25 Airbus A320neos/A321neos with 50 options to purchase further such aircraft. The determination of the split between A320neos and A321neos will be made closer to delivery. Both of these agreements were subject to shareholder approval and were subsequently approved at the Extraordinary General Meeting of the Company on October 26, 2022. The majority of these commitments are denominated in US dollars translated at the closing exchange rate at the reporting date and include escalation clauses dependent on the timing of aircraft deliveries. Under the terms of the committed purchase agreements, the Group is required to make periodic advance payments towards the purchase price, with the commitments above stated net of advance payments that have been made at the reporting date. The Group has certain rights to defer aircraft deliveries and to cancel commitments in the event of significant delays to aircraft deliveries caused by the aircraft manufacturers. No such rights had been exercised as at December 31, 2022. 16 Non-current assets held for sale As at December 31, 2022, the non-current assets held for sale of \u20ac19 million represented two Airbus A321 aircraft. No gain or loss was recognised on classification as non-current assets held for sale. These aircraft were presented within the British Airways segment and are expected to exit the business during 2023. As at December 31, 2021, the non-current assets held for sale of \u20ac20 million represented three Airbus A321 aircraft. No gain or loss was recognised on classification as non-current assets held for sale. These aircraft are presented within the Aer Lingus segment and exited the business during 2022. 17 Intangible assets and impairment review a Intangible assets \u20ac million Goodwill Brand Customer loyalty programmes Landing rights 1 Software ETS assets 2 Other 2 Total Cost Balance at January 1, 2021 593 451 253 1,555 1,474 76 85 4,487 Additions \u2013 \u2013 \u2013 \u2013 149 33 1 183 Disposals \u2013 \u2013 \u2013 (6) (19) (49) \u2013 (74) Exchange movements 3 \u2013 \u2013 56 70 2 1 132 Balance at December 31, 2021 596 451 253 1,605 1,674 62 87 4,728 Additions \u2013 \u2013 \u2013 14 218 360 1 593 Disposals \u2013 \u2013 \u2013 (6) (52) (9) \u2013 (67) Exchange movements (1) \u2013 \u2013 (25) (34) (6) \u2013 (66) December 31, 2022 595 451 253 1,588 1,806 407 88 5,188 Amortisation and impairment Balance at January 1, 2021 249 \u2013 \u2013 132 836 \u2013 62 1,279 Amortisation charge for the year \u2013 \u2013 \u2013 6 167 \u2013 5 178 Disposals \u2013 \u2013 \u2013 \u2013 (13) \u2013 \u2013 (13) Exchange movements \u2013 \u2013 \u2013 4 42 \u2013 (1) 45 Balance at December 31, 2021 249 \u2013 \u2013 142 1,032 \u2013 66 1,489 Amortisation charge for the year \u2013 \u2013 \u2013 6 210 \u2013 2 218 Disposals \u2013 \u2013 \u2013 \u2013 (50) \u2013 \u2013 (50) Exchange movements \u2013 \u2013 \u2013 (2) (23) \u2013 \u2013 (25) December 31, 2022 249 \u2013 \u2013 146 1,169 \u2013 68 1,632 Net book values December 31, 2022 346 451 253 1,442 637 407 20 3,556 December 31, 2021 347 451 253 1,463 642 62 21 3,239 1 The net book value includes non-UK and non-EU based landing rights of \u20ac69 million (2021: \u20ac75 million) that have a definite life. The remaining average life of these landing rights is 13 years. 2 During 2022 the Group separated the ETS assets from Other intangible assets. This change resulted in an amount of \u20ac76 million and \u20ac62 million recorded within ETS assets at January 1, 2021 and January 1, 2022, respectively. There was no net change in total intangible assets. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 17 Intangible assets and impairment review a Intangible assets \u20ac million Goodwill Brand Customer loyalty programmes Landing rights 1 Software ETS assets 2 Other 2 Total Cost Balance at January 1, 2021 593 451 253 1,555 1,474 76 85 4,487 Additions \u2013 \u2013 \u2013 \u2013 149 33 1 183 Disposals \u2013 \u2013 \u2013 (6) (19) (49) \u2013 (74) Exchange movements 3 \u2013 \u2013 56 70 2 1 132 Balance at December 31, 2021 596 451 253 1,605 1,674 62 87 4,728 Additions \u2013 \u2013 \u2013 14 218 360 1 593 Disposals \u2013 \u2013 \u2013 (6) (52) (9) \u2013 (67) Exchange movements (1) \u2013 \u2013 (25) (34) (6) \u2013 (66) December 31, 2022 595 451 253 1,588 1,806 407 88 5,188 Amortisation and impairment Balance at January 1, 2021 249 \u2013 \u2013 132 836 \u2013 62 1,279 Amortisation charge for the year \u2013 \u2013 \u2013 6 167 \u2013 5 178 Disposals \u2013 \u2013 \u2013 \u2013 (13) \u2013 \u2013 (13) Exchange movements \u2013 \u2013 \u2013 4 42 \u2013 (1) 45 Balance at December 31, 2021 249 \u2013 \u2013 142 1,032 \u2013 66 1,489 Amortisation charge for the year \u2013 \u2013 \u2013 6 210 \u2013 2 218 Disposals \u2013 \u2013 \u2013 \u2013 (50) \u2013 \u2013 (50) Exchange movements \u2013 \u2013 \u2013 (2) (23) \u2013 \u2013 (25) December 31, 2022 249 \u2013 \u2013 146 1,169 \u2013 68 1,632 Net book values December 31, 2022 346 451 253 1,442 637 407 20 3,556 December 31, 2021 347 451 253 1,463 642 62 21 3,239 1 The net book value includes non-UK and non-EU based landing rights of \u20ac69 million (2021: \u20ac75 million) that have a definite life. The remaining average life of these landing rights is 13 years. 2 During 2022 the Group separated the ETS assets from Other intangible assets. This change resulted in an amount of \u20ac76 million and \u20ac62 million recorded within ETS assets at January 1, 2021 and January 1, 2022, respectively. There was no net change in total intangible assets. b Impairment review The carrying amounts of intangible assets with indefinite life and goodwill allocated to cash generating units (CGUs) of the Group are: \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2022 Iberia January 1 and December 31, 2022 \u2013 423 306 \u2013 729 British Airways January 1, 2022 47 809 \u2013 \u2013 856 Additions \u2013 14 \u2013 \u2013 14 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements (1) (23) \u2013 \u2013 (24) December 31, 2022 46 794 \u2013 \u2013 840 Vueling January 1 and December 31, 2022 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2022 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2022 \u2013 \u2013 \u2013 253 253 December 31, 2022 346 1,373 451 253 2,423 \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2021 Iberia January 1 and December 31, 2021 \u2013 423 306 \u2013 729 British Airways January 1, 2021 44 763 \u2013 \u2013 807 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements 3 52 \u2013 \u2013 55 December 31, 2021 47 809 \u2013 \u2013 856 Vueling January 1 and December 31, 2021 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2021 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2021 \u2013 \u2013 \u2013 253 253 December 31, 2021 347 1,388 451 253 2,439 Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 17 Intangible assets and impairment review continued Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Summary of results At December 31, 2022 management reviewed the recoverable amount of each of the CGUs and concluded the recoverable amounts exceeded the carrying values. Reasonable possible changes in key assumptions, both individually and in combination, have been considered for each CGU, where applicable, which include reducing the operating margin by 2 percentage points in each year, ASKs by 5 percentage points in each year, long-term growth rates in the terminal value calculation to zero, increasing pre-tax discount rates by 2.5 percentage points, changing the weighting of the Base Case and the Downside Case to be 100 per cent weighted towards the Downside Case and increasing the fuel price (both jet fuel and SAF) by 45 per cent with no assumed cost recovery. Given the inherent uncertainty associated with the impact of climate change, these sensitivities represent a reasonably possible greater impact of climate change on the CGUs than that included in the impairment models. For the British Airways, Iberia, Vueling and Aer Lingus CGUs, while the recoverable amounts are estimated to exceed the carrying amounts by \u20ac15,432 million, \u20ac3,213 million, \u20ac1,606 million and \u20ac1,407 million, respectively, the recoverable amounts would be below the carrying amounts when applying reasonable possible changes, over the forecast period, in assumptions in each of the following scenarios: \u2022 British Airways: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 22 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Iberia: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 20 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Vueling: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 15 per cent; and (ii) if the fuel price had been 20 per cent higher without cost recovery; and \u2022 Aer Lingus: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 7 per cent; and (ii) if the fuel price had been 14 per cent higher without cost recovery. For the remainder of the reasonably possible changes in key assumptions applied to the British Airways, Iberia, Vueling and Aer Lingus CGUs and for all the reasonably possible changes in key assumptions applied to the IAG Loyalty CGU, no impairment arises. 18 Investments a Investments in subsidiaries The Group\u2019s subsidiaries at December 31, 2022 are listed in the Group investments section. All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly do not differ from the proportion of ordinary shares held. There have been no significant changes in ownership interests of subsidiaries during the year. The total non-controlling interest at December 31, 2022 is \u20ac6 million (2021: \u20ac6 million). b Investments in associates and joint ventures The share of assets, liabilities, revenue and profit of the Group\u2019s associates and joint ventures, which are included in the Group\u2019s financial statements, are as follows: \u20ac million 2022 2021 Total assets 148 115 Total liabilities (104) (85) Revenue 89 64 Profit for the year 5 2 The detail of the movement in Investment in associates and joint ventures is shown as follows: \u20ac million 2022 2021 At beginning of year 40 29 Additions \u2013 9 Share of retained profits 5 2 Dividends received (2) (1) Exchange movements \u2013 1 43 40 At December 31, 2022 there are no restrictions on the ability of associates or joint ventures to transfer funds to the parent and there are no related contingent liabilities. At both December 31, 2022 and December 31, 2021 the investment in Sociedad Conjunta para la Emisi\u00f3n y Gesti\u00f3n de Medios de Pago EFC, S.A. exceeded 50 per cent ownership by the Group (50.5 per cent). The entity is treated as a joint venture as decisions regarding its strategy and operations require the unanimous consent of the parties who share control, including IAG. 19 Other equity investments Other equity investments include the following: \u20ac million 2022 2021 Unlisted securities 55 31 55 31 The charge relating to Other equity investments was \u20ac3 million (2021: \u20acnil). Investment in Air Europa Holdings On June 15, 2022, the Group entered into a financing arrangement with Globalia Corporaci\u00f3n Empresarial, S,A, (\u2018Globalia\u2019), whereby, the Group provided a \u20ac100 million seven-year unsecured loan, which was convertible for a period of two years from inception into a fixed number of the shares of Air Europa Holdings, S.L. (\u2018Air Europa Holdings\u2019). The loan was accounted for at fair value through the Income statement and recorded as an Other non-current financial asset. In determining the fair value of the financing arrangement, the Group utilised the income approach, whereby, the financing arrangement was valued using observable market data by which to determine an interest rate that a market participant would require to provide a loan with the same tenor and amount. This interest rate was then used to discount back the existing contractual cash flows to derive the fair value. On August 16, 2022, the Group exercised its exchange option with Globalia and converted the Other non-current financial asset into an Other equity investment. Immediately prior to exercising the exchange option, the fair value of the Other non-current financial asset was \u20ac65 million, representing a decrease from inception of \u20ac35 million, which has been recorded within Net change in fair value of financial instruments in the Income statement (see note 9c). The Group determined the fair value of the investment in Air Europa Holdings using both the market approach and the income approach, whereby the Group used both observable market data and unobservable inputs. The fair value was determined on the stand-alone basis of Air Europa Holdings without consideration of potential synergies that could be obtained if the Group were able to obtain control over the operations of Air Europa Holdings. The results of these valuation approaches resulted in a fair value of \u20ac22 million, representing a difference of \u20ac43 million from the fair value of the Other non-current financial asset prior to exercising the option. This loss, which derives from the de- recognition of the loan to Globalia prior to the recognition of the investment in Air Europa Holdings, was recorded within Net change in fair value of financial instruments in the Income statement (see note 9c). At December 31, 2022, the fair value of the investment in Air Europa Holdings was \u20ac24 million, representing an increase of \u20ac2 million since August 16, 2022, which has been recorded within Other comprehensive income. 20 Trade and other receivables \u20ac million 2022 2021 Amounts falling due within one year Trade receivables 1,444 850 Provision for expected credit loss (114) (115) Net trade receivables 1,330 735 Prepayments and accrued income 870 764 Other non-trade receivables 356 196 Other current receivables 1,226 960 Amounts falling due after one year Prepayments and accrued income 337 248 Other non-trade receivables 25 2 Other receivables due after one year 362 250 Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 19 Other equity investments Other equity investments include the following: \u20ac million 2022 2021 Unlisted securities 55 31 55 31 The charge relating to Other equity investments was \u20ac3 million (2021: \u20acnil). Investment in Air Europa Holdings On June 15, 2022, the Group entered into a financing arrangement with Globalia Corporaci\u00f3n Empresarial, S,A, (\u2018Globalia\u2019), whereby, the Group provided a \u20ac100 million seven-year unsecured loan, which was convertible for a period of two years from inception into a fixed number of the shares of Air Europa Holdings, S.L. (\u2018Air Europa Holdings\u2019). The loan was accounted for at fair value through the Income statement and recorded as an Other non-current financial asset. In determining the fair value of the financing arrangement, the Group utilised the income approach, whereby, the financing arrangement was valued using observable market data by which to determine an interest rate that a market participant would require to provide a loan with the same tenor and amount. This interest rate was then used to discount back the existing contractual cash flows to derive the fair value. On August 16, 2022, the Group exercised its exchange option with Globalia and converted the Other non-current financial asset into an Other equity investment. Immediately prior to exercising the exchange option, the fair value of the Other non-current financial asset was \u20ac65 million, representing a decrease from inception of \u20ac35 million, which has been recorded within Net change in fair value of financial instruments in the Income statement (see note 9c). The Group determined the fair value of the investment in Air Europa Holdings using both the market approach and the income approach, whereby the Group used both observable market data and unobservable inputs. The fair value was determined on the stand-alone basis of Air Europa Holdings without consideration of potential synergies that could be obtained if the Group were able to obtain control over the operations of Air Europa Holdings. The results of these valuation approaches resulted in a fair value of \u20ac22 million, representing a difference of \u20ac43 million from the fair value of the Other non-current financial asset prior to exercising the option. This loss, which derives from the de- recognition of the loan to Globalia prior to the recognition of the investment in Air Europa Holdings, was recorded within Net change in fair value of financial instruments in the Income statement (see note 9c). At December 31, 2022, the fair value of the investment in Air Europa Holdings was \u20ac24 million, representing an increase of \u20ac2 million since August 16, 2022, which has been recorded within Other comprehensive income. 20 Trade and other receivables \u20ac million 2022 2021 Amounts falling due within one year Trade receivables 1,444 850 Provision for expected credit loss (114) (115) Net trade receivables 1,330 735 Prepayments and accrued income 870 764 Other non-trade receivables 356 196 Other current receivables 1,226 960 Amounts falling due after one year Prepayments and accrued income 337 248 Other non-trade receivables 25 2 Other receivables due after one year 362 250 Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). The credit risk exposure on the Group's trade receivables is set out below: December 31, 2022 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 719 509 91 25 100 Expected credit loss rate 0.3% 0.1% 1.1% 44.0% 100.0% Provision for expected credit loss 2 \u2013 1 11 100 December 31, 2021 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 498 132 94 10 116 Expected credit loss rate 0.2% 0.1% 1.1% 20.0% 95.7% Provision for expected credit loss 1 \u2013 1 2 111 21 Cash, cash equivalents and other current interest-bearing deposits \u20ac million 2022 2021 Cash at bank and in hand 3,286 2,569 Short-term deposits maturing within three months 5,910 5,323 Cash and cash equivalents 9,196 7,892 Current interest-bearing deposits maturing after three months 403 51 Cash, cash equivalents and other interest-bearing deposits 9,599 7,943 Cash at bank is primarily held in AAA money market funds and bank deposits. Short-term deposits are for periods up to three months and earn interest based on the floating deposit rates. At December 31, 2022 the Group had no outstanding bank overdrafts (2021: \u20acnil). Current interest-bearing deposits have maturities in excess of three months and typically within 12 months of the reporting date and earn interest based on the market rates available at the time the deposit was made. At December 31, 2022 Aer Lingus held \u20ac33 million of restricted cash (2021: \u20ac35 million) within interest-bearing deposits maturing after more than three months to be used for employee-related obligations. a Net debt Movements in net debt were as follows: \u20ac million Balance at January 1, 2022 Cash flows Exchange movements New leases and modifications Other items Balance at December 31, 2022 Bank, other loans and asset financed liabilities 9,973 386 103 \u2013 (97) 10,365 Lease liabilities 9,637 (1,455) 415 1,017 5 9,619 Cash and cash equivalents (7,892) (1,316) 12 \u2013 \u2013 (9,196) Current interest-bearing deposits (51) (351) (1) \u2013 \u2013 (403) 11,667 (2,736) 529 1,017 (92) 10,385 \u20ac million Balance at January 1, 2021 Cash flows Exchange movements New leases and modifications Other items Balance at December 31, 2021 Bank, other loans and asset financed liabilities 5,655 4,033 261 \u2013 24 9,973 Lease liabilities 10,024 (1,481) 559 518 17 9,637 Cash and cash equivalents (5,774) (1,913) (205) \u2013 \u2013 (7,892) Current interest-bearing deposits (143) 91 1 \u2013 \u2013 (51) 9,762 730 616 518 41 11,667 22 Trade and other payables \u20ac million 2022 2021 Trade creditors 1 2,969 2,068 Other creditors 1,244 898 Other taxation and social security 228 176 Accruals and deferred income 768 570 5,209 3,712 1 Trade creditors includes \u20ac48 million (2021: \u20ac89 million) due to suppliers that have signed up to supply chain financing programmes offered by a number of partner financial institutions. Under these programmes either or both: (i) the suppliers can elect on an invoice-by-invoice basis to receive a discounted early payment from the partner financial institutions rather than being paid in line with the agreed payment terms; and/or (ii) the Group elects on an invoice-by- invoice basis for the partner financial institution to pay the supplier in line with the agreed payment terms and the Group enters into payment terms with the partner financial institution of up to 150 days with interest incurred at 2.5 per cent. The Group assesses the arrangement against indicators to assess if liabilities which suppliers have transferred to the partner financial institutions under the supplier financing programmes continue to meet the definition of trade creditors or should be classified as borrowings. The cash flows arising from such arrangements are reported within cash flows from operating activities or within cash flows from financing activities, in the Consolidated cash flow statement, depending on whether the associated liabilities meet the definition of trade creditors or as borrowings. At December 31, 2022 these liabilities met the criteria of Trade creditors and are excluded from the Net debt table in note 21a. Average payment days to suppliers \u2013 Spanish Group companies Days 2022 2021 Average payment days for payment to suppliers 34 34 Ratio of transactions paid 33 32 Ratio of transactions outstanding for payment 53 78 \u20ac million 2022 2021 Total payments made 6,676 3,945 Total payments outstanding 264 147 Information on invoices paid in a period shorter than the maximum period established in the late payment regulations \u2013 Spanish Group companies 2022 2021 Total payments made (\u20ac million) 5,111 2,623 Percentage share of total payments to suppliers 77% 71% Number of invoices paid (thousand) 110 63 Percentage share of total number of invoices paid 48% 48% NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 22 Trade and other payables \u20ac million 2022 2021 Trade creditors 1 2,969 2,068 Other creditors 1,244 898 Other taxation and social security 228 176 Accruals and deferred income 768 570 5,209 3,712 1 Trade creditors includes \u20ac48 million (2021: \u20ac89 million) due to suppliers that have signed up to supply chain financing programmes offered by a number of partner financial institutions. Under these programmes either or both: (i) the suppliers can elect on an invoice-by-invoice basis to receive a discounted early payment from the partner financial institutions rather than being paid in line with the agreed payment terms; and/or (ii) the Group elects on an invoice-by- invoice basis for the partner financial institution to pay the supplier in line with the agreed payment terms and the Group enters into payment terms with the partner financial institution of up to 150 days with interest incurred at 2.5 per cent. The Group assesses the arrangement against indicators to assess if liabilities which suppliers have transferred to the partner financial institutions under the supplier financing programmes continue to meet the definition of trade creditors or should be classified as borrowings. The cash flows arising from such arrangements are reported within cash flows from operating activities or within cash flows from financing activities, in the Consolidated cash flow statement, depending on whether the associated liabilities meet the definition of trade creditors or as borrowings. At December 31, 2022 these liabilities met the criteria of Trade creditors and are excluded from the Net debt table in note 21a. Average payment days to suppliers \u2013 Spanish Group companies Days 2022 2021 Average payment days for payment to suppliers 34 34 Ratio of transactions paid 33 32 Ratio of transactions outstanding for payment 53 78 \u20ac million 2022 2021 Total payments made 6,676 3,945 Total payments outstanding 264 147 Information on invoices paid in a period shorter than the maximum period established in the late payment regulations \u2013 Spanish Group companies 2022 2021 Total payments made (\u20ac million) 5,111 2,623 Percentage share of total payments to suppliers 77% 71% Number of invoices paid (thousand) 110 63 Percentage share of total number of invoices paid 48% 48% 23 Deferred revenue on ticket sales \u20ac million Customer loyalty programmes Sales in advance of carriage Total Balance at January 1, 2022 2,820 3,732 6,552 Cash received from customers 1 \u2013 21,000 21,000 Revenue recognised in the Income statement 2, 3 (780) (19,708) (20,488) Changes in estimates (21) \u2013 (21) Financing charge recognised in the Income statement 21 \u2013 21 Loyalty points issued to customers 4 662 82 744 Exchange movements (72) (92) (164) Balance at December 31, 2022 5, 6 2,630 5,014 7,644 Analysis: Current 2,304 5,014 7,318 Non-current 326 \u2013 326 2,630 5,014 7,644 \u20ac million Customer loyalty programmes Sales in advance of carriage Total Balance at January 1, 2021 2,725 2,405 5,130 Cash received from customers 1 \u2013 7,689 7,689 Revenue recognised in the Income statement 2, 3 (524) (6,518) (7,042) Financing charge recognised in the Income statement 37 \u2013 37 Loyalty points issued to customers 4 407 40 447 Exchange movements 175 116 291 Balance at December 31, 2021 5, 6 2,820 3,732 6,552 Analysis: Current 2,429 3,732 6,161 Non-current 391 \u2013 391 2,820 3,732 6,552 1 Cash received from customers is net of refunds. 2 Where the Group acts as an agent in the provision of redemption products and services to customers through loyalty programmes, or in the provision of interline flights to passengers, revenue is recognised in the Income statement net of the related costs. 3 Included within revenue recognised in the Income statement during 2022 is an amount of \u20ac2,183 million previously held as deferred revenue at January 1, 2022 (recognised during 2021 and previously held as deferred revenue at January 1, 2021: \u20ac780 million). 4 Included within loyalty points issued to customers at December 31, 2022 is an amount of \u20ac82 million (December 31, 2021: \u20ac40 million) classified within Sales in advance of carriage representing the cash component of the consideration paid by customers, where such consideration comprises both cash and the redemption of Avios. 5 Included within Deferred revenue on ticket sales at December 31, 2022 is an amount of \u20ac911 million (December 31, 2021: \u20ac1,400 million) relating to unredeemed vouchers (including associated taxes). 6 In the year to December 31, 2022, the Group recognised \u20ac266 million (2021: \u20ac154 million) within Other revenue related to performance obligations associated with brand and marketing services recognised on the issuance of Avios for both air and non-air partners. The unsatisfied performance obligation under the Group\u2019s customer loyalty programmes that is classified as non-current was \u20ac326 million at December 31, 2022. Of this amount, \u20ac317 million is expected to be recognised as revenue in 1 to 5 years from the reporting date and \u20ac9 million thereafter. Deferred revenue relating to customer loyalty programmes consists primarily of revenue allocated to performance obligations associated with Avios. Avios are issued by the Group's airlines through their loyalty programmes, or are sold to third parties such as credit card providers, who issue them as part of their loyalty programme. While Avios do not have an expiry date and can be redeemed at any time in the future, a customer\u2019s membership account is closed if there is a period of 36 months of inactivity in terms of both issuances and redemptions. Revenue may therefore be recognised at any time in the future. Deferred revenue in respect of sales in advance of carriage consists of revenue allocated to airline tickets to be used for future travel. Typically these tickets expire within 12 months after the planned travel date, if they are not used within that time period, however, with the significant disruption caused by the COVID-19 pandemic during 2020 and 2021, the Group extended the expiry period up to 24 months after the planned travel date, depending on the operating company. During the course of 2022 with the disruption caused by the COVID-19 pandemic significantly reduced, flexible fare tickets now typically expire within 12 months after the planned travel date. In addition, the significant disruption caused by the COVID-19 pandemic led to a number of flight cancellations during both 2020 and 2021, which entitled the customer to either a refund or the issuance of a voucher for future redemption. 24 Other long-term liabilities \u20ac million 2022 2021 Non-current trade creditors 147 121 Accruals and deferred income 53 87 200 208 25 Long-term borrowings a Total borrowings 2022 2021 \u20ac million Current Non-current Total Current Non-current Total Bank and other loans 822 5,724 6,546 761 6,724 7,485 Asset financed liabilities 255 3,564 3,819 171 2,244 2,415 Lease liabilities 1,766 7,853 9,619 1,521 8,116 9,637 Other financing liabilities 1 \u2013 \u2013 \u2013 73 \u2013 73 Interest-bearing long-term borrowings 2,843 17,141 19,984 2,526 17,084 19,610 1 Other financing liabilities recognised in 2021 included sale and repurchase agreements with regard to emission allowances and represent the amount the Group repurchased during 2022. Long-term borrowings of the Group amounting to \u20ac3,962 million (December 31, 2021: \u20ac2,434 million) are secured on owned fleet assets with a net book value of \u20ac3,931 million (December 31, 2021: \u20ac2,938 million). Asset financed liabilities are all secured on the associated aircraft or other property, plant and equipment. b Bank and other loans \u20ac million 2022 2021 Floating rate pound sterling term loan guaranteed by UK Export Finance (UKEF) 1 2,315 2,358 Floating rate Instituto de Cr\u00e9dito Oficial (ICO) guaranteed loans 2 1,070 1,095 \u20ac700 million fixed rate 3.75 per cent unsecured bond 2029 3 717 710 \u20ac825 million fixed rate 1.125 per cent convertible bond 2028 4 605 757 \u20ac500 million fixed rate 2.75 per cent unsecured bond 2025 3 509 508 \u20ac500 million fixed rate 0.50 per cent bond 2023 5 501 499 \u20ac500 million fixed rate 1.50 per cent bond 2027 5 499 498 Floating rate euro mortgage loans secured on aircraft 6 143 171 Fixed rate unsecured US dollar mortgage loan 7 71 85 Fixed rate unsecured bonds 8 56 138 Ireland Strategic Investment Fund (ISIF) facility 9 50 149 Fixed rate unsecured euro loans with the Spanish State (Department of Industry) 10 10 15 \u20ac500 million fixed rate 0.625 per cent convertible bond 2022 11 \u2013 491 Fixed rate Chinese yuan mortgage loans secured on aircraft 12 \u2013 11 6,546 7,485 Less: current instalments due on bank and other loans (822) (761) 5,724 6,724 1 On February 22, 2021, British Airways entered into a floating rate five-year term loan Export Development Guarantee Facility of \u20ac2.3 billion (\u00a32.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. On November 1, 2021, British Airways entered into a further 5 year term loan Export Development Guarantee Facility of \u20ac1.1 billion (\u00a31.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The further facility had not been drawn as at December 31, 2022. The loan contains a number of non-financial covenants to protect the position of the banks involved, including restrictions on the upstreaming of cash to the rest of the IAG companies. 2 On April 30, 2020, Iberia and Vueling entered into floating rate syndicated financing agreements of \u20ac750 million and \u20ac260 million respectively. The loans are repayable from 2023 to 2026. The ICO in Spain guarantees 70 per cent of the value of loans. The loans contain a number of non-financial covenants to protect the position of the banks involved, including restrictions on the upstreaming of cash to the rest of the IAG companies. 3 On March 25, 2021, the Group issued two tranches of senior unsecured bonds for an aggregate principal amount of \u20ac1.2 billion, \u20ac500 million due March 25, 2025 and \u20ac700 million due March 25, 2029. The bonds bear a fixed rate of interest of 2.75 per cent and 3.75 per cent per annum, payable in arrears, respectively. The bonds were issued at 100 per cent of their principal amount, respectively, and, unless previously redeemed or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on their respective maturity dates. 4 A senior unsecured bond convertible into ordinary shares of IAG was issued by the Group on May 11, 2021; \u20ac825 million fixed rate 1.125 per cent raising net proceeds of \u20ac818 million and due in 2028. The Group holds an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The bond contains dividend protection and a total of 244,850,715 options at inception and at December 31, 2022 and 2021 to convert into ordinary shares of IAG. The Group also holds an option to redeem the convertible bond, in full or in part, in cash in the event that bondholders exercise their right to convert the bond into ordinary shares of IAG. See further details below. 5 In July 2019, the Group issued two tranches of senior unsecured bonds for an aggregate principal amount of \u20ac1 billion, \u20ac500 million due July 4, 2023 and \u20ac500 million due July 4, 2027. The bonds bear a fixed rate of interest of 0.5 per cent and 1.5 per cent per annum annually payable in arrears, respectively. The bonds were issued at 99.417 per cent and 98.803 per cent of their principal amount, respectively, and, unless previously redeemed or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on their respective maturity dates. 6 Floating rate euro mortgage loans are secured on specific aircraft assets of the Group and bear interest of between 2.1 and 3.6 per cent. The loans are repayable between 2024 and 2027. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 24 Other long-term liabilities \u20ac million 2022 2021 Non-current trade creditors 147 121 Accruals and deferred income 53 87 200 208 25 Long-term borrowings a Total borrowings 2022 2021 \u20ac million Current Non-current Total Current Non-current Total Bank and other loans 822 5,724 6,546 761 6,724 7,485 Asset financed liabilities 255 3,564 3,819 171 2,244 2,415 Lease liabilities 1,766 7,853 9,619 1,521 8,116 9,637 Other financing liabilities 1 \u2013 \u2013 \u2013 73 \u2013 73 Interest-bearing long-term borrowings 2,843 17,141 19,984 2,526 17,084 19,610 1 Other financing liabilities recognised in 2021 included sale and repurchase agreements with regard to emission allowances and represent the amount the Group repurchased during 2022. Long-term borrowings of the Group amounting to \u20ac3,962 million (December 31, 2021: \u20ac2,434 million) are secured on owned fleet assets with a net book value of \u20ac3,931 million (December 31, 2021: \u20ac2,938 million). Asset financed liabilities are all secured on the associated aircraft or other property, plant and equipment. b Bank and other loans \u20ac million 2022 2021 Floating rate pound sterling term loan guaranteed by UK Export Finance (UKEF) 1 2,315 2,358 Floating rate Instituto de Cr\u00e9dito Oficial (ICO) guaranteed loans 2 1,070 1,095 \u20ac700 million fixed rate 3.75 per cent unsecured bond 2029 3 717 710 \u20ac825 million fixed rate 1.125 per cent convertible bond 2028 4 605 757 \u20ac500 million fixed rate 2.75 per cent unsecured bond 2025 3 509 508 \u20ac500 million fixed rate 0.50 per cent bond 2023 5 501 499 \u20ac500 million fixed rate 1.50 per cent bond 2027 5 499 498 Floating rate euro mortgage loans secured on aircraft 6 143 171 Fixed rate unsecured US dollar mortgage loan 7 71 85 Fixed rate unsecured bonds 8 56 138 Ireland Strategic Investment Fund (ISIF) facility 9 50 149 Fixed rate unsecured euro loans with the Spanish State (Department of Industry) 10 10 15 \u20ac500 million fixed rate 0.625 per cent convertible bond 2022 11 \u2013 491 Fixed rate Chinese yuan mortgage loans secured on aircraft 12 \u2013 11 6,546 7,485 Less: current instalments due on bank and other loans (822) (761) 5,724 6,724 1 On February 22, 2021, British Airways entered into a floating rate five-year term loan Export Development Guarantee Facility of \u20ac2.3 billion (\u00a32.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. On November 1, 2021, British Airways entered into a further 5 year term loan Export Development Guarantee Facility of \u20ac1.1 billion (\u00a31.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The further facility had not been drawn as at December 31, 2022. The loan contains a number of non-financial covenants to protect the position of the banks involved, including restrictions on the upstreaming of cash to the rest of the IAG companies. 2 On April 30, 2020, Iberia and Vueling entered into floating rate syndicated financing agreements of \u20ac750 million and \u20ac260 million respectively. The loans are repayable from 2023 to 2026. The ICO in Spain guarantees 70 per cent of the value of loans. The loans contain a number of non-financial covenants to protect the position of the banks involved, including restrictions on the upstreaming of cash to the rest of the IAG companies. 3 On March 25, 2021, the Group issued two tranches of senior unsecured bonds for an aggregate principal amount of \u20ac1.2 billion, \u20ac500 million due March 25, 2025 and \u20ac700 million due March 25, 2029. The bonds bear a fixed rate of interest of 2.75 per cent and 3.75 per cent per annum, payable in arrears, respectively. The bonds were issued at 100 per cent of their principal amount, respectively, and, unless previously redeemed or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on their respective maturity dates. 4 A senior unsecured bond convertible into ordinary shares of IAG was issued by the Group on May 11, 2021; \u20ac825 million fixed rate 1.125 per cent raising net proceeds of \u20ac818 million and due in 2028. The Group holds an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The bond contains dividend protection and a total of 244,850,715 options at inception and at December 31, 2022 and 2021 to convert into ordinary shares of IAG. The Group also holds an option to redeem the convertible bond, in full or in part, in cash in the event that bondholders exercise their right to convert the bond into ordinary shares of IAG. See further details below. 5 In July 2019, the Group issued two tranches of senior unsecured bonds for an aggregate principal amount of \u20ac1 billion, \u20ac500 million due July 4, 2023 and \u20ac500 million due July 4, 2027. The bonds bear a fixed rate of interest of 0.5 per cent and 1.5 per cent per annum annually payable in arrears, respectively. The bonds were issued at 99.417 per cent and 98.803 per cent of their principal amount, respectively, and, unless previously redeemed or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on their respective maturity dates. 6 Floating rate euro mortgage loans are secured on specific aircraft assets of the Group and bear interest of between 2.1 and 3.6 per cent. The loans are repayable between 2024 and 2027. 7 Fixed rate unsecured US dollar mortgage loan bearing interest between 1.38 to 2.86 per cent. The loan is repayable between 2023 and 2026. 8 Total of \u20ac200 million fixed rate unsecured bonds between 3.75 to 4.93 per cent coupon repayable between 2023 and 2027. 9 On December 23, 2020, Aer Lingus entered into a floating rate financing agreement with the Ireland Strategic Investment Fund (ISIF) for \u20ac75 million. On March 27, 2021, Aer Lingus entered into a further floating rate financing agreement with the ISIF for an additional \u20ac75 million. On March 4, 2022, Aer Lingus entered into a financing arrangement with ISIF, which subsequently extinguished the existing \u20ac150 million of facilities and replaced them with a \u20ac350 million facility that matures in March 2025. On December 13, 2022, Aer Lingus early repaid \u20ac100 million of the ISIF facility, with the \u20ac100 million being available to draw again over the tenor of the facility. The facility is secured on specific landing rights. At December 31, 2022, \u20ac300 million of this facility remained undrawn. 10 Fixed rate unsecured euro loans with the Spanish State (Department of Industry) bear nil interest and are repayable between 2023 and 2028. 11 Senior unsecured bond convertible into ordinary shares of IAG was issued by the Group in November 2015; \u20ac500 million fixed rate 0.625 per cent raising net proceeds of \u20ac494 million and due in 2022. The Group held an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The Group redeemed the bond at maturity in November 2022 with no conversion into ordinary shares. 12 Fixed rate Chinese yuan mortgage loans, secured on specific aircraft assets of the Group were repaid in the fourth quarter of 2022. In addition, on March 23, 2021, the Group entered into a three-year US dollar secured Revolving Credit Facility accessible by British Airways, Iberia and Aer Lingus. On August 23, 2022, the Group extended the term of the Revolving Credit Facility by an additional 12 months through to March 2025. The amount available under the facility is $1.755 billion. As at December 31, 2022 no amounts had been drawn under the facility (2021: nil). While the Group does not forecast drawing down on the Revolving Credit Facility, should it do so, the resultant debt would be secured against specific landing rights and aircraft in the respective operating companies. Details of the 2028 convertible bond The \u20ac825 million convertible bond issued in 2021 provides bondholders with dividend protection and includes a total of 244,850,715 options at inception and at December 31, 2022 to convert into ordinary shares of IAG. The Group holds an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The Group also holds an option to redeem the convertible bond, in full or in part, in cash in the event that bondholders exercise their right to convert the bond into ordinary shares of IAG. The convertible bond is recorded at its fair value, which at December 31, 2022 was \u20ac605 million (2021: \u20ac756 million), representing a decrease of \u20ac151 million since January 1, 2022. Of this decrease, the charge recorded in Other comprehensive income arising from credit risk of the convertible bonds was \u20ac8 million and a credit recorded within Finance costs in the Income statement attributable to changes in market conditions of \u20ac159 million. Transactions with unconsolidated entities On April 12, 2022, the Group entered into an asset-financing structure, under which five aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the Iberia Pass Through Certificates, Series 2022-1, commonly referred to as Enhanced Equipment Trust Certificates (EETCs). In doing so the Group recognised \u20ac680 million of Asset financed liabilities. On October 21, 2022, the Group entered into an asset-financing structure, under which four aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2022-1. In doing so the Group recognised \u20ac159 million of Asset financed liabilities. In July 2021, the Group entered into an asset-financing structure, under which seven aircraft were financed. These transactions mature between 2031 and 2035. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2021-1. In doing so the Group recognised \u20ac204 million of Asset financed liabilities. In the fourth quarter of 2020, the Group entered into an asset-financing structure, under which nine aircraft were financed. These transactions mature between 2028 and 2032. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2020-1. In doing so the Group recognised \u20ac472 million of Asset financed liabilities. In the third quarter of 2019, the Group entered into an asset-financing structure, under which eight aircraft were financed, with the transactions maturing between 2029 and 2034. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2019-1. In doing so the Group recognised \u20ac725 million of Asset financed liabilities. As at December 31, 2022, Asset financed liabilities include cumulative amounts of \u20ac2,983 million (2021: \u20ac1,489 million) and the associated assets recorded within Property, plant and equipment include cumulative amounts of \u20ac3,400 million (2021: \u20ac3,029 million) associ ated with transactions with unconsolidated structured entities having issued EETCs. c Reconciliation of movements of liabilities to cash flows arising from financing activities \u20ac million Bank, other loans and asset financed liabilities Lease liabilities Derivatives to mitigate volatility in financial liabilities Total Balance at January 1, 2022 9,973 9,637 (136) 19,474 Proceeds from borrowings 1,436 \u2013 \u2013 1,436 Repayment of borrowings (1,050) \u2013 \u2013 (1,050) Repayment of lease liabilities \u2013 (1,455) \u2013 (1,455) Settlement of derivative financial instruments 1 \u2013 \u2013 1,029 1,029 Total changes from financing cash flows 386 (1,455) 1,029 (40) Interest paid (334) (422) \u2013 (756) Interest expense 377 464 \u2013 841 New leases and lease modifications \u2013 1,017 \u2013 1,017 Fair value movements (151) \u2013 (990) (1,141) Other non-cash movements 11 (37) \u2013 (26) Exchange movements 103 415 26 544 Balance at December 31, 2022 10,365 9,619 (71) 19,913 \u20ac million Bank, other loans and asset financed liabilities Lease liabilities Derivatives to mitigate volatility in financial liabilities Total Balance at January 1, 2021 5,655 10,024 429 16,108 Proceeds from borrowings 4,817 \u2013 \u2013 4,817 Repayment of borrowings (784) \u2013 \u2013 (784) Repayment of lease liabilities \u2013 (1,481) \u2013 (1,481) Settlement of derivative financial instruments 1 \u2013 \u2013 (268) (268) Total changes from financing cash flows 4,033 (1,481) (268) 2,284 Interest paid (212) (367) (26) (605) Interest expense 307 393 \u2013 700 New leases and lease modifications \u2013 518 \u2013 518 Fair value movements (69) \u2013 (286) (355) Other non-cash movements (2) (9) 15 4 Exchange movements 261 559 \u2013 820 Balance at December 31, 2021 9,973 9,637 (136) 19,474 1 Gain of \u20ac1,036 million (2021: loss of \u20ac268 million) relating to derivatives not designated in hedge relationships and reported within Net cash flows from financing activities in the Cash flow statement, and a loss of \u20ac7 million (2021: \u20acnil) relating to interest rate derivatives designated in hedge relationships and reported within Net cash flows from operating activities. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 25 Long-term borrowings continued c Reconciliation of movements of liabilities to cash flows arising from financing activities \u20ac million Bank, other loans and asset financed liabilities Lease liabilities Derivatives to mitigate volatility in financial liabilities Total Balance at January 1, 2022 9,973 9,637 (136) 19,474 Proceeds from borrowings 1,436 \u2013 \u2013 1,436 Repayment of borrowings (1,050) \u2013 \u2013 (1,050) Repayment of lease liabilities \u2013 (1,455) \u2013 (1,455) Settlement of derivative financial instruments 1 \u2013 \u2013 1,029 1,029 Total changes from financing cash flows 386 (1,455) 1,029 (40) Interest paid (334) (422) \u2013 (756) Interest expense 377 464 \u2013 841 New leases and lease modifications \u2013 1,017 \u2013 1,017 Fair value movements (151) \u2013 (990) (1,141) Other non-cash movements 11 (37) \u2013 (26) Exchange movements 103 415 26 544 Balance at December 31, 2022 10,365 9,619 (71) 19,913 \u20ac million Bank, other loans and asset financed liabilities Lease liabilities Derivatives to mitigate volatility in financial liabilities Total Balance at January 1, 2021 5,655 10,024 429 16,108 Proceeds from borrowings 4,817 \u2013 \u2013 4,817 Repayment of borrowings (784) \u2013 \u2013 (784) Repayment of lease liabilities \u2013 (1,481) \u2013 (1,481) Settlement of derivative financial instruments 1 \u2013 \u2013 (268) (268) Total changes from financing cash flows 4,033 (1,481) (268) 2,284 Interest paid (212) (367) (26) (605) Interest expense 307 393 \u2013 700 New leases and lease modifications \u2013 518 \u2013 518 Fair value movements (69) \u2013 (286) (355) Other non-cash movements (2) (9) 15 4 Exchange movements 261 559 \u2013 820 Balance at December 31, 2021 9,973 9,637 (136) 19,474 1 Gain of \u20ac1,036 million (2021: loss of \u20ac268 million) relating to derivatives not designated in hedge relationships and reported within Net cash flows from financing activities in the Cash flow statement, and a loss of \u20ac7 million (2021: \u20acnil) relating to interest rate derivatives designated in hedge relationships and reported within Net cash flows from operating activities. d Total loans, asset financed liabilities, other financing liabilities and lease liabilities Million 2022 2021 Loans Bank: US dollar $75 $98 Euro \u20ac1,273 \u20ac1,430 Pound sterling \u00a32,026 \u00a32,003 Chinese yuan - CNY 78 \u20ac3,659 \u20ac3,883 Fixed rate bonds: Euro \u20ac2,887 \u20ac3,602 \u20ac2,887 \u20ac3,602 Asset financed liabilities US dollar $3,285 $2,192 Euro \u20ac542 \u20ac408 Japanese yen \u00a525,748 \u00a58,226 \u20ac3,819 \u20ac2,415 Other financing liabilities Euro - \u20ac73 - \u20ac73 Lease liabilities US dollar $7,621 $7,709 Euro \u20ac1,239 \u20ac1,547 Japanese yen \u00a571,994 \u00a575,450 Pound sterling \u00a3620 \u00a3569 \u20ac9,619 \u20ac9,637 Total interest-bearing borrowings \u20ac19,984 \u20ac19,610 26 Provisions \u20ac million Restoration and handback provisions Restructuring provisions Employee leaving indemnities and other employee related provisions Legal claims and contractual disputes provisions ETS provisions 1 Other provisions 1 Total Net book value January 1, 2022 1 1,832 274 720 90 9 74 2,999 Provisions recorded during the year 596 14 74 47 134 31 896 Reclassifications (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Utilised during the year (167) (81) (32) (2) (10) (31) (323) Release of unused amounts (42) (12) (24) (45) \u2013 (14) (137) Unwinding of discount 38 \u2013 5 \u2013 \u2013 \u2013 43 Remeasurements 27 \u2013 (69) \u2013 \u2013 \u2013 (42) Exchange differences 131 (1) (1) (1) (1) \u2013 127 Net book value December 31, 2022 2,400 194 673 89 132 60 3,548 Analysis: Current 508 112 70 66 132 8 896 Non-current 1,892 82 603 23 \u2013 52 2,652 2,400 194 673 89 132 60 3,548 1 During 2022 the Group has separated the ETS provision from Other provisions. This change resulted in an amount of \u20ac9 million recorded within ETS provisions at January 1, 2022. There was no net change in total provisions. Restoration and handback provisions The provision for restoration and handback costs is maintained to meet the contractual maintenance and return conditions on aircraft held under lease. The provision also includes an amount relating to leased land and buildings where restoration costs are contractually required at the end of the lease. Such costs are capitalised within ROU assets. The provision is long-term in nature, typically covering the leased asset term, which for aircraft is up to 12 years. Included within the release of unused restoration and handback provisions is an amount of \u20ac7 million relating to the reversal of contractual lease provisions, which represent the estimation of the cost to fulfil the handback conditions associated with the leased aircraft that had been permanently stood down and impaired during the year to December 31, 2020, which have subsequently been stood back up with a resultant impairment reversal during the year to December 31, 2022. The provisions are determined by discounting the future cash flows using pre-tax risk free rates specific to the tenor of the provision and the currency in which it arises. The unwinding of the discounting of the provisions is recorded as a finance cost in the Income statement (refer to note 9a). Remeasurements arising from changes in estimates relating to the effects of both discounting and inflation are recorded in the Income statement to the extent they relate to avoidable provisions or recorded as an adjustment to the right of use asset (see note 14) for those unavoidable provisions. Where amounts are finalised and the uncertainty relating to these provisions removed, the associated liability is reclassified to either current or non-current Other creditors, dependent on the expecting timing of settlement. Restructuring provisions The restructuring provision includes provisions for voluntary redundancies including the collective redundancy programme for Iberia's Transformation Plan implemented prior to 2022, which provides for payments to affected employees until they reach the statutory retirement age. The amount provided for has been determined by an actuarial valuation made by independent actuaries, and was based on the same assumptions as those made to determine the provisions for obligations to flight crew below, with the exception of the discount rate, which in this case was 3.2 per cent. The payments related to this provision will continue over the next 7 years. At December 31, 2022, \u20ac185 million of this provision related to collective redundancy programmes (2021: \u20ac270 million). Employee leaving indemnities and other employee related provisions This provision includes employees leaving indemnities relating to staff under various contractual arrangements. The Group recognises a provision relating to flight crew (both pilots and cabin crew) who the Group expects to still be in employment by the age of 60, at which point the individuals will have the option of continuing full time employment, being placed on reserve and retaining their employment relationship until reaching the statutory retirement age (referred to as \u2018active\u2019), or alternatively taking early retirement (referred to as \u2018inactive\u2019). The Group is required to remunerate these employees until they reach the statutory retirement age. In determining the provision to be recognised for the proportion of employees that will elect to be inactive, the Group estimates a number of financial assumptions, including, but not limited to: (i) medium to long-term salary growth and inflation; (ii) the discount rate to apply; (iii) the rate of public social security growth; (iv) mortality rates; and (vi) staff turnover. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 26 Provisions \u20ac million Restoration and handback provisions Restructuring provisions Employee leaving indemnities and other employee related provisions Legal claims and contractual disputes provisions ETS provisions 1 Other provisions 1 Total Net book value January 1, 2022 1 1,832 274 720 90 9 74 2,999 Provisions recorded during the year 596 14 74 47 134 31 896 Reclassifications (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Utilised during the year (167) (81) (32) (2) (10) (31) (323) Release of unused amounts (42) (12) (24) (45) \u2013 (14) (137) Unwinding of discount 38 \u2013 5 \u2013 \u2013 \u2013 43 Remeasurements 27 \u2013 (69) \u2013 \u2013 \u2013 (42) Exchange differences 131 (1) (1) (1) (1) \u2013 127 Net book value December 31, 2022 2,400 194 673 89 132 60 3,548 Analysis: Current 508 112 70 66 132 8 896 Non-current 1,892 82 603 23 \u2013 52 2,652 22,,440000 119944 667733 8899 113322 6600 3,548 1 During 2022 the Group has separated the ETS provision from Other provisions. This change resulted in an amount of \u20ac9 million recorded within ETS provisions at January 1, 2022. There was no net change in total provisions. Restoration and handback provisions The provision for restoration and handback costs is maintained to meet the contractual maintenance and return conditions on aircraft held under lease. The provision also includes an amount relating to leased land and buildings where restoration costs are contractually required at the end of the lease. Such costs are capitalised within ROU assets. The provision is long-term in nature, typically covering the leased asset term, which for aircraft is up to 12 years. Included within the release of unused restoration and handback provisions is an amount of \u20ac7 million relating to the reversal of contractual lease provisions, which represent the estimation of the cost to fulfil the handback conditions associated with the leased aircraft that had been permanently stood down and impaired during the year to December 31, 2020, which have subsequently been stood back up with a resultant impairment reversal during the year to December 31, 2022. The provisions are determined by discounting the future cash flows using pre-tax risk free rates specific to the tenor of the provision and the currency in which it arises. The unwinding of the discounting of the provisions is recorded as a finance cost in the Income statement (refer to note 9a). Remeasurements arising from changes in estimates relating to the effects of both discounting and inflation are recorded in the Income statement to the extent they relate to avoidable provisions or recorded as an adjustment to the right of use asset (see note 14) for those unavoidable provisions. Where amounts are finalised and the uncertainty relating to these provisions removed, the associated liability is reclassified to either current or non-current Other creditors, dependent on the expecting timing of settlement. Restructuring provisions The restructuring provision includes provisions for voluntary redundancies including the collective redundancy programme for Iberia's Transformation Plan implemented prior to 2022, which provides for payments to affected employees until they reach the statutory retirement age. The amount provided for has been determined by an actuarial valuation made by independent actuaries, and was based on the same assumptions as those made to determine the provisions for obligations to flight crew below, with the exception of the discount rate, which in this case was 3.2 per cent. The payments related to this provision will continue over the next 7 years. At December 31, 2022, \u20ac185 million of this provision related to collective redundancy programmes (2021: \u20ac270 million). Employee leaving indemnities and other employee related provisions This provision includes employees leaving indemnities relating to staff under various contractual arrangements. The Group recognises a provision relating to flight crew (both pilots and cabin crew) who the Group expects to still be in employment by the age of 60, at which point the individuals will have the option of continuing full time employment, being placed on reserve and retaining their employment relationship until reaching the statutory retirement age (referred to as \u2018active\u2019), or alternatively taking early retirement (referred to as \u2018inactive\u2019). The Group is required to remunerate these employees until they reach the statutory retirement age. In determining the provision to be recognised for the proportion of employees that will elect to be inactive, the Group estimates a number of financial assumptions, including, but not limited to: (i) medium to long-term salary growth and inflation; (ii) the discount rate to apply; (iii) the rate of public social security growth; (iv) mortality rates; and (vi) staff turnover. The provision was re-assessed at December 31, 2022 with the use of independent actuaries using the projected unit credit method, based on a discount rate consistent with the iBoxx index of 3.72 per cent for active employees and 3.50 per cent for inactive employees (2021: iBoxx index of 0.91 per cent and 0.00 per cent, respectively), the PERM/F-2000P mortality tables, and assuming contractual salary increases of up to 6.1 per cent in 2023 and 2.0 per cent in 2024 and then 2.0 per cent per annum thereafter derived from increases in the Consumer Price Index (CPI). At December 31, 2022, there were a total of 4,827 flight crew (December 31, 2021: 4,533) eligible for making such elections when they reach the age of 60. At December 31, 2022, there were 426 employees having reached the age of 60 who had elected to become inactive (December 31, 2021: 333). In addition, at December 31, 2022 the average length of employment of the eligible flight crew was 18 years (December 31, 2021: 20 years). This is mainly a long-term provision. Remeasurements in the valuation of this provision are recorded in Other comprehensive income. The amount relating to this provision was \u20ac611 million at December 31, 2022 (2021: \u20ac644 million). Legal claims and contractual disputes provisions Legal claims and contractual disputes provisions include: \u2022 amounts for multi-party claims from groups of employees on a number of matters related to their employment, including claims for additional holiday pay and for age discrimination; \u2022 amounts related to ongoing contractual disputes arising from the Group\u2019s operations; and \u2022 amounts related to investigations by a number of competition authorities in connection with alleged anti-competitive activity concerning the Group\u2019s passenger and cargo businesses. The final amount required to settle the remaining claims and fines is subject to uncertainty. ETS provisions ETS provisions relate to the Emissions Trading Scheme for CO 2 equivalent emitted on flights within the EU, Switzerland and the United Kingdom and due to be settled in the year subsequent to the reporting date. See note 4 for further information. 27 Financial risk management objectives and policies The Group is exposed to a variety of financial risks: market risk (including fuel price risk, foreign currency risk and interest rate risk), credit risk and liquidity risk. The principal impacts of these on the financial statements are discussed below: a Fuel price risk The Group is exposed to fuel price risk. In order to mitigate such risk, under the Group\u2019s fuel price risk management strategy a variety of over the counter derivative instruments are entered into. The Group strategy is to hedge a proportion of fuel consumption up to two years within the approved hedging profile. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the fuel price, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on fuel derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of th e years to December 31, 2022 and 2021. 2022 2021 Increase/(decrease) in fuel price per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Increase/(decrease) in fuel price per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 45 \u2013 1,402 30 \u2013 834 (45) \u2013 (1,200) (30) \u2013 (520) 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. During 2022, following a substantial recovery in the global price of crude oil and jet fuel, which continues to be impacted by geopolitical events in Ukraine, the fair value of such net asset derivative instruments was \u20ac87 million at December 31, 2022, representing a decrease of \u20ac201 million since January 1, 2022. b Foreign currency risk The Group is exposed to foreign currency risk on revenue, purchases and borrowings that are denominated in a currency other than the functional currency of the Group (the euro). The currencies in which these transactions are denominated are primarily US dollar and pound sterling. The Group has a number of strategies to hedge foreign currency risk including hedging a proportion of its foreign currency sales and purchases for up to three years. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the US dollar, pound sterling and Japanese yen exchange rates, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on interest-bearing liabilities, lease liabilities and derivatives (both those designated in hedge relationships and those not designated in hedge relationships) denominated in foreign currencies at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US dollar rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in pound sterling rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in Japanese yen rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 20 904 1,299 20 (20) 241 20 (58) (70) (20) (922) (1,161) (20) 18 (241) (20) 58 70 2021 10 255 523 10 (10) 134 10 (17) (41) (10) (260) (481) (10) 10 (134) (10) 17 41 1 The sensitivity analysis on equity, excludes the sensitivity amounts recognised in the result before tax. At December 31, 2022, the fair value of foreign currency net asset derivative instruments was \u20ac108 million, representing a decrease of \u20ac77 million since January 1, 2022. These comprise both derivatives designated in hedge relationships and those derivatives that are not designated into a hedge relationship at inception. Those derivatives not designated in a hedge relationship on inception have their mark-to- market movements recorded directly in the Income statement and recognised within Net currency retranslation (charges)/credits. c Interest rate risk The Group is exposed to changes in interest rates on debt and on cash deposits. In order to mitigate the interest rate risk, the Group\u2019s policies allow a variety of over the counter derivative instruments to be entered into. The following table demonstrates the sensitivity of the Group\u2019s interest rate exposure to a reasonable possible change in the US dollar, euro and sterling interest rates, based on expectations regarding forward rate movements, on the result before tax and equity 1 . The sensitivity analysis has been performed on interest rate derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in euro interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in sterling interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 150 \u2013 6 150 5 17 150 (35) \u2013 (150) \u2013 (7) (150) (4) (17) (150) 35 \u2013 2021 50 \u2013 \u2013 50 3 10 50 (2) \u2013 (50) \u2013 \u2013 (50) (3) (9) (50) 2 \u2013 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. For details regarding the Group\u2019s management of interest rate benchmark reform, refer to note 27i. d Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company and by only entering into transactions with counterparties with a very low credit risk. At each period end, the Group assesses the effect of counterparties\u2019 and the Group\u2019s own credit risk on the fair value of derivatives and any ineffectiveness arising is immediately recognised in the Income statement within Other non-operating expenses. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 27 Financial risk management objectives and policies continued b Foreign currency risk The Group is exposed to foreign currency risk on revenue, purchases and borrowings that are denominated in a currency other than the functional currency of the Group (the euro). The currencies in which these transactions are denominated are primarily US dollar and pound sterling. The Group has a number of strategies to hedge foreign currency risk including hedging a proportion of its foreign currency sales and purchases for up to three years. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the US dollar, pound sterling and Japanese yen exchange rates, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on interest-bearing liabilities, lease liabilities and derivatives (both those designated in hedge relationships and those not designated in hedge relationships) denominated in foreign currencies at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US dollar rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in pound sterling rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in Japanese yen rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 20 904 1,299 20 (20) 241 20 (58) (70) (20) (922) (1,161) (20) 18 (241) (20) 58 70 2021 10 255 523 10 (10) 134 10 (17) (41) (10) (260) (481) (10) 10 (134) (10) 17 41 1 The sensitivity analysis on equity, excludes the sensitivity amounts recognised in the result before tax. At December 31, 2022, the fair value of foreign currency net asset derivative instruments was \u20ac108 million, representing a decrease of \u20ac77 million since January 1, 2022. These comprise both derivatives designated in hedge relationships and those derivatives that are not designated into a hedge relationship at inception. Those derivatives not designated in a hedge relationship on inception have their mark-to- market movements recorded directly in the Income statement and recognised within Net currency retranslation (charges)/credits. c Interest rate risk The Group is exposed to changes in interest rates on debt and on cash deposits. In order to mitigate the interest rate risk, the Group\u2019s policies allow a variety of over the counter derivative instruments to be entered into. The following table demonstrates the sensitivity of the Group\u2019s interest rate exposure to a reasonable possible change in the US dollar, euro and sterling interest rates, based on expectations regarding forward rate movements, on the result before tax and equity 1 . The sensitivity analysis has been performed on interest rate derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in euro interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in sterling interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 150 \u2013 6 150 5 17 150 (35) \u2013 (150) \u2013 (7) (150) (4) (17) (150) 35 \u2013 2021 50 \u2013 \u2013 50 3 10 50 (2) \u2013 (50) \u2013 \u2013 (50) (3) (9) (50) 2 \u2013 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. For details regarding the Group\u2019s management of interest rate benchmark reform, refer to note 27i. d Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company and by only entering into transactions with counterparties with a very low credit risk. At each period end, the Group assesses the effect of counterparties\u2019 and the Group\u2019s own credit risk on the fair value of derivatives and any ineffectiveness arising is immediately recognised in the Income statement within Other non-operating expenses. e Counterparty risk The Group is exposed to the non-performance by its counterparties in respect of financial assets receivable. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company. The underlying exposures are monitored on a daily basis and the overall exposure limit by counterparty is periodically reviewed by using available market information. The financial assets recognised in the financial statements, net of impairment losses (if any), represent the Group's maximum exposure to credit risk, without taking into account any guarantees in place or other credit enhancements. At December 31, 2022 the Group\u2019s credit risk position, allocated by region, in respect of treasury managed cash and derivatives was as follows: Mark-to-market of treasury controlled financial instruments allocated by geography Region 2022 2021 United Kingdom 51% 44% Spain 1% \u2013 Ireland 20% 18% Rest of eurozone 27% 34% Rest of world 1% 4% f Liquidity risk The Group invests cash in interest-bearing accounts, time deposits and money market funds, choosing instruments with appropriate maturities or liquidity to retain sufficient headroom to readily generate cash inflows required to manage liquidity risk. The Group has also committed revolving credit facilities. At December 31, 2022 the Group had undrawn overdraft facilities of \u20ac53 million (2021: \u20ac53 million). The Group held the following undrawn general and committed aircraft financing facilities: 2022 Million Currency \u20ac equivalent General facilities 1 Euro facilities expiring between January and March 2023 \u20ac87 87 US dollar facility expiring November 2023 $50 47 Euro facility expiring March 2025 \u20ac300 300 US dollar facility expiring March 2025 $1,755 1,654 Pound sterling facility expiring November 2025 \u00a31,000 1,143 3,231 Committed aircraft facilities US dollar facilities expiring between February and September 2023 2 $386 364 US dollar facility expiring April 2023 2 $273 257 US dollar facilities expiring between October 2023 and March 2024 3 $525 495 1,116 2021 Million Currency \u20ac equivalent General facilities 1 Euro facilities expiring between January and July 2022 \u20ac27 27 Euro facilities expiring March 2023 \u20ac60 60 US dollar facility expiring May 2022 $50 44 US dollar facility expiring March 2024 $1,755 1,556 Pound sterling facility expiring November 2025 \u00a31,000 1,177 2,864 Committed aircraft facilities US dollar facility expiring September 2022 2 $635 563 US dollar facilities expiring March 2024 3 $635 563 1,126 1 The general facilities can be drawn at any time at the discretion of the Group subject to the provision of up to three days\u2019 notice of the intended utilisation, depending on the facility. 2 The aircraft facilities maturing in 2023 are available for specific committed aircraft deliveries. 3 The aircraft facilities maturing between October 2023 and March 2024 (2021: maturing in March 2024) are available for specific committed aircraft deliveries and require the Group to give three months\u2019 notice to the counterparty of its intention to utilise the facilities. The following table analyses the Group\u2019s (outflows) and inflows in respect of financial liabilities and derivative financial instruments into relevant maturity groupings based on the remaining period at December 31 to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and include interest. \u20ac million Within 6 months 6-12 months 1-2 years 2-5 years More than 5 years Total 2022 Interest-bearing loans and borrowings: Asset financing liabilities (196) (190) (374) (1,081) (2,823) (4,664) Lease liabilities (955) (1,050) (2,120) (3,374) (5,295) (12,794) Fixed rate borrowings (64) (523) (78) (1,242) (757) (2,664) Floating rate borrowings (227) (146) (455) (3,191) \u2013 (4,019) Trade and other payables (5,209) \u2013 (200) \u2013 \u2013 (5,409) Derivative financial instruments (assets): Interest rate derivatives 42 9 12 9 \u2013 72 Foreign exchange contracts 245 195 46 \u2013 \u2013 486 Fuel derivatives 122 62 13 \u2013 \u2013 197 Derivative financial instruments (liabilities): Interest rate derivatives (4) (1) (1) (3) \u2013 (9) Foreign exchange contracts (185) (121) (68) \u2013 \u2013 (374) Fuel derivatives (42) (59) (10) \u2013 \u2013 (111) December 31, 2022 (6,473) (1,824) (3,235) (8,882) (8,875) (29,289) \u20ac million Within 6 months 6-12 months 1-2 years 2-5 years More than 5 years Total 2021 Interest-bearing loans and borrowings: Asset financing liabilities (122) (116) (230) (678) (1,714) (2,860) Lease liabilities (920) (854) (1,814) (3,839) (5,524) (12,951) Fixed rate borrowings (151) (529) (578) (690) (2,094) (4,042) Floating rate borrowings (129) (285) (428) (3,368) (16) (4,226) Other financing liabilities (73) \u2013 \u2013 \u2013 \u2013 (73) Trade and other payables (3,712) \u2013 (208) \u2013 \u2013 (3,920) Derivative financial instruments (assets): Interest rate derivatives \u2013 1 2 3 \u2013 6 Foreign exchange contracts 227 52 46 1 \u2013 326 Fuel derivatives 157 129 48 \u2013 \u2013 334 Derivative financial instruments (liabilities): Interest rate derivatives (12) (10) (7) (3) \u2013 (32) Foreign exchange contracts (67) (38) (33) (6) \u2013 (144) Fuel derivatives (14) (13) (18) \u2013 \u2013 (45) December 31, 2021 (4,816) (1,663) (3,220) (8,580) (9,348) (27,627) NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 27 Financial risk management objectives and policies continued The following table analyses the Group\u2019s (outflows) and inflows in respect of financial liabilities and derivative financial instruments into relevant maturity groupings based on the remaining period at December 31 to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and include interest. \u20ac million Within 6 months 6-12 months 1-2 years 2-5 years More than 5 years Total 2022 Interest-bearing loans and borrowings: Asset financing liabilities (196) (190) (374) (1,081) (2,823) (4,664) Lease liabilities (955) (1,050) (2,120) (3,374) (5,295) (12,794) Fixed rate borrowings (64) (523) (78) (1,242) (757) (2,664) Floating rate borrowings (227) (146) (455) (3,191) \u2013 (4,019) Trade and other payables (5,209) \u2013 (200) \u2013 \u2013 (5,409) Derivative financial instruments (assets): Interest rate derivatives 42 9 12 9 \u2013 72 Foreign exchange contracts 245 195 46 \u2013 \u2013 486 Fuel derivatives 122 62 13 \u2013 \u2013 197 Derivative financial instruments (liabilities): Interest rate derivatives (4) (1) (1) (3) \u2013 (9) Foreign exchange contracts (185) (121) (68) \u2013 \u2013 (374) Fuel derivatives (42) (59) (10) \u2013 \u2013 (111) December 31, 2022 (6,473) (1,824) (3,235) (8,882) (8,875) (29,289) \u20ac million Within 6 months 6-12 months 1-2 years 2-5 years More than 5 years Total 2021 Interest-bearing loans and borrowings: Asset financing liabilities (122) (116) (230) (678) (1,714) (2,860) Lease liabilities (920) (854) (1,814) (3,839) (5,524) (12,951) Fixed rate borrowings (151) (529) (578) (690) (2,094) (4,042) Floating rate borrowings (129) (285) (428) (3,368) (16) (4,226) Other financing liabilities (73) \u2013 \u2013 \u2013 \u2013 (73) Trade and other payables (3,712) \u2013 (208) \u2013 \u2013 (3,920) Derivative financial instruments (assets): Interest rate derivatives \u2013 1 2 3 \u2013 6 Foreign exchange contracts 227 52 46 1 \u2013 326 Fuel derivatives 157 129 48 \u2013 \u2013 334 Derivative financial instruments (liabilities): Interest rate derivatives (12) (10) (7) (3) \u2013 (32) Foreign exchange contracts (67) (38) (33) (6) \u2013 (144) Fuel derivatives (14) (13) (18) \u2013 \u2013 (45) December 31, 2021 (4,816) (1,663) (3,220) (8,580) (9,348) (27,627) g Offsetting financial assets and liabilities The Group enters into derivative transactions under ISDA (International Swaps and Derivatives Association) documentation. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding are aggregated into a single net amount that is payable by one party to the other. The following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements. December 31, 2022 \u20ac million Gross value of financial instruments Gross amounts set off in the Balance sheet 1 Net amounts of financial instruments in the Balance sheet Related amounts not offset in the Balance sheet 1 Net amount Financial assets Derivative financial assets 760 (34) 726 (5) 721 Financial liabilities Derivative financial liabilities 505 (34) 471 5 476 1 The Group has pledged cash and cash equivalents as collateral against certain of its derivative financial liabilities. As December 31, 2022, the Group recognised \u20acnil of collateral (2021: \u20acnil) offset in the balance sheet and \u20ac5 million (2021: \u20ac30 million) not offset in the Balance sheet. December 31, 2021 \u20ac million Gross value of financial instruments Gross amounts set off in the Balance sheet Net amounts of financial instruments in the Balance sheet Related amounts not offset in the Balance sheet Net amount Financial assets Derivative financial assets 628 (8) 620 (30) 590 Financial liabilities Derivative financial liabilities 181 (8) 173 30 203 h Capital risk management The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern, to maintain an optimal capital structure, to reduce the cost of capital and to provide returns to shareholders. The Group monitors capital on the basis of the net debt to EBITDA before exceptional items ratio. For the year to December 31, 2022, the net debt to EBITDA before exceptional items was 3.1 times (2021: minus 11.5 times). The definition and calculation for this performance measure is included in the Alternative performance measures section. Further detail on liquidity and capital resources and capital risk management is disclosed in the going concern section in note 2. i Managing interest rate benchmark reform and associated risks Overview A reform of major interest rate benchmarks is being undertaken globally, including the replacement of certain interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). The Group has exposures to IBORs on its financial instruments that are expected to mature subsequent to December 31, 2022, and as such will be replaced as part of these market-wide initiatives. The Group anticipates that IBOR reform will impact its risk management and hedge accounting. During 2020 the Group established an IBOR transition working group and project plan, led by Group Treasury. This project has and continues to consider the required changes to systems, processes, risk management and valuation models, as well as managing any accounting and tax implications. During the course of 2022, the Group, and the counterparties to the financial instruments, have transitioned the majority of such instruments to an alternative benchmark rate and in order to enable such transitions, changes to systems, processes and models have been implemented. Those financial instruments that have not transitioned at December 31, 2022 relate to those with a US dollar LIBOR component, which is not expected to convert to an alternative risk-free rate until mid-2023, subject to further consultation. Reforms to the Euro Interbank Offered Rate (EURIBOR) methodology to enable it to meet the criteria of a risk-free rate were completed in 2019. As such the Group expects to continue to utilise financial instruments with a EURIBOR component without transitioning to an alternative benchmark rate. Derivative and non-derivative financial instruments and hedge accounting While the Group has transitioned a number of its derivative and non-derivative financial instruments to an alternative benchmark rate, certain interest rate swap derivative financial instruments and non-derivative financial instruments continue to have their floating legs indexed to US dollar LIBOR. For derivative financial instruments there is no uncertainty associated with IBOR reform as at December 31, 2022, as such instruments either mature prior to the date of withdrawal of the US dollar LIBOR, or where maturity is subsequent to the date of withdrawal of the US dollar LIBOR, the final pricing date for such instruments is prior to the date of withdrawal. Accordingly, the Group does not intend to transition such instruments to an alternative benchmark and these derivatives continue to be recognised as hedging instruments in hedge relationships, with the hedged item being those non-derivative financial instruments indexed to US dollar LIBOR. Non-derivative financial instruments predominantly relate to those lease liabilities with a US dollar LIBOR component. The Group has such leases with a limited number of counterparties for which the Group expects to transition to an alternative benchmark by June 30, 2023. The table below provides an overview of the IBOR-related exposures as at December 31, 2022. Non-derivative financial instruments are presented on the basis of their carrying values, while derivative financial instruments are presented on the basis of their nominal amounts. \u20ac million Non- derivative financial instruments \u2013 carrying value Derivative financial instruments \u2013 nominal amount US dollar LIBOR 461 305 28 Financial instruments a Financial assets and liabilities by category The detail of the Group\u2019s \ufb01nancial instruments at December 31, 2022 and December 31, 2021 by nature and classi\ufb01cation for measurement purposes is as follows: December 31, 2022 Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 55 \u2013 \u2013 55 Derivative financial instruments \u2013 \u2013 81 \u2013 81 Other non-current assets 180 \u2013 \u2013 182 362 Current assets Trade receivables 1,330 \u2013 \u2013 \u2013 1,330 Other current assets 308 \u2013 \u2013 918 1,226 Derivative financial instruments \u2013 \u2013 645 \u2013 645 Other current interest-bearing deposits 403 \u2013 \u2013 \u2013 403 Cash and cash equivalents 9,196 \u2013 \u2013 \u2013 9,196 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 7,853 \u2013 \u2013 \u2013 7,853 Interest-bearing long-term borrowings 8,692 \u2013 596 \u2013 9,288 Derivative financial instruments \u2013 \u2013 84 \u2013 84 Other long-term liabilities 131 \u2013 \u2013 69 200 Current liabilities Lease liabilities 1,766 \u2013 \u2013 \u2013 1,766 Current portion of long-term borrowings 1,068 \u2013 9 \u2013 1,077 Trade and other payables 4,898 \u2013 \u2013 311 5,209 Derivative financial instruments \u2013 \u2013 387 \u2013 387 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 8,116 \u2013 \u2013 \u2013 8,116 Interest-bearing long-term borrowings 8,220 \u2013 748 \u2013 8,968 Derivative financial instruments \u2013 \u2013 47 \u2013 47 Other long-term liabilities 132 \u2013 \u2013 76 208 Current liabilities Lease liabilities 1,521 \u2013 \u2013 \u2013 1,521 Current portion of long-term borrowings 996 \u2013 9 \u2013 1,005 Trade and other payables 3,506 \u2013 \u2013 206 3,712 Derivative financial instruments \u2013 \u2013 126 \u2013 126 b Fair value of financial assets and financial liabilities The fair values of the Group\u2019s financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in determining the fair values and using the following methods and assumptions: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. Level 1 methodologies (market values at the balance sheet date) were used to determine the fair value of listed asset investments classified as equity investments and listed interest-bearing borrowings. The fair value of financial liabilities and financial assets incorporates own credit risk and counterparty credit risk, respectively. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. Derivative instruments are measured based on the market value of instruments with similar terms and conditions using forward pricing models, which include forward exchange rates, forward interest rates, forward fuel curves and corresponding volatility surface data at the reporting date. The fair value of derivative financial assets and liabilities are determined as follows, incorporating adjustments for own credit risk and counterparty credit risk: \u2022 commodity reference contracts including swaps and options transactions, referenced to (i) CIF NWE cargoes jet fuel; (ii) ICE Gasoil; (iii) ICE Brent; (iv) ICE Gasoil Brent crack; (v) Jet Differential and (vi) Jet fuel Brent crack - the mark-to-market valuation prices are determined by reference to current forward curve and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; \u2022 currency forward and option contracts \u2013 by reference to current forward prices and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; and \u2022 interest rate swap contracts \u2013 by discounting the future cash flows of the swap contracts at market interest rate valued with the current forward curve. The fair value of the Group\u2019s interest-bearing borrowings including leases is determined by discounting the remaining contractual cash flows at the relevant market interest rates at the balance sheet date. The fair value of the Group\u2019s interest-bearing borrowings is adjusted for own credit risk. Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 31 \u2013 \u2013 31 Derivative financial instruments \u2013 \u2013 77 \u2013 77 Other non-current assets 126 10 \u2013 114 250 Current assets Trade receivables 735 \u2013 \u2013 \u2013 735 Other current assets 363 \u2013 \u2013 597 960 Derivative financial instruments \u2013 \u2013 543 \u2013 543 Other current interest-bearing deposits 51 \u2013 \u2013 \u2013 51 Cash and cash equivalents 7,892 \u2013 \u2013 \u2013 7,892 Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2022 are as follows: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 55 55 55 Other non-current financial assets \u2013 20 \u2013 20 31 Derivative financial assets: Interest rate swaps 1 \u2013 66 \u2013 66 66 Foreign exchange contracts 1 \u2013 467 \u2013 467 467 Fuel derivatives 1 \u2013 193 \u2013 193 193 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,925 \u2013 2,925 3,819 Fixed rate borrowings 2,538 72 \u2013 2,610 2,967 Floating rate borrowings \u2013 3,419 \u2013 3,419 3,579 Derivative financial liabilities: Interest rate derivatives 2 \u2013 6 \u2013 6 6 Foreign exchange contracts 2 \u2013 386 \u2013 386 386 Fuel derivatives 2 \u2013 79 \u2013 79 79 1 Current portion of derivative financial assets is \u20ac645 million. 2 Current portion of derivative financial liabilities is \u20ac387 million. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2021 are set out below: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 31 31 31 Derivative financial assets: Interest rate swaps 1 \u2013 5 \u2013 5 5 Foreign exchange contracts 1 \u2013 314 \u2013 314 314 Fuel derivatives 1 \u2013 301 \u2013 301 301 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,583 \u2013 2,583 2,415 Fixed rate borrowings 3,492 265 \u2013 3,757 3,863 Floating rate borrowings \u2013 3,622 \u2013 3,622 3,622 Other financing liabilities \u2013 73 \u2013 73 73 Derivative financial liabilities: Interest rate derivatives 2 \u2013 31 \u2013 31 31 Foreign exchange contracts 2 \u2013 129 \u2013 129 129 Fuel derivatives 2 \u2013 13 \u2013 13 13 1 Current portion of derivative financial assets is \u20ac543 million. 2 Current portion of derivative financial liabilities is \u20ac126 million. On June 15, 2022, the Group entered into a financing arrangement with Globalia, which was classified as a Level 2 financial asset. On August 16, 2022, the Group exercised the conversion option within the financing arrangement leading to the de-recognition of the Level 2 financial asset and the recognition of an Other equity investment in Air Europa Holdings, which was recorded as an addition to a Level 3 financial asset. Refer to note 19 for further details. There have been no other transfers between levels of the fair value hierarchy during the year. Financial assets, other equity instruments, financial liabilities and derivative financial assets and liabilities are all measured at fair value in the consolidated financial statements. Interest-bearing borrowings, with the exception of the \u20ac825 million convertible bond due 2028 which is measured at fair value, are measured at amortised cost. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 28 Financial instruments continued Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2022 are as follows: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 55 55 55 Other non-current financial assets \u2013 20 \u2013 20 31 Derivative financial assets: Interest rate swaps 1 \u2013 66 \u2013 66 66 Foreign exchange contracts 1 \u2013 467 \u2013 467 467 Fuel derivatives 1 \u2013 193 \u2013 193 193 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,925 \u2013 2,925 3,819 Fixed rate borrowings 2,538 72 \u2013 2,610 2,967 Floating rate borrowings \u2013 3,419 \u2013 3,419 3,579 Derivative financial liabilities: Interest rate derivatives 2 \u2013 6 \u2013 6 6 Foreign exchange contracts 2 \u2013 386 \u2013 386 386 Fuel derivatives 2 \u2013 79 \u2013 79 79 1 Current portion of derivative financial assets is \u20ac645 million. 2 Current portion of derivative financial liabilities is \u20ac387 million. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2021 are set out below: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 31 31 31 Derivative financial assets: Interest rate swaps 1 \u2013 5 \u2013 5 5 Foreign exchange contracts 1 \u2013 314 \u2013 314 314 Fuel derivatives 1 \u2013 301 \u2013 301 301 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,583 \u2013 2,583 2,415 Fixed rate borrowings 3,492 265 \u2013 3,757 3,863 Floating rate borrowings \u2013 3,622 \u2013 3,622 3,622 Other financing liabilities \u2013 73 \u2013 73 73 Derivative financial liabilities: Interest rate derivatives 2 \u2013 31 \u2013 31 31 Foreign exchange contracts 2 \u2013 129 \u2013 129 129 Fuel derivatives 2 \u2013 13 \u2013 13 13 1 Current portion of derivative financial assets is \u20ac543 million. 2 Current portion of derivative financial liabilities is \u20ac126 million. On June 15, 2022, the Group entered into a financing arrangement with Globalia, which was classified as a Level 2 financial asset. On August 16, 2022, the Group exercised the conversion option within the financing arrangement leading to the de-recognition of the Level 2 financial asset and the recognition of an Other equity investment in Air Europa Holdings, which was recorded as an addition to a Level 3 financial asset. Refer to note 19 for further details. There have been no other transfers between levels of the fair value hierarchy during the year. Financial assets, other equity instruments, financial liabilities and derivative financial assets and liabilities are all measured at fair value in the consolidated financial statements. Interest-bearing borrowings, with the exception of the \u20ac825 million convertible bond due 2028 which is measured at fair value, are measured at amortised cost. c Level 3 financial assets reconciliation The following table summarises key movements in Level 3 financial assets: \u20ac million 2022 2021 Opening balance for the year 31 29 Addition of Air Europa Holdings 22 \u2013 Additions - other 2 2 Losses recognised in Income statement (2) \u2013 Gains recognised in Other comprehensive income 2 \u2013 Closing balance for the year 55 31 For details regarding the valuation of Air Europa Holdings, refer to note 19. d Hedges Cash flow hedges At December 31, 2022 the Group\u2019s principal risk management activities that were hedging future forecast transactions were: \u2022 foreign exchange contracts, hedging foreign currency exchange risk on cash inflows and certain operational payments. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement, where the hedged item is recorded directly in the Income statement, to the same caption as the underlying hedged item is classified; (ii) recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability, are recorded to the Balance sheet to the same caption as the hedged item is recognised; and (iii) recognised in equity and transferred to the Income statement, where the hedged item is a financial asset or liability, at the same time as the financial asset or liability is recorded in the Income statement. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement when the future transaction is no longer expected to occur and recorded in the relevant Income statement caption to which the hedged item is classified; \u2022 forward crude, gas oil and jet kerosene derivative contracts, hedging price risk on fuel expenditure. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement within Fuel, oil costs and emissions charges to match against the related fuel cash outflow, where the underlying hedged item does not give rise to the recognition of fuel inventory; and (ii) recognised in equity and transferred to the Balance sheet within Inventory, where the underlying hedged item is fuel inventory. Gains and losses recorded within Inventory are recognised in the Income statement when the underlying fuel inventory is consumed, within Fuel, oil costs and emission charges. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement within Fuel, oil costs and emissions charges when the future transaction is no longer expected to occur; \u2022 interest rate contracts, hedging interest rate risk on floating rate debt and certain operational payments. Remeasurement gains and losses on the derivatives are recognised in equity and transferred to the Income statement within Interest expense; and \u2022 future loan repayments denominated in foreign currency are designated in a hedge relationship hedging foreign exchange fluctuations on revenue cash inflows. Remeasurement gains and losses on the associated loans are recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability when the loan repayments are made (generally in instalments over the life of the loan). The amounts included in equity are summarised below: (Gains)/losses in respect of cash flow hedges included within equity \u20ac million 2022 2021 Loan repayments to hedge future revenue 87 98 Foreign exchange contracts to hedge future revenue and expenditure 1 (178) 25 Crude, gas oil and jet kerosene derivative contracts 1 (127) (276) Derivatives used to hedge interest rates 1 (46) 58 Instruments for which hedge accounting no longer applies 1, 2 213 247 (51) 152 Related deferred tax charge/(credit) 20 (24) Total amount included within equity (31) 128 1 The carrying value of derivative instruments recognised in assets and liabilities is analysed in parts a and b above. 2 Relates to previously terminated hedge relationships for which the underlying forecast transactions remain expected to occur. The notional amounts of significant financial instruments used as cash flow hedging instruments are set out below, with the prior period presentation amended to reflect the current presentation: Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2022 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.23 1.05 to 1.45 3,582 1,355 \u2013 \u2013 4,937 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.08 0.91 to 1.26 2,578 1,318 \u2013 \u2013 3,896 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.00 to 1.42 371 406 458 14 1,249 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 718 416 to 2,200 2,935 331 \u2013 \u2013 3,266 Interest rate contracts to hedge future interest expenditure 3 1.04 (0.03) to 3.13 2,360 504 238 9 3,111 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.4 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2021 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.31 1.15 to 1.45 2,606 1,030 42 \u2013 3,678 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.18 1.08 to 1.32 1,632 735 26 \u2013 2,393 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.08 to 1.42 396 334 543 166 1,439 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 649 395 to 737 2,386 826 \u2013 \u2013 3,212 Interest rate contracts to hedge future interest expenditure 3 1.40 (0.03) to 3.13 3,099 1,080 738 60 4,977 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.8 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 28 Financial instruments continued The notional amounts of significant financial instruments used as cash flow hedging instruments are set out below, with the prior period presentation amended to reflect the current presentation: Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2022 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.23 1.05 to 1.45 3,582 1,355 \u2013 \u2013 4,937 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.08 0.91 to 1.26 2,578 1,318 \u2013 \u2013 3,896 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.00 to 1.42 371 406 458 14 1,249 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 718 416 to 2,200 2,935 331 \u2013 \u2013 3,266 Interest rate contracts to hedge future interest expenditure 3 1.04 (0.03) to 3.13 2,360 504 238 9 3,111 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.4 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2021 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.31 1.15 to 1.45 2,606 1,030 42 \u2013 3,678 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.18 1.08 to 1.32 1,632 735 26 \u2013 2,393 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.08 to 1.42 396 334 543 166 1,439 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 649 395 to 737 2,386 826 \u2013 \u2013 3,212 Interest rate contracts to hedge future interest expenditure 3 1.40 (0.03) to 3.13 3,099 1,080 738 60 4,977 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.8 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. Amounts recognised in the Income statement For the year to December 31, 2021 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 4 39 43 (178) (24) Crude, gas oil and jet kerosene derivative contracts (1) 73 88 160 (737) \u2013 Derivatives used to hedge interest rates \u2013 \u2013 (29) (29) 21 \u2013 Loan repayments to hedge future revenue \u2013 \u2013 (15) (15) (120) \u2013 Instruments for which hedge accounting no longer applies \u2013 \u2013 (54) (54) \u2013 \u2013 (1) 77 29 105 (1,014) (24) Related deferred tax (24) 166 3 Total movements recorded in the cash flow hedge reserve 81 (848) (21) 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. The losses associated with the discontinuance of hedge accounting recognised in the Income statement and the subsequent fair value movements of those derivative instruments recorded in the Income statement through to the earlier of the reporting date and the maturity date of the derivative are set out below: \u20ac million 2022 2021 Gains associated with the discontinuance of hedge accounting recognised in the Income statement (29) (77) Fair value movements subsequently recorded in the Income statement \u2013 (82) Total effect of discontinuance of hedge accounting in the Income statement (29) (159) The Group has no significant fair value hedges at December 31, 2022 and 2021. 29 Share capital, share premium and treasury shares Allotted, called up and fully paid Number of shares '000s Ordinary share capital \u20ac million Share premium \u20ac million December 31, 2021: Ordinary shares of \u20ac0.10 each 4,971,476 497 7,770 December 31, 2022: Ordinary shares of \u20ac0.10 each 4,971,476 497 7,770 a Treasury shares The treasury shares balance consists of shares held directly by the Group. During the year to December 31, 2022, the Group purchased 15.0 million shares at a weighted average share price of \u20ac1.51 per share totalling \u20ac23 million, which are held as Treasury shares. A total of 8.1 million shares (2021: 5.4 million) were issued to employees during the year as a result of vesting of employee share schemes. At December 31, 2022 the Group held 17.1 million shares (2021: 10.2 million) which represented 0.34 per cent (2021: 0.20 per cent) of the issued share capital of the Company. 30 Share-based payments The Group operates share-based payment schemes as part of the total remuneration package provided to employees. These schemes comprise both share option schemes where employees acquire shares at an option price and share award plans whereby shares are issued to employees at no cost, subject to the achievement by the Group of specified performance targets. a IAG Performance Share Plan The IAG Performance Share Plan (PSP) is granted to senior executives and managers of the Group who are most directly involved in shaping and delivering business success over the medium to long term. Since 2015, awards have been made as nil-cost options, with a two- year holding period following the three-year performance period, before options can be exercised. All awards since 2015 have three independent performance measures with equal weighting: Total Shareholder Return (TSR) relative to the STOXX Europe 600 Travel and Leisure Index (for 2020 awards) or MSCI European Transportation Index (for prior to 2020 awards), earnings per share, and Return on Invested Capital. b IAG Restricted Share Plan During 2021, the Group revised its approach to long-term incentives, replacing the existing PSP with a Restricted Share Plan (RSP) proposal under the new Executive Share Plan approved by shareholders in June 2021. The RSP was introduced to increase the alignment of both interests and outcomes between the Group\u2019s senior management and shareholders through the build-up and maintenance of senior management shareholdings and an increased focus on the long-term, sustainable performance of the Group. Awards have been made as nil-cost options, with a two-year holding period following the three-year performance period, before options vest. There are no performance measures associated with the awards, although approval at the end of the vesting period will be at the discretion of the Remuneration Committee, considering the Group\u2019s overall performance, including financial and non-financial performance measures over the course of the vesting period, as well as any material risk or regulatory failures identified. c IAG Full Potential Incentive Plan During 2021, the Group launched the new Full Potential Incentive Plan (FPIP), which is granted to key individuals involved in the delivery of a series of transformation projects that will enable the Group to deliver business success over the medium to long term. The awards have been made as nil-cost options, vesting in 2025 and dependent on stretch performance targets for 2024 and the approval of the Board. d IAG Incentive Award Deferral Plan The IAG Incentive Award Deferral Plan (IADP) is granted to qualifying employees based on performance and service tests. It will be awarded when an incentive award is triggered subject to the employee remaining in employment with the Group for three years after the grant date. The relevant population will receive 50 per cent of their incentive award up front in cash, and the remaining 50 per cent in shares after three years through the IADP. e Share-based payment schemes summary Outstanding at January 1, 2022 Granted number Lapsed number Vested number Outstanding at December 31, 2022 Exercisable December 31, 2022 \u2018000s \u2018000s \u2018000s \u2018000s \u2018000s \u2018000s Performance Share Plan 24,706 \u2013 5,273 3,094 16,339 3,683 Restricted Share Plan 16,198 26,796 1,911 749 40,334 \u2013 Full Potential Incentive Plan 27,879 2,386 2,560 \u2013 27,705 \u2013 Incentive Award Deferral Plan 5,359 111 96 2,963 2,411 \u2013 74,142 29,293 9,840 6,806 86,789 3,683 The weighted average share price at the date of exercise of options exercised during the year to December 31, 2022 was \u00a31.35 (2021: \u00a31.78). The Group recognised a share-based payment charge of \u20ac39 million for the year to December 31, 2022 (2021: \u20ac23 million). NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 30 Share-based payments The Group operates share-based payment schemes as part of the total remuneration package provided to employees. These schemes comprise both share option schemes where employees acquire shares at an option price and share award plans whereby shares are issued to employees at no cost, subject to the achievement by the Group of specified performance targets. a IAG Performance Share Plan The IAG Performance Share Plan (PSP) is granted to senior executives and managers of the Group who are most directly involved in shaping and delivering business success over the medium to long term. Since 2015, awards have been made as nil-cost options, with a two- year holding period following the three-year performance period, before options can be exercised. All awards since 2015 have three independent performance measures with equal weighting: Total Shareholder Return (TSR) relative to the STOXX Europe 600 Travel and Leisure Index (for 2020 awards) or MSCI European Transportation Index (for prior to 2020 awards), earnings per share, and Return on Invested Capital. b IAG Restricted Share Plan During 2021, the Group revised its approach to long-term incentives, replacing the existing PSP with a Restricted Share Plan (RSP) proposal under the new Executive Share Plan approved by shareholders in June 2021. The RSP was introduced to increase the alignment of both interests and outcomes between the Group\u2019s senior management and shareholders through the build-up and maintenance of senior management shareholdings and an increased focus on the long-term, sustainable performance of the Group. Awards have been made as nil-cost options, with a two-year holding period following the three-year performance period, before options vest. There are no performance measures associated with the awards, although approval at the end of the vesting period will be at the discretion of the Remuneration Committee, considering the Group\u2019s overall performance, including financial and non-financial performance measures over the course of the vesting period, as well as any material risk or regulatory failures identified. c IAG Full Potential Incentive Plan During 2021, the Group launched the new Full Potential Incentive Plan (FPIP), which is granted to key individuals involved in the delivery of a series of transformation projects that will enable the Group to deliver business success over the medium to long term. The awards have been made as nil-cost options, vesting in 2025 and dependent on stretch performance targets for 2024 and the approval of the Board. d IAG Incentive Award Deferral Plan The IAG Incentive Award Deferral Plan (IADP) is granted to qualifying employees based on performance and service tests. It will be awarded when an incentive award is triggered subject to the employee remaining in employment with the Group for three years after the grant date. The relevant population will receive 50 per cent of their incentive award up front in cash, and the remaining 50 per cent in shares after three years through the IADP. e Share-based payment schemes summary Outstanding at January 1, 2022 Granted number Lapsed number Vested number Outstanding at December 31, 2022 Exercisable December 31, 2022 \u2018000s \u2018000s \u2018000s \u2018000s \u2018000s \u2018000s Performance Share Plan 24,706 \u2013 5,273 3,094 16,339 3,683 Restricted Share Plan 16,198 26,796 1,911 749 40,334 \u2013 Full Potential Incentive Plan 27,879 2,386 2,560 \u2013 27,705 \u2013 Incentive Award Deferral Plan 5,359 111 96 2,963 2,411 \u2013 74,142 29,293 9,840 6,806 86,789 3,683 The weighted average share price at the date of exercise of options exercised during the year to December 31, 2022 was \u00a31.35 (2021: \u00a31.78). The Group recognised a share-based payment charge of \u20ac39 million for the year to December 31, 2022 (2021: \u20ac23 million). 31 Other reserves and non-controlling interests For the year to December 31, 2022 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Capital reserves 6 Total other reserves Non- controlling interest January 1, 2022 (94) 24 (65) 62 (2,467) 867 (1,673) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net profit: Fuel and oil costs (1,115) \u2013 \u2013 \u2013 \u2013 \u2013 (1,115) \u2013 Currency differences (90) \u2013 \u2013 \u2013 \u2013 \u2013 (90) \u2013 Finance costs 10 \u2013 \u2013 \u2013 \u2013 \u2013 10 \u2013 Discontinuance of hedge accounting (22) \u2013 \u2013 \u2013 \u2013 \u2013 (22) \u2013 Ineffectiveness recognised in other non-operating costs (16) \u2013 \u2013 \u2013 \u2013 \u2013 (16) \u2013 Net change in fair value of cash flow hedges 1,472 \u2013 \u2013 \u2013 \u2013 \u2013 1,472 \u2013 Net change in fair value of other equity investments 2 \u2013 \u2013 \u2013 \u2013 \u2013 2 \u2013 Net change in fair value of cost of hedging \u2013 (115) \u2013 \u2013 \u2013 \u2013 (115) \u2013 Cost of hedging reclassified and reported in net profit \u2013 38 \u2013 \u2013 \u2013 \u2013 38 \u2013 Fair value movements on liabilities attributable to credit risk changes (6) \u2013 \u2013 \u2013 \u2013 \u2013 (6) \u2013 Currency translation differences \u2013 \u2013 (53) \u2013 \u2013 \u2013 (53) \u2013 Hedges reclassified and reported in property, plant and equipment (51) (14) \u2013 \u2013 \u2013 \u2013 (65) \u2013 Hedges reclassified and reported in sales in advance of carriage 35 1 \u2013 \u2013 \u2013 \u2013 36 \u2013 Hedges reclassified and reported in inventory (58) \u2013 \u2013 \u2013 \u2013 \u2013 (58) \u2013 Redemption of convertible bond \u2013 \u2013 \u2013 (62) \u2013 \u2013 (62) \u2013 December 31, 2022 67 (66) (118) \u2013 (2,467) 867 (1,717) 6 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Redeemed capital reserve 6 Total other reserves Non- controlling interest January 1, 2021 (867) 38 (53) 62 (2,467) 867 (2,420) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net loss: Passenger revenue 18 \u2013 \u2013 \u2013 \u2013 \u2013 18 \u2013 Fuel and oil costs (45) \u2013 \u2013 \u2013 \u2013 \u2013 (45) \u2013 Currency differences (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) \u2013 Finance costs 23 \u2013 \u2013 \u2013 \u2013 \u2013 23 \u2013 Discontinuance of hedge accounting (62) \u2013 \u2013 \u2013 \u2013 \u2013 (62) \u2013 Net change in fair value of cash flow hedges 848 \u2013 \u2013 \u2013 \u2013 \u2013 848 \u2013 Net change in fair value of cost of hedging \u2013 10 \u2013 \u2013 \u2013 \u2013 10 \u2013 Cost of hedging reclassified and reported in net profit \u2013 (12) \u2013 \u2013 \u2013 \u2013 (12) \u2013 Fair value movements on liabilities attributable to credit risk changes (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Currency translation differences \u2013 \u2013 (12) \u2013 \u2013 \u2013 (12) \u2013 Hedges reclassified and reported in property, plant and equipment 21 (12) \u2013 \u2013 \u2013 \u2013 9 \u2013 December 31, 2021 (94) 24 (65) 62 (2,467) 867 (1,673) 6 1 The unrealised gains and losses reserve records fair value changes on equity investments and the portion of the amounts on hedging instruments in cash flow hedges that are determined to be effective hedges. The amounts at December 31, 2022 that relate to the fair value changes on equity instruments and to the cash flow hedge reserve were \u20ac11 million credit and \u20ac56 million credit, respectively. 2 The cost of hedging reserve records, amongst others, changes on the time value of options. 3 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and investments accounted for under the equity method into the Group\u2019s reporting currency of euros. The movement through this reserve is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate. 4 At December 31, 2021 the equity portion of convertible bond reserve represented the equity portion of the \u20ac500 million fixed rate 0.625 per cent convertible bond that matured in 2022. During 2022 the Group redeemed the \u20ac500 million convertible bond with no conversion into ordinary shares. On redemption, an amount of \u20ac62 million was transferred to Retained earnings. 5 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves). 6 Capital reserves include a Redeemed capital reserve of \u20ac70 million (2021: \u20ac70 million) associated with the decrease in share capital relating to cancelled shares and a Share capital reduction reserve of \u20ac797 million (2021: \u20ac797 million) associated with a reduction in the nominal value of the Company\u2019s share capital (note 29). NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 31 Other reserves and non-controlling interests continued Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Redeemed capital reserve 6 Total other reserves Non- controlling interest January 1, 2021 (867) 38 (53) 62 (2,467) 867 (2,420) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net loss: Passenger revenue 18 \u2013 \u2013 \u2013 \u2013 \u2013 18 \u2013 Fuel and oil costs (45) \u2013 \u2013 \u2013 \u2013 \u2013 (45) \u2013 Currency differences (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) \u2013 Finance costs 23 \u2013 \u2013 \u2013 \u2013 \u2013 23 \u2013 Discontinuance of hedge accounting (62) \u2013 \u2013 \u2013 \u2013 \u2013 (62) \u2013 Net change in fair value of cash flow hedges 848 \u2013 \u2013 \u2013 \u2013 \u2013 848 \u2013 Net change in fair value of cost of hedging \u2013 10 \u2013 \u2013 \u2013 \u2013 10 \u2013 Cost of hedging reclassified and reported in net profit \u2013 (12) \u2013 \u2013 \u2013 \u2013 (12) \u2013 Fair value movements on liabilities attributable to credit risk changes (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Currency translation differences \u2013 \u2013 (12) \u2013 \u2013 \u2013 (12) \u2013 Hedges reclassified and reported in property, plant and equipment 21 (12) \u2013 \u2013 \u2013 \u2013 9 \u2013 December 31, 2021 (94) 24 (65) 62 (2,467) 867 (1,673) 6 1 The unrealised gains and losses reserve records fair value changes on equity investments and the portion of the amounts on hedging instruments in cash flow hedges that are determined to be effective hedges. The amounts at December 31, 2022 that relate to the fair value changes on equity instruments and to the cash flow hedge reserve were \u20ac11 million credit and \u20ac56 million credit, respectively. 2 The cost of hedging reserve records, amongst others, changes on the time value of options. 3 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and investments accounted for under the equity method into the Group\u2019s reporting currency of euros. The movement through this reserve is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate. 4 At December 31, 2021 the equity portion of convertible bond reserve represented the equity portion of the \u20ac500 million fixed rate 0.625 per cent convertible bond that matured in 2022. During 2022 the Group redeemed the \u20ac500 million convertible bond with no conversion into ordinary shares. On redemption, an amount of \u20ac62 million was transferred to Retained earnings. 5 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves). 6 Capital reserves include a Redeemed capital reserve of \u20ac70 million (2021: \u20ac70 million) associated with the decrease in share capital relating to cancelled shares and a Share capital reduction reserve of \u20ac797 million (2021: \u20ac797 million) associated with a reduction in the nominal value of the Company\u2019s share capital (note 29). 32 Employee benefit obligations The Group operates a variety of post-employment benefit arrangements, covering both defined contribution and defined benefit schemes. The Group also has a scheme for flight crew who meet certain conditions and therefore have the option of being placed on reserve and retaining their employment relationship until reaching the statutory retirement age, or taking early retirement (note 26). Defined contribution schemes The Group operates a number of defined contribution schemes for its employees. Costs recognised in respect of defined contribution pension plans in Spain, UK and Ireland for the year to December 31, 2022 were \u20ac251 million (2021: \u20ac200 million). Defined benefit schemes The principal funded defined benefit pension schemes within the Group are the Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS), both of which are in the UK and are closed to new members. APS has been closed to new members since 1984, but remains open to future accrual. The benefits provided under APS are based on final average pensionable pay and, for the majority of members, are subject to inflationary increases in payment. NAPS has been closed to new members since 2003 and closed to future accrual since 2018. Following closure, members\u2019 deferred pensions are increased annually by inflation up to five per cent per annum (measured using the Government\u2019s annual Pension Increase (Review) Orders, which since 2011 have been based on CPI). APS and NAPS are governed by separate Trustee Boards. Although APS and NAPS have separate Trustee Boards, certain aspects of the business of the two schemes are common. APS and NAPS have developed certain joint working groups that are attended by the Trustee Board members of each scheme although each Trustee Board reaches its decisions independently. There are sub committees which are separately responsible for the governance, operation and investments of each scheme. British Airways Pension Trustees Limited holds the assets of both schemes on behalf of their respective Trustees. Triennially, the Trustees of APS and NAPS undertake actuarial valuations, which are subsequently agreed with British Airways to determine the cash contributions and any deficit payment plans through to the next valuation date, as well as ensuring that the schemes have sufficient funds available to meet future benefit payments to members. These actuarial valuations are prepared using the principles set out in UK Pension legislation. This differs from the IAS 19 \u2018Employee benefits\u2019 valuation, which is used for deriving the Income statement and Balance sheet positions and uses a best-estimate approach overall. The different purpose and principles lead to different assumptions being used, and therefore a different estimate for the liabilities and funding levels. During 2022, the triennial valuations, as at March 31, 2021, were finalised for APS and NAPS which resulted in a technical surplus of \u20ac343 million (\u00a3295 million) for APS and a technical deficit of \u20ac1,887 million (\u00a31,650 million) for NAPS. The actuarial valuations performed for APS and NAPS are different to the valuation performed as at December 31, 2022 under IAS 19 \u2018Employee Benefits\u2019 mainly due to timing differences of the measurement dates and to the specific scheme assumptions in the actuarial valuation performed as at March 31, 2021 compared with IAS 19 requirements used in the accounting valuation assumptions as at the reporting date. The triennial actuarial valuation of neither APS and NAPS is updated outside of the triennial valuations, making comparability between the scheme liabilities applying the principles set out in the UK Pension legislation and the requirements of IAS 19 not possible. The principal difference relates to the discount rate applied, which under the triennial actuarial valuation, aligns with a prudent estimate of the future investment returns on the assets of the respective schemes, whereas, under IAS 19, the rates are based on high quality corporate bond yields, regardless of how the assets are invested. The triennial valuation as at March 31, 2021 for NAPS supersedes the previous agreements reached in 2020 and 2021 between British Airways and the Trustee of NAPS relating to the deferral of deficit contributions. The deferred deficit contributions have been incorporated into the deficit payment plan agreed as part of the triennial valuation as at March 31, 2021. As part of the triennial valuation as at March 31, 2021 for NAPS, British Airways has agreed to provide certain property assets as security, which will remain in place until September 30, 2028. Other plans British Airways also operates post-retirement schemes in a number of jurisdictions outside of the UK. The principal scheme is the British Airways Plc Pension Plan (USA) based in the United States and referred to as the \u2018US Plan\u2019. The US Plan is considered to be a defined benefit scheme and is closed to new members and to future accrual. The majority of British Airways\u2019 other plans are fully funded, but there are also a number of unfunded plans, for which the Group meets the benefit payment obligations as they fall due. In addition, Aer Lingus operates certain defined benefit plans, both funded and unfunded. Risk associated with the defined benefit schemes The defined benefit schemes expose the Group to a range of risks, with the following being the most significant: \u2022 asset volatility risk - the scheme obligations are calculated using a discount rate set with reference to high quality corporate bond yields. If scheme assets underperform this yield, this will reduce the surplus / increase the deficit, depending on the scheme. Certain of the schemes hold a significant proportion of equities, which are expected to outperform corporate bonds in the long term while creating volatility and risk in the short term; \u2022 longevity risk \u2013 the majority of the scheme obligations are to provide benefits over the life of the scheme members. An increase in life expectancy will result in a corresponding increase in the defined benefit obligation; \u2022 interest rate risk - a decrease in interest rates will increase plan liabilities, although this will be partially offset by an increase in the value of certain of the scheme assets; \u2022 inflation risk \u2013 a significant proportion of the scheme obligations are linked to inflation, such that any increase in inflation will cause an increase in the obligations. While certain of the scheme assets are indexed to inflation, any expected increase in the scheme assets from inflation would be disproportionately lower than the increase in the scheme obligations; and \u2022 currency risk \u2013 a number of scheme assets are denominated in currencies other than the pound sterling. Weakening of those currencies, or strengthening of the pound sterling, in the long term, will have the effect of reducing the value of scheme assets. a Cash payments and funding arrangements Cash payments in respect to pension obligations comprise normal employer contributions by the Group and deficit contributions based on the agreed deficit payment plan with NAPS. Total payments for the year to December 31, 2022 net of service costs made by the Group were \u20ac20 million (2021: \u20ac38 million) being the employer contributions of \u20ac22 million (2021: \u20ac41 million) less the current service cost of \u20ac2 million (2021: \u20ac3 million) (note 32b,c). Future funding arrangements Pension contributions for APS and NAPS were determined by actuarial valuations made at March 31, 2021, using assumptions and methodologies agreed between the Group and Trustee of each scheme. In total, the Group expects to pay \u20ac1 million in employer contributions to APS and NAPS in 2023. The following graph provides the undiscounted benefit payments to be made by the Trustees of APS and NAPS over the remaining expected duration of the schemes: Projected benefit payments from the reporting date (\u20ac million, unaudited) The amounts and timing of these projected benefit payments are subject to the aforementioned risks to the schemes. Deficit contributions At the date of the actuarial valuation, the actuarial deficit of NAPS amounted to \u20ac1,887 million. In order to address the deficit in the scheme, the Group has also committed to deficit contribution payments through to June 30, 2023, amounting to approximately \u20ac58 million per year, increasing by \u20ac58 million each year up to June 30, 2026 and subsequently capped at \u20ac257 million per year through to May 31, 2032. The deficit contribution plan includes an over-funding protection mechanism, based on the triennial valuation methodology for measuring the deficit, whereby deficit contributions are suspended if the funding position reaches 100 per cent, with a mechanism for contributions to resume if the contribution level subsequently falls below 100 per cent, or until such point as the scheme funding level reaches 100 per cent. During the year ended and as at December 31, 2022, given the funding level of the scheme, the NAPS funding position exceeded 100 per cent and accordingly deficit contributions were suspended. At December 31, 2022, the valuation of the funding level incorporates significant forward-looking assumptions, such that the Group currently does not expect to make further deficit contributions. Given the long-term nature of the NAPS scheme, these assumptions are subject to uncertainty and there can be no guarantee that deficit contributions will not resume in the future or that additional deficit contributions will not need to be incorporated into future triennial actuarial valuations. At December 31, 2022, had the over-funding protection mechanism not been applied, then the asset ceiling adjustment (as detailed in note 32c) would have been \u20ac661 million higher. At December 31, 2022, the Group is committed to the following undiscounted deficit payments, which are deductible for tax purposes at the statutory rate of tax: NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 32 Employee benefit obligations continued Risk associated with the defined benefit schemes The defined benefit schemes expose the Group to a range of risks, with the following being the most significant: \u2022 asset volatility risk - the scheme obligations are calculated using a discount rate set with reference to high quality corporate bond yields. If scheme assets underperform this yield, this will reduce the surplus / increase the deficit, depending on the scheme. Certain of the schemes hold a significant proportion of equities, which are expected to outperform corporate bonds in the long term while creating volatility and risk in the short term; \u2022 longevity risk \u2013 the majority of the scheme obligations are to provide benefits over the life of the scheme members. An increase in life expectancy will result in a corresponding increase in the defined benefit obligation; \u2022 interest rate risk - a decrease in interest rates will increase plan liabilities, although this will be partially offset by an increase in the value of certain of the scheme assets; \u2022 inflation risk \u2013 a significant proportion of the scheme obligations are linked to inflation, such that any increase in inflation will cause an increase in the obligations. While certain of the scheme assets are indexed to inflation, any expected increase in the scheme assets from inflation would be disproportionately lower than the increase in the scheme obligations; and \u2022 currency risk \u2013 a number of scheme assets are denominated in currencies other than the pound sterling. Weakening of those currencies, or strengthening of the pound sterling, in the long term, will have the effect of reducing the value of scheme assets. a Cash payments and funding arrangements Cash payments in respect to pension obligations comprise normal employer contributions by the Group and deficit contributions based on the agreed deficit payment plan with NAPS. Total payments for the year to December 31, 2022 net of service costs made by the Group were \u20ac20 million (2021: \u20ac38 million) being the employer contributions of \u20ac22 million (2021: \u20ac41 million) less the current service cost of \u20ac2 million (2021: \u20ac3 million) (note 32b,c). Future funding arrangements Pension contributions for APS and NAPS were determined by actuarial valuations made at March 31, 2021, using assumptions and methodologies agreed between the Group and Trustee of each scheme. In total, the Group expects to pay \u20ac1 million in employer contributions to APS and NAPS in 2023. The following graph provides the undiscounted benefit payments to be made by the Trustees of APS and NAPS over the remaining expected duration of the schemes: Projected benefit payments from the reporting date (\u20ac million, unaudited) The amounts and timing of these projected benefit payments are subject to the aforementioned risks to the schemes. Deficit contributions At the date of the actuarial valuation, the actuarial deficit of NAPS amounted to \u20ac1,887 million. In order to address the deficit in the scheme, the Group has also committed to deficit contribution payments through to June 30, 2023, amounting to approximately \u20ac58 million per year, increasing by \u20ac58 million each year up to June 30, 2026 and subsequently capped at \u20ac257 million per year through to May 31, 2032. The deficit contribution plan includes an over-funding protection mechanism, based on the triennial valuation methodology for measuring the deficit, whereby deficit contributions are suspended if the funding position reaches 100 per cent, with a mechanism for contributions to resume if the contribution level subsequently falls below 100 per cent, or until such point as the scheme funding level reaches 100 per cent. During the year ended and as at December 31, 2022, given the funding level of the scheme, the NAPS funding position exceeded 100 per cent and accordingly deficit contributions were suspended. At December 31, 2022, the valuation of the funding level incorporates significant forward-looking assumptions, such that the Group currently does not expect to make further deficit contributions. Given the long-term nature of the NAPS scheme, these assumptions are subject to uncertainty and there can be no guarantee that deficit contributions will not resume in the future or that additional deficit contributions will not need to be incorporated into future triennial actuarial valuations. At December 31, 2022, had the over-funding protection mechanism not been applied, then the asset ceiling adjustment (as detailed in note 32c) would have been \u20ac661 million higher. At December 31, 2022, the Group is committed to the following undiscounted deficit payments, which are deductible for tax purposes at the statutory rate of tax: \u20ac million NAPS 1 Other schemes Within 12 months \u2013 49 1-2 years \u2013 44 2-5 years \u2013 44 Greater than 5 years \u2013 \u2013 Total expected deficit payments \u2013 137 1 Committed deficit contributions for NAPS are stated after the effect of the over-funding protection mechanism. Deficit payments in respect of local arrangements outside of the UK have been determined in accordance with local practice. Under the triennial valuation of NAPS as at March 31, 2021, in the period up to December 31, 2023, no dividend payment is permitted from British Airways to IAG. In the period from January 1 to December 31, 2024, any dividends paid by British Airways will be matched by contributions to NAPS of 50 per cent of the value of dividends paid. In the period from January 1 to September 30, 2025, any dividend payment from British Airways to IAG that exceeds 50 per cent of the pre-exceptional profit after tax in each financial year will require additional payments to be made to NAPS if the scheme is not at least 100 per cent funded. All dividend restrictions cease from October 1, 2025, onwards. British Airways must maintain a minimum cash level of \u20ac1,829 million (\u00a31,600 million) as at the date of the declaration of any dividends as well as immediately following the payment of any dividends to IAG and the associated matching contributions to NAPS. The amount of any deficit contributions and dividend matching contributions in a single financial year is limited to \u20ac343 million (\u00a3300 million). b Employee benefit scheme amounts recognised in the financial statements i Amounts recognised on the Balance sheet 2022 \u20ac million APS NAPS Other Total Scheme assets at fair value 1 6,283 17,029 356 23,668 Present value of scheme liabilities 1 (6,052) (13,692) (548) (20,292) Net pension asset/(liability) 231 3,337 (192) 3,376 Effect of the asset ceiling 2 (80) (1,168) \u2013 (1,248) Other employee benefit obligations \u2013 \u2013 (11) (11) December 31, 2022 151 2,169 (203) 2,117 Represented by: Employee benefit asset 2,334 Employee benefit obligation (217) Net employee benefit asset 3 2,117 2021 \u20ac million APS NAPS Other Total Scheme assets at fair value 1 8,869 25,055 446 34,370 Present value of scheme liabilities 1 (8,333) (22,583) (706) (31,622) Net pension asset/(liability) 536 2,472 (260) 2,748 Effect of the asset ceiling 2 (186) (1,061) \u2013 (1,247) Other employee benefit obligations \u2013 \u2013 (11) (11) December 31, 2021 350 1,411 (271) 1,490 Represented by: Employee benefit asset 1,775 Employee benefit obligation (285) Net employee benefit obligation 3 1,490 1 Includes Additional Voluntary Contributions (AVCs), which the Trustees hold as assets to secure additional benefits on a defined contribution basis for those members who elect to make such AVCs. At December 31, 2022, such assets were \u20ac320 million (2021: \u20ac391 million) with a corresponding amount recorded in the scheme liabilities. 2 APS and NAPS have an accounting surplus under IAS 19, which would be available to the Group as a refund upon wind up of the scheme. This refund is restricted due to withholding taxes that would be payable by the Trustee arising on both the net pension asset and the future contractual minimum funding requirements. 3 The net deferred tax asset recognised on the net employee benefit asset (2021: asset) was \u20ac54 million at December 31, 2022 (2021: \u20ac62 million). The defined benefit obligation includes \u20ac21 million (2021: \u20ac25 million) arising from unfunded plans. ii Amounts recognised in the Income statement Pension costs charged to operating result are: \u20ac million 2022 2021 Defined benefit plans: Current service cost 2 3 Administrative expenses 19 29 21 32 Defined contribution plans 251 200 Pension costs recorded as employee costs 272 232 \u20ac million 2022 2021 Interest income on scheme assets (633) (432) Interest expense on scheme liabilities 584 425 Interest expense on asset ceiling 23 9 Net financing (credit)/charge relating to pensions (26) 2 iii Amounts recognised in the Statement of other comprehensive income \u20ac million 2022 2021 Return on plan assets excluding interest income 9,360 (2,495) Remeasurement of plan liabilities from changes in financial assumptions 1 (10,476) 95 Remeasurement of plan liabilities from changes in demographic assumptions 1 (202) (49) Remeasurement of experience losses 627 427 Remeasurement of the APS and NAPS asset ceilings 14 419 Exchange movements 6 (14) Pension remeasurements charged to Other comprehensive income (671) (1,617) Deferred tax arising on pension remeasurements 9 217 Pension remeasurements charged to Other comprehensive income, net of tax (662) (1,400) 1 The prior year figures include a reclassification between remeasurements of plan liabilities from changes in financial assumptions to remeasurement of plan liabilities from changes in demographic assumptions to align with the current year presentation. There is no change in the total pension remeasurements charged to Other comprehensive income. c Fair value of scheme assets i Investment strategies For both APS and NAPS, the Trustee has ultimate responsibility for decision making on investments matters, including the asset-liability matching strategy. The latter is a form of investing designed to match the movement in pension plan assets with the movement in the projected benefit obligation over time. The Trustees\u2019 investment committee adopts an annual business plan which sets out investment objectives and work required to support achievement of these objectives. The committee also deals with the monitoring of performance and activities, including work on developing the strategic benchmark to improve the risk return profile of the scheme where possible, as well as having a trigger-based dynamic governance process to be able to take advantage of opportunities as they arise. The investment committee reviews the existing investment restrictions, performance benchmarks and targets, as well as continuing to develop the de- risking and liability hedging portfolio. Both schemes use derivative instruments for investment purposes and to manage exposures to financial risks, such as interest rate, foreign exchange, longevity and liquidity risks arising in the normal course of business. Exposure to interest rate risk is managed through the use of Inflation-Linked Swap contracts. Foreign exchange forward contracts are entered into to mitigate the risk of currency fluctuations. Longevity risk is managed through the use of buy-in insurance contracts, asset swaps and longevity swaps. Along with existing contracts with Rothesay Life (as detailed in note 32c(iii)), APS is 90 per cent protected against all longevity risk and fully protected in relation to all pensions that were already being paid as at March 31, 2018. It is also more than 90 per cent protected against interest rates and inflation (on a Retail Price Index basis). The strategic benchmark for asset allocations differentiates between \u2018return seeking assets\u2019 and \u2018liability matching assets\u2019 depending on the maturity of each scheme. At December 31, 2022, the benchmark for NAPS was 31 per cent (2021: 37 per cent) in return seeking assets and 69 per cent (2021: 63 per cent) in liability matching investments. Bandwidths are set around these strategic benchmarks that allow for tactical asset allocation decisions, providing parameters for the investment committee and their investment managers to work within. APS no longer has a \u2018strategic benchmark\u2019 as instead, APS now runs off its liquidation portfolio to a liability matching portfolio of bonds and cash. The actual asset allocation for APS at December 31, 2022 was 1 per cent (2021: 1 per cent) in return seeking assets and 99 per cent (2021: 99 per cent) in liability matching investments. NAPS uses Liability Driven Investments (LDIs) to effectively hedge volatility in the scheme liabilities. This is achieved through direct bond holdings as opposed to the use of derivatives and as such leverage is low. Accordingly, as at December 31, 2022, NAPS has not been required to raise additional cash or liquidate existing assets in order to fund derivative positions. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 32 Employee benefit obligations continued ii Amounts recognised in the Income statement Pension costs charged to operating result are: \u20ac million 2022 2021 Defined benefit plans: Current service cost 2 3 Administrative expenses 19 29 21 32 Defined contribution plans 251 200 Pension costs recorded as employee costs 272 232 \u20ac million 2022 2021 Interest income on scheme assets (633) (432) Interest expense on scheme liabilities 584 425 Interest expense on asset ceiling 23 9 Net financing (credit)/charge relating to pensions (26) 2 iii Amounts recognised in the Statement of other comprehensive income \u20ac million 2022 2021 Return on plan assets excluding interest income 9,360 (2,495) Remeasurement of plan liabilities from changes in financial assumptions 1 (10,476) 95 Remeasurement of plan liabilities from changes in demographic assumptions 1 (202) (49) Remeasurement of experience losses 627 427 Remeasurement of the APS and NAPS asset ceilings 14 419 Exchange movements 6 (14) Pension remeasurements charged to Other comprehensive income (671) (1,617) Deferred tax arising on pension remeasurements 9 217 Pension remeasurements charged to Other comprehensive income, net of tax (662) (1,400) 1 The prior year figures include a reclassification between remeasurements of plan liabilities from changes in financial assumptions to remeasurement of plan liabilities from changes in demographic assumptions to align with the current year presentation. There is no change in the total pension remeasurements charged to Other comprehensive income. c Fair value of scheme assets i Investment strategies For both APS and NAPS, the Trustee has ultimate responsibility for decision making on investments matters, including the asset-liability matching strategy. The latter is a form of investing designed to match the movement in pension plan assets with the movement in the projected benefit obligation over time. The Trustees\u2019 investment committee adopts an annual business plan which sets out investment objectives and work required to support achievement of these objectives. The committee also deals with the monitoring of performance and activities, including work on developing the strategic benchmark to improve the risk return profile of the scheme where possible, as well as having a trigger-based dynamic governance process to be able to take advantage of opportunities as they arise. The investment committee reviews the existing investment restrictions, performance benchmarks and targets, as well as continuing to develop the de- risking and liability hedging portfolio. Both schemes use derivative instruments for investment purposes and to manage exposures to financial risks, such as interest rate, foreign exchange, longevity and liquidity risks arising in the normal course of business. Exposure to interest rate risk is managed through the use of Inflation-Linked Swap contracts. Foreign exchange forward contracts are entered into to mitigate the risk of currency fluctuations. Longevity risk is managed through the use of buy-in insurance contracts, asset swaps and longevity swaps. Along with existing contracts with Rothesay Life (as detailed in note 32c(iii)), APS is 90 per cent protected against all longevity risk and fully protected in relation to all pensions that were already being paid as at March 31, 2018. It is also more than 90 per cent protected against interest rates and inflation (on a Retail Price Index basis). The strategic benchmark for asset allocations differentiates between \u2018return seeking assets\u2019 and \u2018liability matching assets\u2019 depending on the maturity of each scheme. At December 31, 2022, the benchmark for NAPS was 31 per cent (2021: 37 per cent) in return seeking assets and 69 per cent (2021: 63 per cent) in liability matching investments. Bandwidths are set around these strategic benchmarks that allow for tactical asset allocation decisions, providing parameters for the investment committee and their investment managers to work within. APS no longer has a \u2018strategic benchmark\u2019 as instead, APS now runs off its liquidation portfolio to a liability matching portfolio of bonds and cash. The actual asset allocation for APS at December 31, 2022 was 1 per cent (2021: 1 per cent) in return seeking assets and 99 per cent (2021: 99 per cent) in liability matching investments. NAPS uses Liability Driven Investments (LDIs) to effectively hedge volatility in the scheme liabilities. This is achieved through direct bond holdings as opposed to the use of derivatives and as such leverage is low. Accordingly, as at December 31, 2022, NAPS has not been required to raise additional cash or liquidate existing assets in order to fund derivative positions. ii Movement in scheme assets A reconciliation of the opening and closing balances of the fair value of scheme assets is set out below: \u20ac million 2022 2021 January 1 34,370 31,185 Interest income 633 432 Administrative expenses (13) (21) Return on plan assets excluding interest income (9,360) 2,495 Employer contributions 1 22 41 Employee contributions 6 13 Benefits paid (1,301) (1,930) Exchange movements (689) 2,155 December 31 23,668 34,370 1 Includes employer contributions to APS of \u20ac1 million (2021: \u20ac1 million) and to NAPS of \u20acnil (2021: \u20acnil) of which deficit-funding payments represented \u20acnil for APS (2021: \u20acnil) and \u20acnil for NAPS (2021: \u20acnil). iii Composition of scheme assets Scheme assets held by the Group at December 31 comprise: 2022 \u20ac million APS NAPS Other Total 2021 Return seeking investments Listed equities \u2013 UK 8 125 6 139 224 Listed equities \u2013 Rest of world 1 883 163 1,047 4,441 Private equities 38 1,518 10 1,566 1,643 Properties 2 2,124 16 2,142 2,481 Alternative investments 41 1,837 3 1,881 1,925 90 6,487 198 6,775 10,714 Liability matching investments Government issued fixed bonds 790 4,390 99 5,279 10,681 Government issued index-linked bonds 860 7,225 8 8,093 8,511 Asset and longevity swaps 1 1,114 \u2013 \u2013 1,114 1,716 Insurance contract 1 3,356 \u2013 36 3,392 4,662 6,120 11,615 143 17,878 25,570 Other Cash and cash equivalents 117 563 4 684 1,139 Derivative financial instruments (47) (1,650) 9 (1,688) (3,135) Other investments 3 14 2 19 82 73 (1,073) 15 (985) (1,914) Total scheme assets 6,283 17,029 356 23,668 34,370 1 The prior year scheme asset balances split between Asset and longevity swaps and Insurance contracts have been updated to reflect the current year presentation. There is no change in total scheme assets. The fair values of the Group\u2019s scheme assets, which are not derived from quoted prices on active markets, are determined depending on the nature of the inputs used in determining the fair values (see note 28b for further details) and using the following methods and assumptions: \u2022 private equities are valued at fair value based on the most recent transaction price or third-party net asset, revenue or earnings-based valuations that generally result in the use of significant unobservable inputs. The dates of these valuations typically precede the reporting date and have been adjusted for any cash movements between the date of the valuation and the reporting date. Typically, the valuation approach and inputs for these investments are not updated through to the reporting date unless there are indications of significant market movements. \u2022 properties are valued based on an analysis of recent market transactions supported by market knowledge derived from third-party professional valuers that generally result in the use of significant unobservable inputs. \u2022 alternative investments fair values, which predominantly include holdings in investment and infrastructure funds are determined based on the most recent available valuations applying the Net Asset Value methodology and issued by fund administrators or investment managers and adjusted for any cash movements having occurred from the date of the valuation to the reporting date. The dates of these valuations typically precede the reporting date and have been adjusted for any cash movements between the date of the valuation and the reporting date. Typically, the valuation approach and inputs for these investments are not updated through to the reporting date unless there are indications of significant market movements. \u2022 other investments predominantly includes: interest receivable on bonds; dividends from listed and private equities that have been declared but not received at the balance sheet date; receivables from the sale of assets for which the proceeds have not been collected at the balance sheet date; and payables for the purchase of assets which have not been settled at the balance sheet date. \u2022 asset and longevity swaps - APS has a contract with Rothesay Life, entered into in 2010 and extended in 2013, which covers 25 per cent (2021: 25 per cent) of the pensioner liabilities for an agreed list of members. Under the contract, to reduce the risk of long-term longevity risk, Rothesay Life makes benefit payments monthly in respect of the agreed list of members in return for the contractual return receivable on a portfolio of assets (made up of quoted government debt) held by the scheme and the contractual payments made by APS to Rothesay Life on the longevity swaps. The Group holds the portfolio of assets at their fair value, with the government debt held at their quoted market price and the swaps accounted for at their estimated discounted future cash flows. During 2011, APS entered into a longevity swap with Rothesay Life, which covers an additional 21 per cent (2021: 21 per cent) of the pensioner liabilities for the same agreed list of members as the 2010 contract. Under the longevity swap, to reduce the risk of long-term longevity risk, APS makes a fixed payment to Rothesay Life each month reflecting the prevailing mortality assumptions at the inception of the contract, and Rothesay Life make a monthly payment to APS reflecting the actual monthly benefit payments to members. The cash flows are settled net each month. If pensioners live longer than expected at inception of the longevity swap, Rothesay Life will make payments to the scheme to offset the additional cost of paying pensioners and if pensioners do not live as long as expected, then the scheme will make payments to Rothesay Life. The Group holds the longevity swap at fair value, determined at the estimated discounted future cash flows. \u2022 insurance contract - During 2018 the Trustee of APS secured a buy-in contract with Legal & General. The buy-in contract covers all members in receipt of pensions from APS at March 31, 2018, excluding dependent children, receiving a pension at that date and members in receipt of equivalent pension only benefits, who were alive on October 1, 2018. Benefits coming into payment for retirements after March 31, 2018 are not covered. The contract covers benefits payable from October 1, 2018 onwards. The policy covers approximately 60 per cent of all benefits APS expects to pay out in future. iv Effect of the asset ceiling In measuring the valuation of the net defined benefit asset for each scheme, the Group limits such measurement to the lower of the surplus in each scheme and the respective asset ceiling. The asset ceiling represents the present value of the economic benefits available in the form of a refund or a reduction in future contributions after they are paid into the plan. The Group has determined that the recoverability of such surpluses, including minimum funding requirements, will be subject to withholding taxes in the UK, payable by the Trustee, of 35 per cent. The future committed NAPS deficit contributions, as detailed in note 32a, are treated as minimum funding requirements under IAS 19 and are not recognised as part of the scheme assets or liabilities. The Group has determined that upon the wind up of the scheme, that if the scheme is in surplus, including the incorporation of the minimum funding requirements, then the surplus will be available as a refund or a reduction in future contributions after they are paid into the scheme. The recovery of such amounts are subject to UK withholding tax payable by the Trustee. In measuring the recoverability of the surplus for each scheme, the Group limits such measurement to the lower of the surplus in each scheme and the respective asset ceiling. The asset ceiling represents the present value of the economic benefits available upon wind up of the scheme, less the application of withholding taxes in the UK, payable by the Trustee, at 35 per cent. A reconciliation of the effect of the asset ceiling used in calculating the IAS 19 irrecoverable surplus in APS and NAPS is set out below: \u20ac million 2022 2021 January 1 1,247 761 Interest expense 23 9 Remeasurements 14 419 Exchange movements (36) 58 December 31 1,248 1,247 d Present value of scheme liabilities i Movement in scheme liabilities A reconciliation of the opening and closing balances of the present value of the defined benefit obligations is set out below: \u20ac million 2022 2021 January 1 31,622 30,556 Current service cost 2 3 Interest expense 584 425 Remeasurements - financial assumptions 1, 2 (10,476) 95 Remeasurements - demographic assumptions 2 (202) (49) Remeasurements of experience losses 627 427 Benefits paid (1,301) (1,930) Employee contributions 6 13 Exchange movements (570) 2,082 December 31 20,292 31,622 1 Included in the remeasurements from financial assumptions is an amount of \u20ac10,299 million (2021: reduction of \u20ac1,866 million) that reduces the scheme liabilities relating to changes in the discount rates and \u20ac177 million (2021: increase of \u20ac1,961 million) that reduces the scheme liabilities relating to changes in inflation rates. 2 The prior year figures include a reclassification between remeasurements of plan liabilities from changes in financial assumptions to remeasurement of plan liabilities from changes in demographic assumptions to align with the current year presentation. There is no change in total scheme liabilities. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 32 Employee benefit obligations continued During 2011, APS entered into a longevity swap with Rothesay Life, which covers an additional 21 per cent (2021: 21 per cent) of the pensioner liabilities for the same agreed list of members as the 2010 contract. Under the longevity swap, to reduce the risk of long-term longevity risk, APS makes a fixed payment to Rothesay Life each month reflecting the prevailing mortality assumptions at the inception of the contract, and Rothesay Life make a monthly payment to APS reflecting the actual monthly benefit payments to members. The cash flows are settled net each month. If pensioners live longer than expected at inception of the longevity swap, Rothesay Life will make payments to the scheme to offset the additional cost of paying pensioners and if pensioners do not live as long as expected, then the scheme will make payments to Rothesay Life. The Group holds the longevity swap at fair value, determined at the estimated discounted future cash flows. \u2022 insurance contract - During 2018 the Trustee of APS secured a buy-in contract with Legal & General. The buy-in contract covers all members in receipt of pensions from APS at March 31, 2018, excluding dependent children, receiving a pension at that date and members in receipt of equivalent pension only benefits, who were alive on October 1, 2018. Benefits coming into payment for retirements after March 31, 2018 are not covered. The contract covers benefits payable from October 1, 2018 onwards. The policy covers approximately 60 per cent of all benefits APS expects to pay out in future. iv Effect of the asset ceiling In measuring the valuation of the net defined benefit asset for each scheme, the Group limits such measurement to the lower of the surplus in each scheme and the respective asset ceiling. The asset ceiling represents the present value of the economic benefits available in the form of a refund or a reduction in future contributions after they are paid into the plan. The Group has determined that the recoverability of such surpluses, including minimum funding requirements, will be subject to withholding taxes in the UK, payable by the Trustee, of 35 per cent. The future committed NAPS deficit contributions, as detailed in note 32a, are treated as minimum funding requirements under IAS 19 and are not recognised as part of the scheme assets or liabilities. The Group has determined that upon the wind up of the scheme, that if the scheme is in surplus, including the incorporation of the minimum funding requirements, then the surplus will be available as a refund or a reduction in future contributions after they are paid into the scheme. The recovery of such amounts are subject to UK withholding tax payable by the Trustee. In measuring the recoverability of the surplus for each scheme, the Group limits such measurement to the lower of the surplus in each scheme and the respective asset ceiling. The asset ceiling represents the present value of the economic benefits available upon wind up of the scheme, less the application of withholding taxes in the UK, payable by the Trustee, at 35 per cent. A reconciliation of the effect of the asset ceiling used in calculating the IAS 19 irrecoverable surplus in APS and NAPS is set out below: \u20ac million 2022 2021 January 1 1,247 761 Interest expense 23 9 Remeasurements 14 419 Exchange movements (36) 58 December 31 1,248 1,247 d Present value of scheme liabilities i Movement in scheme liabilities A reconciliation of the opening and closing balances of the present value of the defined benefit obligations is set out below: \u20ac million 2022 2021 January 1 31,622 30,556 Current service cost 2 3 Interest expense 584 425 Remeasurements - financial assumptions 1, 2 (10,476) 95 Remeasurements - demographic assumptions 2 (202) (49) Remeasurements of experience losses 627 427 Benefits paid (1,301) (1,930) Employee contributions 6 13 Exchange movements (570) 2,082 December 31 20,292 31,622 1 Included in the remeasurements from financial assumptions is an amount of \u20ac10,299 million (2021: reduction of \u20ac1,866 million) that reduces the scheme liabilities relating to changes in the discount rates and \u20ac177 million (2021: increase of \u20ac1,961 million) that reduces the scheme liabilities relating to changes in inflation rates. 2 The prior year figures include a reclassification between remeasurements of plan liabilities from changes in financial assumptions to remeasurement of plan liabilities from changes in demographic assumptions to align with the current year presentation. There is no change in total scheme liabilities. ii Scheme liability assumptions The principal assumptions used for the purposes of the IAS 19 valuations were as follows: 2022 2021 Per cent per annum APS NAPS Other schemes 4 APS NAPS Other schemes 4 Discount rate 1 4.85 4.80 0.8-7.2 1.80 1.90 0.3-6.5 Rate of increase in pensionable pay 2 3.40 \u2013 2.0-6.0 3.55 \u2013 2.0-6.0 Rate of increase of pensions in payment 3 3.40 2.80 0.3-3.0 3.55 2.85 2.0-3.0 RPI rate of inflation 3.40 3.20 2.2-3.1 3.55 3.30 1.8-2.5 CPI rate of inflation 2.80 2.80 2.0-2.6 2.95 2.85 1.8-2.5 1 Discount rate is determined by reference to the yield on high quality corporate bonds of currency and term consistent with the scheme liabilities. 2 Rate of increase in pensionable pay, which reflects inflationary increases, is assumed to be in line with increases in RPI. 3 It has been assumed that the rate of increase of pensions in payment, which reflects inflationary increases, will be in line with CPI for NAPS and RPI for APS as at December 31, 2022. 4 The rate of increase in healthcare costs for schemes based in the United States is based on medical trend rates of 6.25 per cent grading down to 5.00 per cent over five years (2021: 6.00 per cent to 5.00 per cent over five years). The current longevities underlying the values of the scheme liabilities were as follows: Mortality assumptions 2022 2021 Life expectancy at age 60 for a: \u2022 male currently aged 60 27.9 28.1 \u2022 male currently aged 40 29.1 29.9 \u2022 female currently aged 60 29.3 29.5 \u2022 female currently aged 40 31.5 31.9 For APS, the base mortality tables are based on the Agreed Valuation Basis (AVB) as agreed between British Airways and the trustees of APS. For NAPS, the base mortality tables are based on the most recent model published by the UK actuarial profession\u2019s Continuous Mortality Investigation (CMI), being their 2021 model. These standard mortality tables, for both APS and NAPS, incorporate adjustments specific to the demographics of scheme members, including a long-term improvement parameter of 1.00 per cent per annum (2021: 1.25 per cent). Allowance has been made with regard to the long-term uncertainty arising from the effects of COVID-19. For schemes in the United States, mortality rates were based on the MP-2021 mortality tables incorporating adjustments for the long-term impact COVID-19 is expected to have on mortality. At December 31, 2022, the weighted-average duration of the defined benefit obligation was 10 years for APS (2021: 12 years) and 15 years for NAPS (2021: 19 years). The weighted average duration of the defined benefit obligations was 3 to 19 years for other schemes (2021: 11 to 23 years). The weighted average duration represents a single figure for the average number of years over which the employee benefit liability discounted cash flows is extinguished and is highly dependent on movements in the aforementioned discount rates, such that with an increase in the discount rates experienced in 2022, the weighted-average duration for both schemes has reduced. iii Sensitivity analysis Reasonably possible changes at the reporting date to significant valuation assumptions, holding other assumptions constant, would have affected the present value of scheme liabilities by the amounts shown: Increase in scheme liabilities \u20ac million APS NAPS Other schemes Discount rate (decrease of 50 basis points) 1 286 983 34 Future pension growth (increase of 50 basis points) 1 252 949 5 Future mortality rate (one year increase in life expectancy) 286 354 24 1 Sensitivities smaller than those disclosed can be approximately interpolated from those sensitivities above. Although the analysis does not take into account the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown. 33 Contingent liabilities There are a number of legal and regulatory proceedings against the Group in a number of jurisdictions which at December 31, 2022, where they could be reliably estimated, amounted to \u20ac11 million (December 31, 2021: \u20ac22 million). The Group does not consider it probable that there will be an outflow of economic resources with regard to these proceedings and accordingly no provisions have been recorded. Contingent liabilities associated with income taxes, deferred taxes and indirect taxes are presented in note 10. 34 Government grants and assistance The Group has availed itself of government grants and assistance as follows: The Coronavirus Job Retention Scheme (CJRS) \u2013 recognised net within Employee costs The CJRS was implemented by the Government of the United Kingdom from March 1, 2020 to August 30, 2020, where those employees designated as being \u2018furloughed workers\u2019 were eligible to have 80 per cent of their wage costs paid up to a maximum of \u00a32,500 per month. From September 1, 2020 to September 30, 2020, the level of eligibility reduced to 70 per cent of wage costs and up to a maximum of \u00a32,197.50 per month. From October 1, 2020 to October 31, 2020, the level of eligibility reduced to 60 per cent of wage costs and up to a maximum of \u00a31,875 per month. Following the introduction of further lockdown restrictions in the United Kingdom in November 2020, the CJRS was extended from November 1, 2020 to November 30, 2020 and then further to March 31, 2021 and then further again to September 30, 2021 with the level of eligibility increased to 80 per cent of wage costs and a maximum of \u00a32,500 per month through to the end of June 2021. From July 1, 2021 the eligibility decreased down each month to 60 per cent of wage costs and a maximum of \u00a31,875 per month by September 30, 2021, at which time the CJRS ended. Such costs were paid by the Government to the Group in arrears. The Group was obliged to continue to pay the associated social security costs and employer pension contributions. The Temporary Wage Subsidy Scheme (TWSS) and the Employment Wage Subsidy Scheme (EWSS) \u2013 recognised net within Employee costs The TWSS was implemented by the government of Ireland from March 1, 2020 to August 30, 2020, where those employees designated as being furloughed workers were eligible to have 85 per cent of their wage costs paid up to a maximum of \u20ac410 per week. This scheme was replaced with the EWSS from September 1, 2020 and ran through to April, 2022. For those qualifying employees (earning less than \u20ac1,462 per week), the government reimbursed wage costs up to a maximum of \u20ac203 per week. Such costs were paid by the government to the Group in arrears. The total amount of the relief received under the CJRS, the TWSS and the EWSS by the Group during 2022 amounted to \u20ac11 million (2021: \u20ac286 million). Temporary Redundancy Plan (ERTE) \u2013 no recognition in the financial statements of the Group The ERTE was implemented by the government of Spain from March 1, 2020 and ran through to February 28, 2022. Under this plan, employment was temporarily suspended and those designated employees were paid directly by the government and there was no remittance made to the Group. The Group was obliged to continue to pay the associated social security costs. Had those designated employees not been temporarily suspended during 2022, the Group would have incurred further employee costs of \u20ac3 million (2021: \u20ac269 million). The Ireland Strategic Investment Fund (ISIF) \u2013 recognised within Long-term borrowings On December 23, 2020, Aer Lingus entered into a financing arrangement for \u20ac75 million. On March 27, 2021, Aer Lingus entered into a further financing arrangement to extend the total amount to \u20ac150 million. On March 4, 2022, Aer Lingus entered into a financing arrangement with ISIF, which subsequently extinguished the existing \u20ac150 million of facilities and replaced them with a \u20ac350 million facility that matures in March 2025. On December 13, 2022, Aer Lingus repaid \u20ac100 million of this financing arrangement with the amount repaid available to be redrawn through to March 2025. The facility is secured on specific landing rights. At December 31, 2022 \u20ac300 million of the facility remained undrawn. The UK Export Finance (UKEF) \u2013 recognised within Long-term borrowings On February 22, 2021, British Airways entered into a 5-year term loan Export Development Guarantee Facility of \u20ac2.3 billion (\u00a32.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The facility is unsecured. On November 1, 2021, British Airways entered into a further 5-year term loan Export Development Guarantee Facility of \u20ac1.1 billion (\u00a31.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The facility is unsecured. At December 31, 2022 the facility remained undrawn. NOTES TO THE ACCOUNTS CONTINUED For the year to December 31, 2022 34 Government grants and assistance The Group has availed itself of government grants and assistance as follows: The Coronavirus Job Retention Scheme (CJRS) \u2013 recognised net within Employee costs The CJRS was implemented by the Government of the United Kingdom from March 1, 2020 to August 30, 2020, where those employees designated as being \u2018furloughed workers\u2019 were eligible to have 80 per cent of their wage costs paid up to a maximum of \u00a32,500 per month. From September 1, 2020 to September 30, 2020, the level of eligibility reduced to 70 per cent of wage costs and up to a maximum of \u00a32,197.50 per month. From October 1, 2020 to October 31, 2020, the level of eligibility reduced to 60 per cent of wage costs and up to a maximum of \u00a31,875 per month. Following the introduction of further lockdown restrictions in the United Kingdom in November 2020, the CJRS was extended from November 1, 2020 to November 30, 2020 and then further to March 31, 2021 and then further again to September 30, 2021 with the level of eligibility increased to 80 per cent of wage costs and a maximum of \u00a32,500 per month through to the end of June 2021. From July 1, 2021 the eligibility decreased down each month to 60 per cent of wage costs and a maximum of \u00a31,875 per month by September 30, 2021, at which time the CJRS ended. Such costs were paid by the Government to the Group in arrears. The Group was obliged to continue to pay the associated social security costs and employer pension contributions. The Temporary Wage Subsidy Scheme (TWSS) and the Employment Wage Subsidy Scheme (EWSS) \u2013 recognised net within Employee costs The TWSS was implemented by the government of Ireland from March 1, 2020 to August 30, 2020, where those employees designated as being furloughed workers were eligible to have 85 per cent of their wage costs paid up to a maximum of \u20ac410 per week. This scheme was replaced with the EWSS from September 1, 2020 and ran through to April, 2022. For those qualifying employees (earning less than \u20ac1,462 per week), the government reimbursed wage costs up to a maximum of \u20ac203 per week. Such costs were paid by the government to the Group in arrears. The total amount of the relief received under the CJRS, the TWSS and the EWSS by the Group during 2022 amounted to \u20ac11 million (2021: \u20ac286 million). Temporary Redundancy Plan (ERTE) \u2013 no recognition in the financial statements of the Group The ERTE was implemented by the government of Spain from March 1, 2020 and ran through to February 28, 2022. Under this plan, employment was temporarily suspended and those designated employees were paid directly by the government and there was no remittance made to the Group. The Group was obliged to continue to pay the associated social security costs. Had those designated employees not been temporarily suspended during 2022, the Group would have incurred further employee costs of \u20ac3 million (2021: \u20ac269 million). The Ireland Strategic Investment Fund (ISIF) \u2013 recognised within Long-term borrowings On December 23, 2020, Aer Lingus entered into a financing arrangement for \u20ac75 million. On March 27, 2021, Aer Lingus entered into a further financing arrangement to extend the total amount to \u20ac150 million. On March 4, 2022, Aer Lingus entered into a financing arrangement with ISIF, which subsequently extinguished the existing \u20ac150 million of facilities and replaced them with a \u20ac350 million facility that matures in March 2025. On December 13, 2022, Aer Lingus repaid \u20ac100 million of this financing arrangement with the amount repaid available to be redrawn through to March 2025. The facility is secured on specific landing rights. At December 31, 2022 \u20ac300 million of the facility remained undrawn. The UK Export Finance (UKEF) \u2013 recognised within Long-term borrowings On February 22, 2021, British Airways entered into a 5-year term loan Export Development Guarantee Facility of \u20ac2.3 billion (\u00a32.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The facility is unsecured. On November 1, 2021, British Airways entered into a further 5-year term loan Export Development Guarantee Facility of \u20ac1.1 billion (\u00a31.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The facility is unsecured. At December 31, 2022 the facility remained undrawn. 35 Related party transactions The following transactions took place with related parties for the financial years to December 31: \u20ac million 2022 2021 Sales of goods and services Sales to associates 1 5 6 Sales to significant shareholders 2 141 16 Purchases of goods and services Purchases from associates 3 61 49 Purchases from significant shareholders 2 113 69 Receivables from related parties Amounts owed by associates 4 1 1 Amounts owed by significant shareholders 5 25 5 Payables to related parties Amounts owed to associates 6 \u2013 3 Amounts owed to significant shareholders 5 26 2 1 Sales to associates: Consisted primarily of sales for airline related services to Dunwoody Airline Services (Holding) Limited (Dunwoody) of \u20ac4 million (2021: \u20ac5 million) and \u20ac1 million (2021: \u20ac1 million) to Serpista, S.A. and Multiservicios Aeroportuarios. 2 Sales to and purchases from significant shareholders related to interline services with Qatar Airways. 3 Purchases from associates: Consisted primarily of \u20ac35 million of airport auxiliary services purchased from Multiservicios Aeroportuarios, S.A. (2021: \u20ac33 million), \u20ac14 million of handling services provided by Dunwoody (2021: \u20ac8 million) and \u20ac13 million of maintenance services received from Serpista, S.A. (2021: \u20ac8 million). 4 Amounts owed by associates: Consisted primarily of \u20ac1 million of services provided to Multiservicios Aeroportuarios, Serpista, Dunwoody and Empresa Hispano Cubana de Mantenimiento de Aeronaves, Ibeca, S.A. (2021: \u20ac1 million). 5 Amounts owed by and to significant shareholders related to Qatar Airways. 6 Amounts owed to associates: \u20acnil (2021: \u20ac3 million). During the year to December 31, 2022 British Airways met certain costs of administering its retirement benefit plans, including the provision of support services to the Trustees. Costs borne on behalf of the retirement benefit plans amounted to \u20ac2 million (2021: \u20ac6 million) in relation to the costs of the Pension Protection Fund levy. The Group has transactions with related parties that are conducted in the normal course of the airline business, which include the provision of airline and related services. All such transactions are carried out on an arm\u2019s length basis. During the course of 2022, the Group renewed its loyalty currency exchange agreement with Qatar Airways, where Avios could be exchanged for points within the Qatar Airways\u2019 loyalty programme, the Privilege Club. In addition, in renewing the agreement, IAG Loyalty licensed the Avios brand name for use within the Privilege Club. During the course of 2022, the Group provided a long-term shareholder loan of \u20ac12 million ($14 million) to LanzaJet, Inc., a company which specialises in the generation of Sustainable Aviation Fuels of which the Group has a 16.7 per cent equity interest, classified as an associate and presented within Investments accounted for using the equity method in the Balance sheet. For the year to December 31, 2022, the Group has not made any provision for expected credit loss arising relating to amounts owed by related parties (2021: \u20acnil). Significant shareholders In this instance, significant shareholders are those parties who have the power to participate in the financial and operating policy decisions of the Group, as a result of their shareholdings in the Group, but who do not have control over these policies. At December 31, 2022, the only significant shareholder of the Group was Qatar Airways. At December 31, 2022 the Group had cash deposit balances with shareholders holding a participation of between 3 to 5 per cent, of \u20acnil (2021: \u20acnil). Board of Directors and Management Committee remuneration Compensation received by the Group\u2019s Board of Directors and Management Committee, in 2022 and 2021 is as follows: Year to December 31 \u20ac million 2022 2021 Base salary, fees and benefits Board of Directors Short-term benefits 4 3 Share-based payments 1 \u2013 Management Committee Short-term benefits 15 11 Share-based payments 2 1 For the year to December 31, 2022 the Board of Directors includes remuneration for one Executive Director (December 31, 2021: one Executive Director). The Management Committee includes remuneration for 14 members (December 31, 2021: 14 members). The Company provides life insurance for the Executive Director and all members of the Management Committee. For the year to December 31, 2022 the Company's obligation was \u20ac38,000 (2021: \u20ac35,000). At December 31, 2022 the transfer value of accrued pensions covered under defined benefit pension obligation schemes, relating to the current members of the Management Committee totalled \u20ac5 million (2021: \u20ac9 million). No loan or credit transactions were outstanding with Directors or officers of the Group at December 31, 2022 (2021: \u20acnil). 36 Post balance sheet events On February 23, 2023, the Group entered into an agreement to acquire the remaining eighty per cent of the share capital of Air Europa Holdings that it had not previously owned. On successful completion of the transaction, 54,064,575 ordinary shares of the Company (which represented \u20ac100 million at the date of the agreement) will be transferred to and \u20ac100 million in cash will be paid to Globalia, with a further \u20ac100 million paid on both the first and second anniversary of completion. In addition, the Group has agreed to pay a break-fee to Globalia of \u20ac50 million should: (i) the relevant approvals, detailed below, not be forthcoming within 24 months of entering into the agreement; or (ii) the Group terminates the agreement at any time prior to completion. The acquisition is conditional on Globalia receiving approval from the syndicated banks that provide the loan agreements that are partially guaranteed by the Instituto de Cr\u00e9dito Oficial (ICO) and Sociedad Estatal de Participaciones Industriales (SEPI) in Spain. The acquisition is also subject to approval by relevant competition authorities. Until the completion of these approvals, the acquisition does not meet the recognition criteria under IFRS 3 Business combinations, and no accounting has been made for the transaction in these consolidated financial statements. The execution of the agreement has not impacted the fair value of the 20 per cent shareholding in Air Europa Holdings as detailed in note 19. The fair value of the non-controlling equity interest in Air Europa Holdings will be remeasured to reflect the transaction price upon successful completion of the transaction.", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-603": { "value": "1 Background and general information International Consolidated Airlines Group S.A. (hereinafter \u2018International Airlines Group\u2019, \u2018IAG\u2019 or the \u2018Group\u2019) is a leading European airline group, formed to hold the interests of airline and ancillary operations. IAG (hereinafter the \u2018Company\u2019) is a Spanish company registered in Madrid and was incorporated on December 17, 2009. The registered address of IAG is El Caser\u00edo, Zona industrial 2, Camino de La Mu\u00f1oza s/n, 28042, Madrid, Spain . On January 21, 2011 British Airways Plc and Iberia L\u00edneas A\u00e9reas de Espa\u00f1a S.A. Operadora (hereinafter \u2018British Airways\u2019 and \u2018Iberia\u2019 respectively) completed a merger transaction becoming the first two airlines of the Group. Vueling Airlines S.A. (\u2018Vueling\u2019) was acquired on April 26, 2013, and Aer Lingus Group Plc (\u2018Aer Lingus\u2019) on August 18, 2015. A list of the subsidiaries of the Group is included in the Group investments section. IAG shares are traded on the London Stock Exchange\u2019s main market for listed securities and also on the stock exchanges of Madrid, Barcelona, Bilbao and Valencia (the \u2018Spanish Stock Exchanges\u2019), through the Spanish Stock Exchanges Interconnection System (Mercado Continuo Espa\u00f1ol). ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-738": { "value": "International Consolidated Airlines Group S.A.", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-2": { "value": "S.A", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-739": { "value": "IAG", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-740": { "value": "is a leading European airline group, formed to hold the interests of airline and ancillary operations.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-741": { "value": "IAG ", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-1": { "value": "El Caser\u00edo, Zona industrial 2, Camino de La Mu\u00f1oza s/n, 28042, Madrid, Spain ", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-721": { "value": "
s/n, 28042, Madrid, Spain . On January 21, 2011 British Airways Plc and Iberia L\u00edneas A\u00e9reas de Espa\u00f1a S.A. Operadora (hereinafter \u2018British
", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-742": { "value": "Madrid", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-734": { "value": "Spain ", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-602": { "value": "2 Significant accounting policies Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards as endorsed by the European Union (IFRSs as endorsed by the EU). The consolidated financial statements are rounded to the nearest million unless otherwise stated. These financial statements have been prepared on a historical cost convention except for certain financial assets and liabilities, including the \u20ac825 million convertible bond due 2028, derivative financial instruments and other equity investments that are measured at fair value. The notes to the financial statements for the prior year include reclassifications that were made to conform to the current year presentation. The Group\u2019s financial statements for the year to December 31, 2022 were authorised for issue, and approved by the Board of Directors on February 23, 2023. Going concern At December 31, 2022, the Group had total liquidity of \u20ac13,999 million (December 31, 2021: total liquidity of \u20ac11,986 million), comprising cash, cash equivalents and interest-bearing deposits of \u20ac9,599 million, \u20ac3,284 million of committed and undrawn general facilities and a further \u20ac1,116 million of committed and undrawn aircraft specific facilities. At December 31, 2022, the Group has no financial covenants associated with its loans and borrowings. In its assessment of going concern, the Group has modelled two scenarios referred to below as the Base Case and the Downside Case over the period to June 30, 2024 (the \u2018going concern period\u2019). The tenor of the going concern period encapsulates the seasonality of the Group\u2019s operations. The Group\u2019s three-year business plan, used in the creation of the Base Case, was prepared for and approved by the Board in December 2022. The business plan takes into account the Board\u2019s and management\u2019s views on the anticipated continued recovery from the COVID-19 pandemic and the wider economic and geopolitical environments on the Group\u2019s businesses across the going concern period. The key inputs and assumptions underlying the Base Case include: \u2022 capacity recovery modelled by geographical region (and in certain regions, by key destinations) with capacity gradually increasing from 97 per cent in quarter 1 2023 (compared to the equivalent period in 2019) to pre-pandemic levels by the end of the going concern period; \u2022 passenger unit revenue per ASK is forecast to continue to remain above the levels obtained in 2019 throughout the going concern period, which is based on, amongst other assumptions, higher ticket prices to reflect both higher fuel prices and cost inflation; \u2022 the Group has assumed that the committed and undrawn general facilities of \u20ac3.3 billion will not be drawn over the going concern period. The availability of certain of these facilities reduces over time, with \u20ac3.2 billion being available to the Group at the end of the going concern period; \u2022 the Group has assumed that \u20ac1.0 billion of the committed and undrawn aircraft specific facilities of \u20ac1.1 billion would be available to be drawn over the going concern period if required, of which \u20ac0.6 billion, relating to the EETC financing structures and other specific asset securitised financing are expected to be utilised; \u2022 the Group has assumed that the \u20ac500 million bond that matures in July 2023 will not be refinanced; \u2022 of the capital commitments detailed in note 15, \u20ac4.4 billion is due to be paid over the going concern period; \u2022 in addition to the \u20ac0.6 billion of committed aircraft financing, the Group has forecast securing approximately 100 per cent, or \u20ac4.9 billion, of the aircraft financing required that is currently uncommitted, to align with the timing and payments for these aircraft deliveries. This loan to value assumption is consistent with the level of financing the Group has been able to achieve recently, including over the course of the COVID-19 pandemic to date; and \u2022 the acquisition of the remaining shares in Air Europa Holdings, that the Group does not currently own, shall receive the relevant approvals and complete during the going concern period. The Downside Case applies stress to the Base Case to model adverse commercial and operational impacts as the Group\u2019s capacity recovers over the going concern period, represented by: reduced levels of capacity operated in each month, including reductions of at least 25 per cent for three months during 2023 to reflect the risk of more severe operational disruption; reduced passenger unit revenue per ASK reflective of general pricing pressure due to the current economic backdrop; and increased operational costs reflective of inflationary pressures. In the Downside Case, over the going concern period capacity would be ten per cent down when compared to the Base Case. The Downside Case assumes that \u20ac350 million of the \u20ac3,284 million of available general credit facilities are required to be drawn. The Directors consider the Downside Case to be a severe but plausible scenario. While not incorporated in the Downside Case, the Group has modelled the impact of further deteriorations in capacity operated and yield, as well as increases in the price of jet fuel by 20 per cent and a reduction in the forecast loan to value to 80 per cent of the uncommitted financing, but has also considered further mitigating actions, such as reducing operating and capital expenditure and deferring currently forecast early repayments of loans and borrowings. The Group expects to be able to continue to secure financing for future aircraft deliveries and in addition has further potential mitigating actions, including asset disposals, it would pursue in the event of adverse liquidity experience. Having reviewed the Base Case, the Downside Case and additional sensitivities, the Directors have a reasonable expectation that the Group has sufficient liquidity to continue in operational existence over the going concern period and hence continue to adopt the going concern basis in preparing the consolidated financial statements for year to December 31, 2022. In adopting the going concern basis of accounting, the consolidated financial statements have been prepared without the inclusion of a material uncertainty, which has been removed since the Annual report and accounts 2021. The removal of the material uncertainty arises from the reduction in uncertainty over the going concern period due to both the continued recovery subsequent to the COVID-19 pandemic and the strength of the Group\u2019s liquidity at December 31, 2022. Consolidation The Group financial statements include the financial statements of the Company and its subsidiaries, each made up to December 31, together with the attributable share of results and reserves of associates and joint ventures, adjusted where appropriate to conform to the Group\u2019s accounting policies. Subsidiaries are consolidated from the date of their acquisition, which is the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group applies the acquisition method to account for business combinations. The consideration paid is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the Consolidated balance sheet. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, as at the acquisition date the acquirer\u2019s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the Income statement. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. All intragroup account balances, including intragroup profits, are eliminated in preparing the consolidated financial statements. Unconsolidated structured entities The Group regularly uses sale and leaseback transactions to finance the acquisition of aircraft. In certain instances the Group will undertake several such sale and leaseback transactions at once through Enhanced Equipment Trust Certificates (EETCs). Under each of these financing structures, a company or companies (the EETC Issuer) are established to facilitate such financing on behalf of a number of unrelated investors. In certain of these financing structures, additional special purpose vehicles (the Lessor SPV) are established to provide additional financing from a number of further unrelated investors to the EETC Issuer. The proceeds from the issuance of the EETCs by the EETC Issuer, and where relevant the proceeds obtained from the Lessor SPV, are then used to purchase aircraft solely from the Group. The Group will then enter into fixed rate lease arrangements (which meet the recognition criteria of Asset financed liabilities) with the EETC Issuer, or where relevant the Lessor SPV, with payments made by the Group to the EETC Issuer, or the Lessor SPV, distributed, through a trust, to the aforementioned unrelated investors. The main purpose of the trust structure is to enhance the credit-worthiness of the Group\u2019s debt obligations through certain bankruptcy protection provisions and liquidity facilities, and also to lower the Group\u2019s total borrowing cost. The EETC Issuer and the Lessor SPV are established solely with the purpose of providing the asset-backed financing and upon maturity of such financing are expected to have no further activity. The relevant activities of the EETC Issuer and the Lessor SPV are restricted to pre- established financing agreements and the retention of the title of the associated financed aircraft. Accordingly, the Group has determined that each EETC Issuer and the Lessor SPVs are structured entities. Under the contractual terms of the financing structures, the Group has no exposure to losses in these entities, does not own any of the share capital of the EETC Issuer or the Lessor SPV, does not have any representation on the respective boards and has no ability to influence decision making. In addition to the above, such financial transactions expose the Group to no further significant financial or economic risks, such as no variability over time in interest rates. In considering the aforementioned facts, management has concluded that the Group does not have access to variable returns from the EETC Issuers and Lessor SPVs because its involvement is limited to the payment of principal and interest under the arrangement and, therefore, it does not control the EETC Issuers or the Lessor SPVs and as such does not consolidate them. Further information as to the financial impact of these financial transactions is given in note 25. Segmental reporting Operating segments are reported in a manner consistent with how resource allocation decisions are made by the chief operating decision- maker. The chief operating decision-maker, who is responsible for resource allocation and assessing performance of the operating segments, has been identified as the IAG Management Committee. Foreign currency translation a Functional and presentation currency Items included in the financial statements of each of the Group\u2019s entities are measured using the functional currency, being the currency of the primary economic environment in which the entity operates. In particular, British Airways and IAG Loyalty have a functional currency of pound sterling. The Group\u2019s consolidated financial statements are presented in euros, which is the Group\u2019s presentation currency. b Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency using the rate of exchange prevailing on the date of the transaction. Monetary foreign currency balances are translated into the functional currency at the rates ruling at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement, except where hedge accounting is applied. Foreign exchange gains and losses arising on the retranslation of monetary assets and liabilities classified as non- current on the Balance sheet are recognised within Net currency retranslation (charges)/credits in the Income statement. All other gains and losses arising on the retranslation of monetary assets and liabilities are recognised in operating profit. c Group companies The net assets of foreign operations are translated into euros at the rate of exchange ruling at the balance sheet date. Profits and losses of such operations are translated into euros at average rates of exchange during the year. The resulting exchange differences are taken directly to a separate component of equity (Currency translation reserve) until all or part of the interest is sold, when the relevant portion of the cumulative exchange difference is recognised in the Income statement. Property, plant and equipment Property, plant and equipment are held at cost. The Group has a policy of not revaluing property, plant and equipment. Depreciation is calculated to write off the cost less the estimated residual value on a straight-line basis, over the economic life of the asset. Residual values, where applicable, are reviewed annually against prevailing market values for equivalently aged assets and depreciation rates adjusted accordingly on a prospective basis. a Fleet All aircraft are stated at the fair value of the consideration given after taking account of manufacturers\u2019 credits. Fleet assets owned or right of use (\u2018ROU\u2019) assets are disaggregated into separate components and depreciated at rates calculated to write down the cost of each component to the estimated residual value at the end of their planned operational lives (which is the shorter of their useful life or lease term) on a straight-line basis. Depreciation rates are specific to aircraft type, based on the Group\u2019s fleet plans, within overall parameters of 23 years and up to 5 per cent residual value for shorthaul aircraft and between 23 and 29 years (depending on aircraft) and up to 5 per cent residual value for longhaul aircraft. Right of use assets are depreciated over the shorter of the lease term and the aforementioned depreciation rates. Where the lease includes a purchase option, at the discretion of the Group, where it is expected that the purchase option will be exercised, the associated right of use asset is depreciated using the aforementioned depreciation rates to reflect the reasonably certain life of the aircraft, irrespective of the lease term. Cabin interior modifications, including those required for brand changes and relaunches, are depreciated over the lower of 12 years and the remaining economic life of the aircraft, whether owned or leased. Aircraft and engine spares acquired on the introduction or expansion of a fleet, as well as rotable spares purchased separately, are carried as property, plant and equipment and generally depreciated in line with the fleet to which they relate. Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life between major overhaul. All other replacement spares and other costs relating to maintenance of fleet assets (including maintenance provided under \u2018pay-as-you-go\u2019 contracts) are charged to the Income statement on consumption or as incurred respectively. b Other property, plant and equipment Provision is made for the depreciation of all property, plant and equipment. Property, with the exception of freehold land, is depreciated over its expected useful life over periods not exceeding 50 years, or in the case of leasehold properties, over the duration of the lease if shorter, on a straight-line basis. Equipment is depreciated over periods ranging from four to 20 years. c Capitalisation of interest on progress payments Interest costs attributed to progress payments made on account of aircraft and other qualifying assets under construction are capitalised and added to the cost of the asset concerned. All other borrowing costs are recognised in the Income statement in the year in which they are incurred. d Liquidated damages Liquidated damages are recognised in the Income statement only to the extent that they relate to compensation for loss of income and/or incremental operating costs, when a contractual entitlement exists, the amounts can be reliably measured and the receipt is virtually certain. When liquidated damages do not relate to compensation for loss of income and/or incremental operating costs, the amounts are recorded as a reduction in the cost of the associated aircraft in the Balance sheet and depreciated over the life of the aircraft. e Leases The Group leases various aircraft, properties, equipment and other assets. The lease terms of these assets are consistent with the determined useful economic life of similar assets within property, plant and equipment. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified tangible asset for a period in exchange for consideration. The Group has elected not to apply such consideration where the contract relates to an intangible asset, such as for landing rights or IT software, in which case payments associated with the contract are expensed as incurred. Leases are recognised as a ROU asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. Right of use assets At the lease commencement date a ROU asset is measured at cost comprising the following: the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date less any lease incentives received; and any initial direct costs. In addition, at the lease commencement date a ROU asset will incorporate unavoidable restoration costs, such as the removal of airline- specific branding and configuration, to return the asset to its original condition, for which a corresponding amount is recognised withi n Provisions. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If ownership o f the ROU asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Lease liabilities Lease liabilities are initially measured at their present value, which includes the following lease payments: fixed payments (including in- substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the Group under residual value guarantees; the exercise price of a purchase option if the Group is reasonably certain to exercise that option; payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option; and payments to be made under reasonably certain extension options. Aircraft lease payments are discounted using the interest rate implicit in the lease. The interest rate implicit in the lease is the discount rate that, at the inception of the lease, causes the aggregate present value of the minimum lease payments and the unguaranteed residual value to be equal to the fair value of the leased asset and any initial indirect costs of the lessor. For aircraft leases these inputs are either observable in the contract or readily available from external market data. The initial direct costs of the lessor are considered to be immaterial. If the interest rate implicit in the lease cannot be determined, the Group entity\u2019s incremental borrowing rate is used. Each lease payment is allocated between the principal and finance cost. The finance cost is charged to the Income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification of the lease contract, a re-assessment of the lease term (specifically in regard to assumptions regarding extension and termination options) and changes in variable lease payments that are based on an index or a rate. Amounts excluded from recognition as lease liabilities The Group has elected not to recognise ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less and those leases of low-value assets. Payments associated with short-term leases and leases of low-value assets are recognised on a straight line basis as an expense in the Income statement. Short-term leases are leases with a lease term of 12 months or less, that do not contain a purchase option. Low-value assets comprise IT equipment and small items of office furniture. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is re-assessed and adjusted against the ROU asset. Extension options are included in a number of aircraft, property and equipment leases across the Group and are reflected in the lease payments where the Group is reasonably certain that it will exercise the option. The Group is also exposed to variable lease payments based on usage or revenue generated over a defined period. Such variable lease payments are expensed to the Income statement as incurred. Sale and leaseback transactions The Group regularly uses sale and lease transactions to finance the acquisition of aircraft. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. The principal criterion for assessing whether a sale has occurred or not, is whether the contract contains the option, at the discretion of the Group, to repurchase the aircraft over the lease term; with the existence of such a repurchase option resulting in a sale having been deemed not to have occurred; and if no such repurchase option exists, then a sale is deemed to have occurred. The following defines the accounting for such transactions: \u2022 if a sale is determined to have occurred, then the associated asset is de-recognised and a ROU asset and lease liability are recognised. The ROU asset recognised is based on the proportion of the previous carrying amount of the asset that is retained. Any gain or loss is restricted to the amount that relates to the rights that have been transferred to the counter-party to the transaction; and \u2022 where a sale is determined to have not occurred, the asset is retained on the balance sheet within Property, plant and equipment and an Asset financed liability recognised equal to the financing proceeds. Cash flow presentation \u2013 lease liabilities Lease payments are presented as follows in the Consolidated cash flow statement: \u2022 where the proceeds received from sale and leaseback transactions represent the fair value of the asset being transferred, the total proceeds are presented within cash flows from investing activities. Where the proceeds received from sale and leaseback transactions exceed the fair value of the asset being transferred, the element of the proceeds equivalent to the fair value of the asset being transferred is presented within investing activities and the amount of proceeds in excess of the fair value is presented within financing activities; \u2022 the repayments of the principal element of lease liabilities are presented within cash flows from financing activities; \u2022 the payments of the interest element of lease liabilities are included within cash flows from operating activities; and \u2022 the payments arising from variable elements of a lease, short-term leases and low-value assets are presented within cash flows from operating activities. Cash flow presentation \u2013 asset financed liabilities Payments associated with asset financed liabilities are presented as follows in the Consolidated cash flow statement: \u2022 the proceeds received asset financed liabilities are presented within cash flows from financing activities; \u2022 the repayments of the principal element of asset financed liabilities are presented within cash flows from financing activities; and \u2022 the payments of the interest element of asset financed liabilities are included within cash flows from operating activities. COVID-19 related rent concessions On May 28, 2020, the IASB issued \u2018COVID-19 Related Rent Concessions \u2013 amendments to IFRS 16 Leases\u2019. The EU subsequently adopted the amendment on October 9, 2020. The amendment provides a practical expedient for lessees, up to June 30, 2021, not to assess whether a COVID-19 related rent concession is a lease modification. On March 31, 2021, the IASB extended the period for the application of these concessions through to June 30, 2022. The EU subsequently adopted the amendment on August 31, 2021. The extended amendment is effective for annual reporting periods commencing on or after April 1, 2021 and the Group has elected to adopt this amendment for the year to December 31, 2022. Lessor accounting From time to time the Group will lease, to third parties, specific assets, including certain property, plant and equipment. On inception of the lease, the Group determines whether each lease is a finance lease or an operating lease. In order to make this determination, the Group assesses whether the lease transfers substantially all of the risks and rewards of ownership to the lessee. Factors in making this assessment include, but are not limited to, whether the lease term is for the major part of the economic life of the underlying asset and whether the underlying asset transfers to the lessee or the lessee has the option to purchase the underlying asset at the end of the lease. Where substantially all of the risks and rewards of ownership have been transferred, then the lease is recorded as a finance lease, otherwise it is recorded as an operating lease. Intangible assets a Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration paid over the net fair value of the identifiable assets and liabilities of the acquiree. Where the net fair value of the identifiable assets and liabilities of the acquiree is in excess of the consideration paid, a gain on bargain purchase is recognised immediately in the Income statement. For the purpose of assessing impairment, goodwill is grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is tested for impairment annually and whenever indicators exist that the carrying value may not be recoverable. b Brands Brands arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. Long established brands that are expected to be used indefinitely are not amortised but assessed annually for impairment. c Customer loyalty programmes Customer loyalty programmes arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. A customer loyalty programme with an expected useful life is amortised over the expected remaining useful life. Established customer loyalty programmes that are expected to be used indefinitely are not amortised but assessed annually for impairment. d Landing rights Landing rights acquired in a business combination are recognised at fair value at the acquisition date. Landing rights acquired from other airlines are capitalised at cost. Capitalised landing rights based outside of the UK and the EU are amortised on a straight-line basis over a period not exceeding 20 years. Capitalised landing rights based within the UK and the EU are not amortised, as regulations provide that these landing rights are perpetual. e Contract-based intangibles Contract based intangibles acquired in a business combination are recognised initially at fair value at the acquisition date and amortised over the remaining life of the contract. f Software The cost to purchase or develop computer software that is separable from an item of related hardware is capitalised separately and amortised on a straight-line basis generally over a period not exceeding five years, with certain specific software development s amortised over a period of up to ten years. g Emissions allowances Where an operating company purchases emissions allowances these amounts are recognised at cost and recorded within Intangible assets. As an operating company emits CO 2 equivalent and builds up an obligation to the relevant authorities, a provision is recognised. Emissions allowances recorded within Intangible assets are not revalued or amortised but are tested for impairment whenever indicators exist that the carrying value may not be recoverable. For those obligations arising for which the operating company has purchased emission allowances to offset the emissions, the provision is recognised at the weighted average cost of the intangible asset. For those obligations arising for which the operating company has not yet purchased emission allowances to offset the emissions, the provision is recognised at the market price of the allowances required at the reporting date. As the provision is recognised, a corresponding amount is recorded in the Income statement within Fuel, oil costs and emission charges. The Group\u2019s emissions obligation, recognised as a separate liability, is extinguished when the associated emission certificates are surrendered, which is typically within 12 months of the reporting date. From time to time the Group enters into sale and repurchase transactions for specified emission allowances. Such transactions do not meet the recognition criteria of a sale under IFRS 15 and accordingly the asset is retained on the balance sheet within Intangible assets and an Other financing liability recognised equal to the proceeds received. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the value by which the asset\u2019s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less cost to sell and value-in-use. Non-financial assets other than goodwill that were subject to an impairment are reviewed for possible reversal of the impairment at each reporting date. a Property, plant and equipment, including Right of use assets The carrying value is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable and the cumulative impairment losses are shown as a reduction in the carrying value of property, plant and equipment. b Intangible assets Intangible assets are held at cost and are either amortised on a straight-line basis over their economic life, or they are deemed to have an indefinite economic life and are not amortised. Indefinite life intangible assets are tested annually for impairment or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. Investments in associates and joint ventures An associate is an undertaking in which the Group has a long-term equity interest and over which it has the power to exercise significant influence. Where the Group cannot exercise control over an entity in which it has a shareholding greater than 51 per cent, the equity interest is treated as an associated undertaking. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates and joint ventures are accounted for using the equity method, and initially recognised at cost. The Group\u2019s interest in the net assets of associates and joint ventures is included in Investments accounted for using the equity method in the Balance sheet and its interest in their results is included in the Income statement, below operating result. The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership. Financial instruments a Financial assets and liabilities Financial assets and financial liabilities are classified, upon initial recognition, as measured at amortised cost, at fair value through other comprehensive income (OCI), or fair value through profit or loss. Financial assets and financial liabilities are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets and financial liabilities. The classification of financial assets and financial liabilities at initial recognition depends on the financial assets\u2019 and financial liabilities\u2019 contractual cash flow characteristics and the Group\u2019s business model for managing them. In order for a financial asset and financial liability to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. A financial asset or financial liability that is not SPPI is classified and measured at fair value through profit or loss. This assessment is performed on an instrument by instrument basis. The Group\u2019s business model for managing financial assets and financial liabilities establishes how it manages its financial assets and financial liabilities in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets and financial liabilities classified and measured at amortised c ost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets and financial liabilities classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Long term borrowings Long-term borrowings are recorded at amortised cost, including lease liabilities which contain interest rate swaps that are closely related to the underlying financing and as such are not accounted for as an embedded derivative. Convertible debt Convertible bonds are classified as either compound financial instruments or hybrid financial instruments depending on the settlement alternatives upon redemption. Where the bondholders exercise their equity conversion options and the Group has no alternative other than to settle the convertible bonds into a fixed number of ordinary shares of the Company, then the bonds are classified as a compound financial instrument. Where the Group has an alternative settlement mechanism to the convertible bonds that permits settlement in cash, then the convertible instrument is classified as a hybrid financial instrument. Convertible bonds that are classified as compound financial instruments consist of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt, and is subsequently recorded on an amortised cost basis using the effective interest method until extinguished on conversion or maturity of the bonds, and is recognised within Long-term borrowings. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in the equity portion of the convertible bond in Other reserves and is not subsequently remeasured. The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this value and the interest paid is added to the carrying amount of the liability. Convertible bonds that are classified as hybrid financial instruments consist only of a liability component recognised within Long-term borrowings. At the date of issue, the entirety of the convertible bonds is accounted for at fair value with subsequent fair value gains or losses recorded within Long-term borrowings. The fair value of such financial instruments is obtained from their respective quoted prices in active markets, with the portion of the change in fair value attributable to changes in the credit risk of the convertible bonds recognised in Other comprehensive income and the portion of the change in fair value attributable to market conditions recognised in the Income statement within Finance costs. Issue costs associated with compound financial instruments are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying values at the date of issue. The portion relating to the equity component is charged directly against equity. Issue costs associated with hybrid financial instruments are expensed immediately to the Income statement. Other equity investments Other equity investments are non-derivative financial assets including listed and unlisted investments, excluding interests in associates and joint ventures. On initial recognition, these equity investments are irrevocably designated as measured at fair value through Other comprehensive income. They are subsequently measured at fair value, with changes in fair value recognised in Other comprehensive income with no recycling of these gains and losses to the Income statement when the investment is sold or a change in the structure of transaction changes its classification as an Other equity instrument. Dividends received on other equity investments are recognised in the Income statement. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Interest-bearing deposits Interest-bearing deposits, principally comprising funds held with banks and other financial institutions with contractual cash flows that are SPPI, and held in order to collect contractual cash flows, are carried at amortised cost using the effective interest method. Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation. b Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits with any qualifying financial institution repayable on demand or maturing within three months of the date of acquisition and which are subject to an insignificant risk of change in value. c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is en tered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. When a derivative is designated as a hedging instrument and that instrument expires, is sold or is restructured, if the initial forecast transaction is still expected to occur, any cumulative gain or loss remains in the cash flow hedge reserve until such time as the hedge item impacts the Income statement. Where there is a change in the risk management objective, then hedge accounting is discontinued and the associated cumulative gain or loss arising prior to the change in risk management objective remains in the cash flow hedge reserve until such time as the underlying hedged item impacts the Income statement had the risk management objective continued to have been met. Where a forecast transaction which was previously determined to be highly probable and for which hedge accounting applied, is no longer expected to occur, hedge accounting is discontinued and the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified to the Income statement. Each operating company enters into foreign currency derivative contracts, that are not designated in a hedge relationship, in order to mitigate foreign exchange movements on financial liabilities designated in currencies other than the presentational currency of each operating company, including but not limited to, lease liabilities. Movements in the fair value of such derivatives are recognised in the Income statement in the period in which they occur and are presented within Net currency retranslation charges. Exchange gains and losses on monetary investments are taken to the Income statement unless the item has been designated and is assessed as an effective hedging instrument. Exchange gains and losses on non-monetary investments are reflected in equity. d Cash flow hedges Changes in the fair value of derivative financial instruments designated as in a hedge relationship of a highly probable expected future transaction are assessed for effectiveness and accordingly recorded in the Cash flow hedge reserve within equity. Hedge effectiveness Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: (i) there is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument; (ii) the effect of credit risk does not dominate the value changes that result from that economic relationship; and (iii) the hedge ratio is aligned with the requirements of the Group\u2019s risk management strategy and in all instances is maintained at a ratio of 1:1. Sources of ineffectiveness include the following: \u2022 in hedges of fuel purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; \u2022 in hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; and \u2022 in hedges of interest rate payments, ineffectiveness may arise if there are differences in the critical terms between the interest rate derivative instrument and the underlying hedged item, or if there are changes in the credit risk of the Group or the derivative counterparty. Ineffectiveness is recorded within the Income statement as Realised/unrealised (losses)/gains on derivatives not qualifying for hedge accounting and presented within Other non-operating charges. Reclassification adjustments Gains and losses accumulated in the Cash flow hedge reserve within equity are reclassified from the Cash flow hedge reserve when the hedged item affects the Income statement as follows: \u2022 where the forecast hedged item results in the recognition of expenses within the Income statement (such as the purchase of jet fuel for which both fuel and the associated foreign currency derivatives are designated as the hedging instrument), the accumulated gains and losses recorded in both the cash flow hedge reserve and the cost of hedging reserve are reclassified and included in the Income statement within the same caption as the hedged item is presented. Such reclassification occurs in the same period as the hedged item is recognised in the Income statement; \u2022 where the forecast hedged item results in the recognition of a non-financial asset (such as the purchase of aircraft for which foreign currency derivatives are designated as the hedging instrument or where the purchase of jet fuel gives rise to the recognition of fuel inventory in storage facilities), or a non-financial liability (such as the sales in advance of carriage for which both foreign currency derivatives and non-financial derivative instruments are designated as the hedging instrument), the accumulated gains and losses recorded within both the cash flow hedge reserve and the cost of hedging reserve are included in the initial cost of the asset and liability, respectively. These gains or losses are recorded in the Income statement as the non-financial asset and the non-financial liability affects the Income statement (which for aircraft is through Depreciation over the expected life of the aircraft, for fuel inventory through Fuel, oil costs and emission charges and for sales in advance of carriage through Passenger revenue when the flight is flown); and \u2022 where the forecast hedged items results in the recognition of a financial asset or liability (such as variable rate debt for which interest rate swaps are designated as the hedging instrument), the accumulated gains and losses recorded within the cash flow hedge reserve are reclassified to Interest expense within the Income statement at the same time as the interest expense arises on the hedged item. Further information on the risk management activities of the Group is given in note 28d. e Interest rate benchmark reform In 2020 the Group adopted the amendments to IFRS 9 and IFRS 7 relating to the interest rate benchmark reform Phase 1, (\u2018Phase 1\u2019) and in 2021 the Group adopted the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to the interest rate benchmark reform Phase 2 (\u2018Phase 2\u2019). The Phase 1 amendments provide temporary relief from applying certain hedge accounting requirements to hedging relationships directly affected by Interbank Offered Rates (\u2018IBOR\u2019) reform. The reliefs have the effect that IBOR reform does not cause hedge accounting to terminate prior to contracts being amended. Where transition to an alternative benchmark rate has taken place, the Group ceases to apply the Phase 1 amendments and instead applies the Phase 2 amendments. Hedge accounting Where the Group continues to apply the Phase 1 amendments, the following reliefs are applied: \u2022 when considering the highly probable requirement, the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the Group\u2019s hedged long-term borrowings are based, do not change as a result of IBOR reform; \u2022 in assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the cash flows of the hedged long-term borrowings and the interest rate swaps that hedge them are based, are not altered by IBOR reform; and \u2022 the Group has not recycled the cash flow hedge reserve relating to the period after the IBOR reform is expected to take effect. When the Group ceases to apply the Phase 1 amendments, the Group amends its hedge designation to reflect changes which are required by IBOR reform, but only to make one or more of the following changes: \u2022 designating an alternative benchmark rate (contractually or non-contractually specified) as the hedged risk; \u2022 amending the description of the hedged item, including the description of the designated portion of the cash flows being hedged; or \u2022 amending the description of the hedging instrument. The associated hedge documentation is updated to reflect these changes in designation by the end of the reporting period in which the changes are made. Such amendments do not give rise to the hedge relationship being discontinued. When the Group transitions to an alternative benchmark rate, the accumulated amounts within the cash flow hedge reserve are determined to be based on the alternative benchmark rate and no reclassification adjustments are made from the cash flow hedge reserve to the Income statement. Long-term borrowings and lease liabilities Phase 2 of the amendments requires that, for financial instruments measured using amortised cost measurement, changes to the basis for determining the contractual cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest rate prospectively. No gain or loss is recognised upon transition to the new benchmark. The expedient is only applicable to direct changes that are required by interest rate benchmark reform. For lease liabilities where there is a change to the basis for determining the contractual cash flows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reflects the change in the interest rate where the change is required by IBOR reform. Further information on the management of and uncertainty arising from interest rate reform is given in note 27i. No amounts have been recorded in the current or prior periods as a result of these amendments. Employee benefit plans a Pension obligations The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior years. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior years. The benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. The discount rate is the yield at the balance sheet date on AA-rated corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. When the net obligation calculation results in an asset for the Group, the recognition of an asset is limited to the present value of any future refunds, net of the relevant taxes, from the plan or reductions in future contributions to the plan (\u2018the asset ceiling\u2019). The fair value of the plan assets is based on market price information and, in the case of quoted securities, is the published bid price. The fair value of insurance policies which exactly match the amount and timing of some or all benefits payable under the scheme are deemed to be the present value of the related obligations. Longevity swaps are measured at their fair value. Current service costs are recognised within employee costs in the year in which they arise. Past service costs are recognised in the event of a plan amendment or curtailment, or when the Group recognises related restructuring costs or severance obligations. The net interest is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest and other expenses related to the defined benefit plans are recognised in the Income statement. Remeasurements, comprising IAS 19 gains and losses, the effect of the asset ceiling (excluding interest) and the return on plan assets (excluding interest), are recognised immediately in Other comprehensive income. Remeasurements are not reclassified to the Income statement in subsequent periods. b Severance obligations Severance obligations are recognised when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises a provision for severance payments when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without realistic possibility of withdrawal, or providing severance payments as a result of an offer made to encourage voluntary redundancy. Other employee benefits are recognised when there is deemed to be a present obligation. Taxation Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the balance sheet date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: \u2022 where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; \u2022 in respect of taxable temporary differences associated with investments in subsidiaries or associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and \u2022 deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the Income statement. Inventories Inventories are valued at the lower of cost and net realisable value. Such cost is determined by the weighted average cost method. Inventories include mainly aircraft spare parts, repairable aircraft engine parts and fuel held in storage facilities. Share-based payments The Group operates a number of equity-settled, share-based payment plans, under which the Group awards equity instruments of the Group for services rendered by employees. The fair value of the share-based payment plans is measured at the date of grant using a valuation model provided by external specialists. The resulting cost, as adjusted for the expected and actual level of vesting of the plan, is charged to the Income statement over the period in which the options vest. At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management\u2019s best estimate of the achievement or otherwise of non-market conditions, and accordingly the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous balance sheet date is recognised in the Income statement with a corresponding entry in equity. Provisions Provisions are made when an obligation exists for a present liability in respect of a past event and where the amount of the obligation can be reliably estimated and where it is considered probable that an outflow of economic resources will be required to settle the obligation. Where it is not considered probable that there will be an outflow of economic resources required to settle the obligation, the Group does not recognise a provision, but discloses the matter as a contingent liability. The Group assesses whether each matter is probable of there being an outflow of economic resources to settle the obligation at each reporting date. Employee leaving indemnities and other employee provisions are recorded for flight crew who, meeting certain conditions, have the option of being placed on reserve or of taking early retirement. The Group is obligated to remunerate these employees until they reach the statutory retirement age. The calculation is performed by independent actuaries using the projected unit credit method. Other employee related provisions are recognised for direct expenditures of business reorganisation such as severance payments (restructuring provisions) where plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken at the balance sheet date. Restoration and handback provisions arising on inception of a lease are recognised as a provision with a corresponding amount recognised as part of the ROU asset. Any subsequent change in estimation relating to such costs are reflected in the ROU asset. Maintenance and handback provisions that occur through usage or through the passage of time are recognised as such activity occurs, with a corresponding expense recorded in the Income statement. Any subsequent change in estimation are recognised in the Income statement. The method for determining legal claims provisions is determined on a claim by claim basis. Where a claim includes a significant population of items, the weighted average provision is estimated by determining all potential outcomes and the probability of their occurrence. Where a claim relates to a single item, then the Group determines the associated provision by applying the most likely outcome giving consideration to alternative outcomes. Where an individual claim is significant, the disclosure of quantitative information is restricted to the extent that it does not prejudice the outcome of the claim. If the effect is material, expected future cash flows are discounted using a rate that reflects, where appropriate, the risks specific to the provision. Where discounting is used, the effect of unwinding the discount rate is recognised as a finance cost in the Income statement. Revenue recognition Passenger revenue The Group\u2019s revenue primarily derives from transportation services for both passengers and cargo. Revenue is recognised when the transportation service has been provided. Passenger tickets are generally paid for in advance of transportation and are recognised, net of discounts, as Deferred revenue on ticket sales in current liabilities until either the customer has flown or, for flexible tickets, when unused ticket revenue is recognised or the ticket expires unused. At the time of expected travel, revenue is recognised in relation to flexible tickets where a customer can reschedule the date of intended travel, that are not expected to be used, a term referred to as \u2018unused flexible tickets\u2019. This revenue is recognised based on the terms and conditions of the ticket and analysis of historical experience. For these unused flexible tickets, revenue is recognised only when the risk of a significant reversal of revenue is remote based on the terms and conditions of the ticket and analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. Where a flight is cancelled, the passenger is entitled to either compensation, a refund, changing to an alternative flight or the receipt of a voucher. Where compensation is issued to the customer, such payments are presented net within Passenger revenue against the original ticket purchased. Where the Group provides a refund to a customer, Deferred revenue on ticket sales is reduced and no amount is recorded within revenue. Where a voucher is issued it is retained within Deferred revenue on ticket sales until such time as it is redeemed for a flight or it expires, at which time it is recorded within Passenger revenue. The Group also recognises revenue by estimating the amount of vouchers that are not expected to be redeemed prior to expiry using analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. The amount of such revenue recognised is constrained, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Payments received in relation to certain ancillary services regarding passenger transportation, such as change fees, are not considered to be distinct from the performance obligation to provide the passenger flight. Payments relating to these ancillary services are recognised in Deferred revenue on ticket sales in current liabilities until the customer has flown. The Group considers whether it is an agent or a principal in relation to passenger transportation services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. The Group acts as an agent where (i) it collects various taxes, duties and fees assessed on the sale of tickets to passengers and remits these to the relevant taxing authorities; and (ii) where it provides interline services to airline partners outside of the Group. Commissions earned in relation to agency services are recognised as revenue when the underlying goods or services have been transferred to the customer. In all other instances, the Group considers it acts as the principal in relation to passenger transportation services. Cargo revenue The Group has identified a single performance obligation in relation to cargo services and the associated revenue is measured at its standalone selling price and recognised on satisfaction of the performance obligation, which occurs on the fulfilment of the transportation service. Other revenue The Group has identified several performance obligations in relation to services that give rise to revenue being recognised within Other revenue. These services, their performance obligations and associated revenue recognition include: \u2022 the provision of maintenance services and overhaul services for engines and airframes, where the Group is engaged to enhance an asset while the customer retains control of the asset. Accordingly, the performance obligations are satisfied, and revenue recognised, over time. The Group estimates the proportion of the contract completed at the reporting date and recognises revenue based on the percentage of completion of the contract; \u2022 the provision of ground handling services, where the performance obligations are fulfilled when the services are provided; \u2022 the provision of holiday and hotel services, where the performance obligations are satisfied over time as the customer receives the benefit of the service; and \u2022 brand and marketing activities, where the performance obligations are satisfied as the associated activities occur. Customer loyalty programmes The Group operates four loyalty programmes: the British Airways Executive Club, Iberia Plus, Vueling Club and the Aer Lingus Aer Club. The customer loyalty programmes award travellers Avios to redeem for various rewards, primarily redemption travel, including flights, hotels and car hire. Avios are also sold to commercial partners to use in loyalty activity. Avios issuance When issued, the standalone selling price of an Avios is recorded within Deferred revenue on ticket sales in current liabilities until the customer redeems the Avios. The standalone selling price of Avios is based on the value of the awards for which the points could be redeemed. The Group also recognises revenue associated with the proportion of Avios which are not expected to be redeemed, referred to as \u2018breakage\u2019, based on the results of modelling using historical experiences and expected future trends in customer behaviour, up until the reporting date. The amount of such revenue recognised is limited, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Where the issuance of Avios arises from travel on the Group\u2019s airlines, the consideration received from the customer may differ to the aggregation of the relative standalone selling prices. In such instances the allocation of the consideration to each performance obligation is undertaken on a proportional basis using the relative standalone selling prices. The Group has contractual arrangements with non-Group airlines and non-air partners for the issuance and redemption of Avios, for which it has identified the following performance obligations: Companion vouchers Certain non-air partners issue their card holders with companion vouchers, which forms part of the variable consideration of the overall contract, depending on the level of expenditure by the card holders, for redemption on the airlines of the Group for the same flight and class of cabin as the underlying fare being purchased. The Group estimates the standalone selling price of the companion voucher performance obligation, using valuation techniques, by reference to the amount that a third party would be prepared to pay in an arm\u2019s length transaction. Brand and marketing activities For both air and non-air partners, the Group licenses the Avios and the airline brands for certain activities, such as the creation of co- branded credit cards. In addition, the Group has certain contractual arrangements whereby it commits to provide marketing services to the members of the loyalty schemes on behalf of those partners. For the provision of both brand and marketing services, the partner receives benefits incremental to the issuance of Avios. The Group estimates the standalone selling price of the brand and marketing performance obligations, using valuation techniques, by reference to the amount that a third party would be prepared to pay in an arm\u2019s length transaction for access to comparable brands for the period over which they use the brand. For brand services, as the Group considers that the partner has the right to use the brand, revenue is recognised as the brand service is provided and not over time. For marketing performance obligations, revenue is recognised as the marketing activities occur based on when the partner receives the benefit of those services. Upfront payments Where a partner makes an upfront payment to the Group which does not relate to any specific performance obligation, then the Group considers such payments as advance payments for future goods and services and the associated revenue is recognised as those goods and services are provided, as detailed above. In such instances the payment is allocated across all of the performance obligations over the contract term. The Group estimates the expected level of Avios to be issued over the contract term using experience, historical and expected future trends, and allocates the payments to the relevant performance obligations accordingly. At each reporting date, the Group updates its estimate of the number of Avios expected to be issued over the total contract term and recognises a cumulative catch-up adjustment where necessary. When a partner makes an upfront payment to the Group, the Group assesses whether such a payment is representative of a significant financing event. Where a significant financing component is identified, the Group estimates a market rate of interest that an arm\u2019s length financial liability of similar size and tenor would yield. The Group recognises the imputed interest as a Finance expense in the Income statement. Other considerations The Group considers whether it is an agent or a principal in relation to the loyalty services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. In particular, the Group acts as an agent where customers redeem their Avios on interline partner flights outside of the Group, where the fees payable to the interline partner are presented net against the associated release of the Deferred revenue from ticket sales. Exceptional items Exceptional items are those that in management\u2019s view need to be separately disclosed by virtue of their size or nature and where such presentation is relevant to an understanding of the Group\u2019s financial performance. While management has defined a list of items and a quantitative threshold that would merit categorisation as exceptional that has been established through historical experience, the Group retains the flexibility to add additional items should their size or nature merit such presentation. The accounting policy in respect of exceptional items and classification of an item as exceptional is approved by the Board, through the Audit and Compliance Committee. The financial performance of the Group is monitored by the Management Committee and the Board on a pre-exceptional basis to enable comparison to prior reporting periods as well as to other selected companies, and also for making strategic, financial and operational decisions. The exceptional items recorded in the Income statement include, but are not limited to, items such as significant settlement agreements with the Group\u2019s pension schemes; significant restructuring; the impact of business combination transactions that do not contribute to the ongoing results of the Group; significant discontinuance of hedge accounting; legal settlements; individually significant tax transactions; and the impact of the sale, disposal or impairment of an asset or investment in a business. Where exceptional items are separately disclosed, the resultant tax impact is additionally separately disclosed. Certain exceptional items may cover more than a single reporting period, such as significant restructuring events, but not more than two reporting periods. Further information is given in the Alternative performance measures section. Government grants Government grants are recognised where there is reasonable assurance that the grant will be received. Loans provided and/or guaranteed by governments that represent market rates of interest are recorded at the amount of the proceeds received and recognised within Borrowings. Those loans provided and/or guaranteed by governments that represent below market rates of interest are measured at inception at their fair value and recognised within Borrowings, with the differential to the proceeds received recorded within Deferred income and released to the relevant financial statement caption in the Income statement on a systematic basis. Grants that compensate the Group for expenses incurred are recognised in the Income statement in the relevant financial statement caption on a systematic basis in the periods in which the expenses are recognised. Critical accounting estimates, assumptions and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These judgements, estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results in the future may differ from judgements and estimates upon which financial information has been prepared. These underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Estimates The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: a Employee benefit obligations, employee leaving indemnities, other employee related restructuring At December 31, 2022 the Group recognised \u20ac2,334 million in respect of employee benefit assets (2021: \u20ac1,775 million) and \u20ac217 million in respect of employee benefit obligations (2021: \u20ac285 million). Further information on employee benefit obligations is disclosed in note 32. The cost of employee benefit obligations, employee leaving indemnities and other employee-related provisions is determined using the valuation requirements of IAS 19. These valuations involve making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these schemes, such assumptions are subject to significant uncertainty. The assumptions relating to these schemes are disclosed in note 32. The Group determines the assumptions to be adopted in discussion with qualified actuaries. Any difference between these assumptions and the actual outcome will impact future net assets and total comprehensive income. The sensitivity to changes in pension assumptions is disclosed in note 32. Under the Group\u2019s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) defined benefit schemes, increases to pensions are based on the annual Government Pension Increase (Review) Orders, which since 2011 have been based on the Consumer Prices Index (CPI). Additionally, in APS there is provision for the Trustee to pay increases up to the level of the Retail Prices Index (RPI), subject to certain affordability tests. Historically market expectations for RPI could be derived by comparing the prices of UK Government fixed-interest and index-linked gilts, with CPI assessed by considering the Bank of England\u2019s inflation target and comparison of the construction of the two inflation indices. In November 2020, the UK Government and UK Statistics Authority (UKSA) confirmed alignment of RPI with CPIH (a variant of CPI) from February 2030. In assessing RPI and CPI inflation from investment market data, allowance has been made for alignment of RPI with CPIH from 2030 and, therefore, effectively no gap between RPI and CPI inflation from that date. CPI inflation before 2030 is assumed to be 1 per cent per annum below RPI inflation. b Revenue recognition At December 31, 2022 the Group recognised \u20ac7,644 million (2021: \u20ac6,552 million) in respect of deferred revenue on ticket sales of which \u20ac2,630 million (2021: \u20ac2,820 million) related to customer loyalty programmes. Further information on deferred revenue from ticket sales is included in note 23. Passenger revenue Passenger revenue is recognised when the transportation service is provided. At the time of transportation, revenue is also recognised in respect of unused tickets and is estimated based on the terms and conditions of the tickets and historical experience. The Group considers that there is no reasonably possible change to unused ticket assumptions that would have a material impact on Passenger revenue recorded in the year. Historically, where a voucher has been issued to a customer in the event of a flight cancellation, the Group estimated, based on historical experience, the level of such vouchers not expected to be used prior to expiry and recognised revenue accordingly. During 2020 and 2021, due to the significant level of flight cancellations arising from COVID-19, the Group issued a greater volume of vouchers than it would have otherwise done so. In addition, given the uncertainty as to the timing of customers redeeming these vouchers, the Group was unable to estimate with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the historical expiry trends over the period of the pandemic. Accordingly, for the years ended December 31, 2020, and December 31, 2021, the Group did not recognise revenue arising from those vouchers issued due to COVID-19 related cancellations until either the voucher was redeemed or it expired. During 2022, while the recovery from COVID-19 has seen much lower levels of voucher issuance and high levels of voucher redemption, the Group\u2019s operating companies\u2019 voucher programmes have had limited voucher expiry in 2022, with the majority not expected until 2023 at the earliest. Accordingly, the Group has had insufficient historical expiry experience relating to vouchers issued during the pandemic and therefore has not applied any breakage to existing voucher liabilities as it cannot confirm that there would not be a subsequent significant reversal of revenue if it were to do so. Customer loyalty schemes Revenue associated with the issuance of Avios under customer loyalty programmes is based on the relative standalone selling prices of the related performance obligations (brand, marketing and Avios), determined using estimation techniques. The transaction price of brand and marketing services is determined using specific brand valuation methodologies. The transaction price of an Avios is determined as the price of the rewards against which they can be redeemed and is reduced to take account of the proportion of Avios that are not expected to be redeemed by customers. During 2020 and 2021, due to the significant restrictions imposed on the ability of customers to redeem Avios coupled with the disruption in the patterns of redemption caused by COVID-19, the Group considered that the trends experienced since the start of the COVID-19 pandemic were not reflective of the long-term expected patterns of redemption and accordingly, the Group was unable to determine with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the redemption trends over the period of the pandemic. Accordingly, for the years to December 31, 2020 and December 31, 2021, the Group continued to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. While 2022 has seen all operating companies recover from the COVID-19 pandemic, there remains uncertainty as to whether recent redemption data is representative of long-term behavioural trends and accordingly the Group cannot confirm that there would not be a subsequent significant reversal of revenue if the level of redemption estimates were to be updated to reflect behaviours during the COVID-19 period. Accordingly, the Group continues to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. The Group estimates the number of Avios not expected to be redeemed using statistical modelling based on historical experience and expected future trends in customer behaviour. A five percentage point increase in the assumption of Avios outstanding and not expected to be redeemed would result in an adjustment to Deferred revenue from ticket sales of \u20ac95 million, with an offsetting adjustment to increase revenue and operating profit recognised in the year. c Income taxes At December 31, 2022 the Group recognised \u20ac1,282 million in respect of deferred tax assets (2021: \u20ac1,282 million). Further information on current and deferred tax is disclosed in note 10. The Group is subject to income taxes in numerous jurisdictions. Estimates are required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain because it may be unclear how tax law applies to a particular transaction or circumstance. Where the Group determines that it is more likely than not that the tax authorities would accept the position taken in the tax return, amounts are recognised in the financial statements on that basis. Where the amount of tax payable or recoverable is uncertain, the Group recognises a liability based on either: the Group\u2019s judgement of the most likely outcome; or, when there is a wide range of possible outcomes, a probability-weighted average approach. The Group recognises deferred tax assets only to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Management uses judgement, including the consideration of past and current operating performance and the future projections of performance laid out in the approved business plan in order to assess the probability of recoverability. In exercising this judgement, while there are no time restrictions on the utilisation of historic tax losses in the principal jurisdictions in which the Group operates, future cash flow projections are forecast for a period of up to ten years from the balance sheet date, which represents the period over which it is probable that future taxable profits will be available. At December 31, 2022, the Group had unrecognised deferred tax assets of \u20ac2,084 million relating to tax losses the Group does not reasonably expect to utilise. In applying the aforementioned judgement, had the Group extended the period of future cash flow projections indefinitely, then the amount of unrecognised deferred tax assets would have reduced by \u20ac1,608 million. Conversely, if the forecast profit before tax for each operating company was reduced by two percentage points over the forecast period, the amount of the unrecognised deferred tax asset relating to tax losses would increase by \u20ac11 million. d Impairment of non-financial assets At December 31, 2022 the Group recognised \u20ac2,423 million (2021: \u20ac2,439 million) in respect of intangible assets with an indefinite life, including goodwill. Further information on these assets is included in note 17. Goodwill and intangible assets with indefinite economic lives are tested, as part of the cash-generating units to which they relate, for impairment annually and at other times when such indicators exist. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which use a weighted average multi-scenario discounted cash flow model, which are then compared to the carrying amount of the associated cash-generating unit. In determining the carrying value of each cash generating unit, the Group allocates all associated operating tangible and intangible assets, including ROU assets. In addition the Group has allocated certain liabilities to the carrying value of each CGU where those liabilities are critical to the underlying operations of the cash-generating unit and in the event of a disposal of the cash-generating unit would be required to be transferred to the purchaser. Such liabilities include lease liabilities. The Group has applied judgement in the weighting of each scenario in the discounted cash flow model and these calculations require the use of estimates in the determination of key assumptions and sensitivities as disclosed in notes 4 and 17. The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. When such indicators are identified, then non-financial assets are tested for impairment. e Engineering and other aircraft costs At December 31, 2022, the Group recognised \u20ac2,400 million in respect of maintenance, restoration and handback provisions (2021: \u20ac1,832 million). Information on movements on the provision is disclosed in note 26. The Group has a number of contracts with service providers to replace or repair engine parts and for other maintenance checks. These agreements are complex and generally cover a number of years. Provisions for maintenance, restoration and handback are made based on the best estimate of the likely committed cash outflow. In determining this best estimate, the Group applies significant judgement as to the level of forecast costs expected to be incurred when the aircraft is returned to the lessor. The assumptions of this significant judgement include aircraft utilisation, expected maintenance intervals, future maintenance costs and the aircraft\u2019s condition. The associated forecast costs are discounted to their present value. In 2021, the Group considered that there was no reasonably possible change to a single assumption that would have had a material impact on the provisions, however a combination of changes in multiple assumptions may have. In 2022, with the status of the macro-economic environment, the Group considers that a reasonable possible change in the inflation rate and discount rate assumptions of a 100 basis points increase would give rise to an increase of \u20ac51 million and a decrease of \u20ac68 million, respectively, when applied in isolation to one another. Judgements a Determining the lease term of contracts with renewal and termination options The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. Such judgement includes consideration of fleet plans which underpin approved business plans and historical experience regarding the extension of leases. After the commencement date, the Group re-assesses the lease term if there is a significant event or change in circumstances that affects the Group\u2019s ability to exercise or not to exercise the option to renew or to terminate. Further information is given in note 14. b Determining whether the Group has significant influence over Air Europa Holdings The Group applies judgement in the determination as to whether it has the power with which to participate in the decision making of, and as a result significant influence over, Air Europa Holdings, S.L. (Air Europa Holdings). Such judgement includes the consideration as to the ability of the Group to: have representation on the board of Air Europa Holdings; participate in the policy-making processes, including participation in decisions regarding dividends and other distributions; the existence of material transactions between Air Europa Holdings and the Group; enable the interchange of management personnel and provide essential technical information. In forming its judgement, the Group notes that: it does not have the ability to have representation on the board of Air Europa Holdings; it does not have the ability to participate in the policy-making processes; has not entered into material transactions outside of the normal course of business; it does not have the ability to enable the interchange of management personnel and it does not have the ability to provide essential technical information. The Group has therefore concluded that it does not have significant influence over Air Europa Holdings. Accordingly, the Group accounts for its shareholding in Air Europa Holdings as an Other equity investment and measures it at fair value through Other comprehensive income. Had the Group concluded that it does have significant influence over Air Europa Holdings, then the shareholding would have been classified as an associate, measured at fair value on inception and subsequently measured using the equity method. At December 31, 2022, the fair value of its shareholding in Air Europa Holdings was \u20ac24 million. Further information is given in note 19. New standards, amendments and interpretations The following amendments and interpretations apply for the first time in 2022, but do not have a material impact on the consolidated financial statements of the Group: \u2022 property, plant and equipment: proceeds before intended use \u2013 amendments to IAS 16 effective for periods beginning on or after January 1, 2022; \u2022 reference to the Conceptual Framework \u2013 amendments to IFRS 3 effective for periods beginning on or after January 1, 2022; \u2022 onerous contracts \u2013 cost of fulfilling a contract \u2013 amendments to IAS 37 effective for periods beginning on or after January 1, 2022; and \u2022 annual improvements to IFRS standards 2018\u20132020 \u2013 effective for periods beginning on or after January 1, 2022. The IASB and IFRIC have issued the following standards, amendments and interpretations with an effective date after the year end of these financial statements which management believe could impact the Group in future periods. The Group has assessed the impact of these standards, amendments and interpretations and it is not expected that these will have a material effect on the reported income or net assets of the Group. Unless otherwise stated, the Group plans to adopt the following standards, interpretations and amendments on the date they become mandatory: \u2022 IFRS 17 Insurance contracts - effective for periods beginning on or after January 1, 2023; \u2022 definition of accounting estimate \u2013 amendments to IAS 8 effective for periods beginning on or after January 1, 2023; \u2022 disclosure of accounting policies \u2013 amendments to IAS 1 and IFRS Practice statement 2 effective for periods beginning on or after January 1, 2023; and \u2022 deferred tax related to assets and liabilities arising from a single transaction \u2013 amendments to IAS 12 effective for periods beginning on or after January 1, 2023. On October 31, 2022, the IASB issued the amendments to IAS 1 \u2013 classification of liabilities as current or non-current (the \u2018Amendments\u2019), effective for periods beginning on or after January 1, 2024. The Amendments will require the \u20ac825 million convertible bond that matures in 2028, which as at December 31, 2022, had a carrying value of \u20ac605 million, to be reclassified from a non-current liability to a current liability with the comparative presentation as at December 31, 2023 also reclassified. The Amendments require that where the conversion feature of a convertible instrument does not meet the recognition criteria for separate presentation within equity and where the associated bond holders have the irrevocable right to exercise the conversion feature within twelve months of the balance sheet date, that such convertible instruments be presented as current. Other than this reclassification, the Amendments will not have a material effect on the reported results or net assets of the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-604": { "value": "Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards as endorsed by the European Union (IFRSs as endorsed by the EU). The consolidated financial statements are rounded to the nearest million unless otherwise stated. These financial statements have been prepared on a historical cost convention except for certain financial assets and liabilities, including the \u20ac825 million convertible bond due 2028, derivative financial instruments and other equity investments that are measured at fair value. The notes to the financial statements for the prior year include reclassifications that were made to conform to the current year presentation. The Group\u2019s financial statements for the year to December 31, 2022 were authorised for issue, and approved by the Board of Directors on February 23, 2023. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-638": { "value": "The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards as endorsed by the European Union (IFRSs as endorsed by the EU).", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-639": { "value": "The notes to the financial statements for the prior year include reclassifications that were made to conform to the current year presentation. ", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-640": { "value": "The Group\u2019s financial statements for the year to December 31, 2022 were authorised for issue, and approved by the Board of Directors on February 23, 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-605": { "value": "Going concern At December 31, 2022, the Group had total liquidity of \u20ac13,999 million (December 31, 2021: total liquidity of \u20ac11,986 million), comprising cash, cash equivalents and interest-bearing deposits of \u20ac9,599 million, \u20ac3,284 million of committed and undrawn general facilities and a further \u20ac1,116 million of committed and undrawn aircraft specific facilities. At December 31, 2022, the Group has no financial covenants associated with its loans and borrowings. In its assessment of going concern, the Group has modelled two scenarios referred to below as the Base Case and the Downside Case over the period to June 30, 2024 (the \u2018going concern period\u2019). The tenor of the going concern period encapsulates the seasonality of the Group\u2019s operations. The Group\u2019s three-year business plan, used in the creation of the Base Case, was prepared for and approved by the Board in December 2022. The business plan takes into account the Board\u2019s and management\u2019s views on the anticipated continued recovery from the COVID-19 pandemic and the wider economic and geopolitical environments on the Group\u2019s businesses across the going concern period. The key inputs and assumptions underlying the Base Case include: \u2022 capacity recovery modelled by geographical region (and in certain regions, by key destinations) with capacity gradually increasing from 97 per cent in quarter 1 2023 (compared to the equivalent period in 2019) to pre-pandemic levels by the end of the going concern period; \u2022 passenger unit revenue per ASK is forecast to continue to remain above the levels obtained in 2019 throughout the going concern period, which is based on, amongst other assumptions, higher ticket prices to reflect both higher fuel prices and cost inflation; \u2022 the Group has assumed that the committed and undrawn general facilities of \u20ac3.3 billion will not be drawn over the going concern period. The availability of certain of these facilities reduces over time, with \u20ac3.2 billion being available to the Group at the end of the going concern period; \u2022 the Group has assumed that \u20ac1.0 billion of the committed and undrawn aircraft specific facilities of \u20ac1.1 billion would be available to be drawn over the going concern period if required, of which \u20ac0.6 billion, relating to the EETC financing structures and other specific asset securitised financing are expected to be utilised; \u2022 the Group has assumed that the \u20ac500 million bond that matures in July 2023 will not be refinanced; \u2022 of the capital commitments detailed in note 15, \u20ac4.4 billion is due to be paid over the going concern period; \u2022 in addition to the \u20ac0.6 billion of committed aircraft financing, the Group has forecast securing approximately 100 per cent, or \u20ac4.9 billion, of the aircraft financing required that is currently uncommitted, to align with the timing and payments for these aircraft deliveries. This loan to value assumption is consistent with the level of financing the Group has been able to achieve recently, including over the course of the COVID-19 pandemic to date; and \u2022 the acquisition of the remaining shares in Air Europa Holdings, that the Group does not currently own, shall receive the relevant approvals and complete during the going concern period. The Downside Case applies stress to the Base Case to model adverse commercial and operational impacts as the Group\u2019s capacity recovers over the going concern period, represented by: reduced levels of capacity operated in each month, including reductions of at least 25 per cent for three months during 2023 to reflect the risk of more severe operational disruption; reduced passenger unit revenue per ASK reflective of general pricing pressure due to the current economic backdrop; and increased operational costs reflective of inflationary pressures. In the Downside Case, over the going concern period capacity would be ten per cent down when compared to the Base Case. The Downside Case assumes that \u20ac350 million of the \u20ac3,284 million of available general credit facilities are required to be drawn. The Directors consider the Downside Case to be a severe but plausible scenario. While not incorporated in the Downside Case, the Group has modelled the impact of further deteriorations in capacity operated and yield, as well as increases in the price of jet fuel by 20 per cent and a reduction in the forecast loan to value to 80 per cent of the uncommitted financing, but has also considered further mitigating actions, such as reducing operating and capital expenditure and deferring currently forecast early repayments of loans and borrowings. The Group expects to be able to continue to secure financing for future aircraft deliveries and in addition has further potential mitigating actions, including asset disposals, it would pursue in the event of adverse liquidity experience. Having reviewed the Base Case, the Downside Case and additional sensitivities, the Directors have a reasonable expectation that the Group has sufficient liquidity to continue in operational existence over the going concern period and hence continue to adopt the going concern basis in preparing the consolidated financial statements for year to December 31, 2022. In adopting the going concern basis of accounting, the consolidated financial statements have been prepared without the inclusion of a material uncertainty, which has been removed since the Annual report and accounts 2021. The removal of the material uncertainty arises from the reduction in uncertainty over the going concern period due to both the continued recovery subsequent to the COVID-19 pandemic and the strength of the Group\u2019s liquidity at December 31, 2022. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-689": { "value": "Consolidation The Group financial statements include the financial statements of the Company and its subsidiaries, each made up to December 31, together with the attributable share of results and reserves of associates and joint ventures, adjusted where appropriate to conform to the Group\u2019s accounting policies. Subsidiaries are consolidated from the date of their acquisition, which is the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group applies the acquisition method to account for business combinations. The consideration paid is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the Consolidated balance sheet. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, as at the acquisition date the acquirer\u2019s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the Income statement. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. All intragroup account balances, including intragroup profits, are eliminated in preparing the consolidated financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-711": { "value": "Subsidiaries are consolidated from the date of their acquisition, which is the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-710": { "value": "The Group applies the acquisition method to account for business combinations. The consideration paid is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the Consolidated balance sheet. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, as at the acquisition date the acquirer\u2019s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the Income statement. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-722": { "value": "The Group applies the acquisition method to account for business combinations. The consideration paid is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the Consolidated balance sheet. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, as at the acquisition date the acquirer\u2019s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the Income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-690": { "value": "Unconsolidated structured entities The Group regularly uses sale and leaseback transactions to finance the acquisition of aircraft. In certain instances the Group will undertake several such sale and leaseback transactions at once through Enhanced Equipment Trust Certificates (EETCs). Under each of these financing structures, a company or companies (the EETC Issuer) are established to facilitate such financing on behalf of a number of unrelated investors. In certain of these financing structures, additional special purpose vehicles (the Lessor SPV) are established to provide additional financing from a number of further unrelated investors to the EETC Issuer. The proceeds from the issuance of the EETCs by the EETC Issuer, and where relevant the proceeds obtained from the Lessor SPV, are then used to purchase aircraft solely from the Group. The Group will then enter into fixed rate lease arrangements (which meet the recognition criteria of Asset financed liabilities) with the EETC Issuer, or where relevant the Lessor SPV, with payments made by the Group to the EETC Issuer, or the Lessor SPV, distributed, through a trust, to the aforementioned unrelated investors. The main purpose of the trust structure is to enhance the credit-worthiness of the Group\u2019s debt obligations through certain bankruptcy protection provisions and liquidity facilities, and also to lower the Group\u2019s total borrowing cost. The EETC Issuer and the Lessor SPV are established solely with the purpose of providing the asset-backed financing and upon maturity of such financing are expected to have no further activity. The relevant activities of the EETC Issuer and the Lessor SPV are restricted to pre- established financing agreements and the retention of the title of the associated financed aircraft. Accordingly, the Group has determined that each EETC Issuer and the Lessor SPVs are structured entities. Under the contractual terms of the financing structures, the Group has no exposure to losses in these entities, does not own any of the share capital of the EETC Issuer or the Lessor SPV, does not have any representation on the respective boards and has no ability to influence decision making. In addition to the above, such financial transactions expose the Group to no further significant financial or economic risks, such as no variability over time in interest rates. In considering the aforementioned facts, management has concluded that the Group does not have access to variable returns from the EETC Issuers and Lessor SPVs because its involvement is limited to the payment of principal and interest under the arrangement and, therefore, it does not control the EETC Issuers or the Lessor SPVs and as such does not consolidate them. Further information as to the financial impact of these financial transactions is given in note 25. ", "dimensions": { "concept": "ifrs-full:DisclosureOfUnconsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-691": { "value": "
Segmental reporting
Operating segments are reported in a manner consistent with how resource allocation decisions are made by the chief operating decision-
maker. The chief operating decision-maker, who is responsible for resource allocation and assessing performance of the operating
segments, has been identified as the IAG Management Committee.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-692": { "value": "
Foreign currency translation
a Functional and presentation currency
Items included in the financial statements of each of the Group\u2019s entities are measured using the functional currency, being the currency of
the primary economic environment in which the entity operates. In particular, British Airways and IAG Loyalty have a functional currency of
pound sterling. The Group\u2019s consolidated financial statements are presented in euros, which is the Group\u2019s presentation currency.
b Transactions and balances Transactions in foreign currencies are initially recorded in the functional currency using the rate of exchange prevailing on the date of the transaction. Monetary foreign currency balances are translated into the functional currency at the rates ruling at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement, except where hedge accounting is applied. Foreign exchange gains and losses arising on the retranslation of monetary assets and liabilities classified as non- current on the Balance sheet are recognised within Net currency retranslation (charges)/credits in the Income statement. All other gains and losses arising on the retranslation of monetary assets and liabilities are recognised in operating profit. c Group companies The net assets of foreign operations are translated into euros at the rate of exchange ruling at the balance sheet date. Profits and losses of such operations are translated into euros at average rates of exchange during the year. The resulting exchange differences are taken directly to a separate component of equity (Currency translation reserve) until all or part of the interest is sold, when the relevant portion of the cumulative exchange difference is recognised in the Income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-723": { "value": "a Functional and presentation currency Items included in the financial statements of each of the Group\u2019s entities are measured using the functional currency, being the currency of the primary economic environment in which the entity operates. In particular, British Airways and IAG Loyalty have a functional currency of pound sterling. The Group\u2019s consolidated financial statements are presented in euros, which is the Group\u2019s presentation currency. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-693": { "value": "Property, plant and equipment Property, plant and equipment are held at cost. The Group has a policy of not revaluing property, plant and equipment. Depreciation is calculated to write off the cost less the estimated residual value on a straight-line basis, over the economic life of the asset. Residual values, where applicable, are reviewed annually against prevailing market values for equivalently aged assets and depreciation rates adjusted accordingly on a prospective basis. a Fleet All aircraft are stated at the fair value of the consideration given after taking account of manufacturers\u2019 credits. Fleet assets owned or right of use (\u2018ROU\u2019) assets are disaggregated into separate components and depreciated at rates calculated to write down the cost of each component to the estimated residual value at the end of their planned operational lives (which is the shorter of their useful life or lease term) on a straight-line basis. Depreciation rates are specific to aircraft type, based on the Group\u2019s fleet plans, within overall parameters of 23 years and up to 5 per cent residual value for shorthaul aircraft and between 23 and 29 years (depending on aircraft) and up to 5 per cent residual value for longhaul aircraft. Right of use assets are depreciated over the shorter of the lease term and the aforementioned depreciation rates. Where the lease includes a purchase option, at the discretion of the Group, where it is expected that the purchase option will be exercised, the associated right of use asset is depreciated using the aforementioned depreciation rates to reflect the reasonably certain life of the aircraft, irrespective of the lease term. Cabin interior modifications, including those required for brand changes and relaunches, are depreciated over the lower of 12 years and the remaining economic life of the aircraft, whether owned or leased. Aircraft and engine spares acquired on the introduction or expansion of a fleet, as well as rotable spares purchased separately, are carried as property, plant and equipment and generally depreciated in line with the fleet to which they relate. Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life between major overhaul. All other replacement spares and other costs relating to maintenance of fleet assets (including maintenance provided under \u2018pay-as-you-go\u2019 contracts) are charged to the Income statement on consumption or as incurred respectively. b Other property, plant and equipment Provision is made for the depreciation of all property, plant and equipment. Property, with the exception of freehold land, is depreciated over its expected useful life over periods not exceeding 50 years, or in the case of leasehold properties, over the duration of the lease if shorter, on a straight-line basis. Equipment is depreciated over periods ranging from four to 20 years. c Capitalisation of interest on progress payments Interest costs attributed to progress payments made on account of aircraft and other qualifying assets under construction are capitalised and added to the cost of the asset concerned. All other borrowing costs are recognised in the Income statement in the year in which they are incurred. d Liquidated damages Liquidated damages are recognised in the Income statement only to the extent that they relate to compensation for loss of income and/or incremental operating costs, when a contractual entitlement exists, the amounts can be reliably measured and the receipt is virtually certain. When liquidated damages do not relate to compensation for loss of income and/or incremental operating costs, the amounts are recorded as a reduction in the cost of the associated aircraft in the Balance sheet and depreciated over the life of the aircraft. e Leases The Group leases various aircraft, properties, equipment and other assets. The lease terms of these assets are consistent with the determined useful economic life of similar assets within property, plant and equipment. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified tangible asset for a period in exchange for consideration. The Group has elected not to apply such consideration where the contract relates to an intangible asset, such as for landing rights or IT software, in which case payments associated with the contract are expensed as incurred. Leases are recognised as a ROU asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. Right of use assets At the lease commencement date a ROU asset is measured at cost comprising the following: the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date less any lease incentives received; and any initial direct costs. In addition, at the lease commencement date a ROU asset will incorporate unavoidable restoration costs, such as the removal of airline- specific branding and configuration, to return the asset to its original condition, for which a corresponding amount is recognised withi Provisions. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If ownership o the ROU asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Lease liabilities Lease liabilities are initially measured at their present value, which includes the following lease payments: fixed payments (including in- substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the Group under residual value guarantees; the exercise price of a purchase option if the Group is reasonably certain to exercise that option; payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option; and payments to be made under reasonably certain extension options. Aircraft lease payments are discounted using the interest rate implicit in the lease. The interest rate implicit in the lease is the discount rate that, at the inception of the lease, causes the aggregate present value of the minimum lease payments and the unguaranteed residual value to be equal to the fair value of the leased asset and any initial indirect costs of the lessor. For aircraft leases these inputs are either observable in the contract or readily available from external market data. The initial direct costs of the lessor are considered to be immaterial. If the interest rate implicit in the lease cannot be determined, the Group entity\u2019s incremental borrowing rate is used. Each lease payment is allocated between the principal and finance cost. The finance cost is charged to the Income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification of the lease contract, a re-assessment of the lease term (specifically in regard to assumptions regarding extension and termination options) and changes in variable lease payments that are based on an index or a rate. Amounts excluded from recognition as lease liabilities The Group has elected not to recognise ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less and those leases of low-value assets. Payments associated with short-term leases and leases of low-value assets are recognised on a straight line basis as an expense in the Income statement. Short-term leases are leases with a lease term of 12 months or less, that do not contain a purchase option. Low-value assets comprise IT equipment and small items of office furniture. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is re-assessed and adjusted against the ROU asset. Extension options are included in a number of aircraft, property and equipment leases across the Group and are reflected in the lease payments where the Group is reasonably certain that it will exercise the option. The Group is also exposed to variable lease payments based on usage or revenue generated over a defined period. Such variable lease payments are expensed to the Income statement as incurred. Sale and leaseback transactions The Group regularly uses sale and lease transactions to finance the acquisition of aircraft. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. The principal criterion for assessing whether a sale has occurred or not, is whether the contract contains the option, at the discretion of the Group, to repurchase the aircraft over the lease term; with the existence of such a repurchase option resulting in a sale having been deemed not to have occurred; and if no such repurchase option exists, then a sale is deemed to have occurred. The following defines the accounting for such transactions: \u2022 if a sale is determined to have occurred, then the associated asset is de-recognised and a ROU asset and lease liability are recognised. The ROU asset recognised is based on the proportion of the previous carrying amount of the asset that is retained. Any gain or loss is restricted to the amount that relates to the rights that have been transferred to the counter-party to the transaction; and \u2022 where a sale is determined to have not occurred, the asset is retained on the balance sheet within Property, plant and equipment and an Asset financed liability recognised equal to the financing proceeds. Cash flow presentation \u2013 lease liabilities Lease payments are presented as follows in the Consolidated cash flow statement: \u2022 where the proceeds received from sale and leaseback transactions represent the fair value of the asset being transferred, the total proceeds are presented within cash flows from investing activities. Where the proceeds received from sale and leaseback transactions exceed the fair value of the asset being transferred, the element of the proceeds equivalent to the fair value of the asset being transferred is presented within investing activities and the amount of proceeds in excess of the fair value is presented within financing activities; \u2022 the repayments of the principal element of lease liabilities are presented within cash flows from financing activities; \u2022 the payments of the interest element of lease liabilities are included within cash flows from operating activities; and \u2022 the payments arising from variable elements of a lease, short-term leases and low-value assets are presented within cash flows from operating activities. Cash flow presentation \u2013 asset financed liabilities Payments associated with asset financed liabilities are presented as follows in the Consolidated cash flow statement: \u2022 the proceeds received asset financed liabilities are presented within cash flows from financing activities; \u2022 the repayments of the principal element of asset financed liabilities are presented within cash flows from financing activities; and \u2022 the payments of the interest element of asset financed liabilities are included within cash flows from operating activities. COVID-19 related rent concessions On May 28, 2020, the IASB issued \u2018COVID-19 Related Rent Concessions \u2013 amendments to IFRS 16 Leases\u2019. The EU subsequently adopted the amendment on October 9, 2020. The amendment provides a practical expedient for lessees, up to June 30, 2021, not to assess whether a COVID-19 related rent concession is a lease modification. On March 31, 2021, the IASB extended the period for the application of these concessions through to June 30, 2022. The EU subsequently adopted the amendment on August 31, 2021. The extended amendment is effective for annual reporting periods commencing on or after April 1, 2021 and the Group has elected to adopt this amendment for the year to December 31, 2022. Lessor accounting From time to time the Group will lease, to third parties, specific assets, including certain property, plant and equipment. On inception of the lease, the Group determines whether each lease is a finance lease or an operating lease. In order to make this determination, the Group assesses whether the lease transfers substantially all of the risks and rewards of ownership to the lessee. Factors in making this assessment include, but are not limited to, whether the lease term is for the major part of the economic life of the underlying asset and whether the underlying asset transfers to the lessee or the lessee has the option to purchase the underlying asset at the end of the lease. Where substantially all of the risks and rewards of ownership have been transferred, then the lease is recorded as a finance lease, otherwise it is recorded as an operating lease.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-724": { "value": "Property, plant and equipment Property, plant and equipment are held at cost. The Group has a policy of not revaluing property, plant and equipment. Depreciation is calculated to write off the cost less the estimated residual value on a straight-line basis, over the economic life of the asset. Residual values, where applicable, are reviewed annually against prevailing market values for equivalently aged assets and depreciation rates adjusted accordingly on a prospective basis. a Fleet All aircraft are stated at the fair value of the consideration given after taking account of manufacturers\u2019 credits. Fleet assets owned or right of use (\u2018ROU\u2019) assets are disaggregated into separate components and depreciated at rates calculated to write down the cost of each component to the estimated residual value at the end of their planned operational lives (which is the shorter of their useful life or lease term) on a straight-line basis. Depreciation rates are specific to aircraft type, based on the Group\u2019s fleet plans, within overall parameters of 23 years and up to 5 per cent residual value for shorthaul aircraft and between 23 and 29 years (depending on aircraft) and up to 5 per cent residual value for longhaul aircraft. Right of use assets are depreciated over the shorter of the lease term and the aforementioned depreciation rates. Where the lease includes a purchase option, at the discretion of the Group, where it is expected that the purchase option will be exercised, the associated right of use asset is depreciated using the aforementioned depreciation rates to reflect the reasonably certain life of the aircraft, irrespective of the lease term. Cabin interior modifications, including those required for brand changes and relaunches, are depreciated over the lower of 12 years and the remaining economic life of the aircraft, whether owned or leased. Aircraft and engine spares acquired on the introduction or expansion of a fleet, as well as rotable spares purchased separately, are carried as property, plant and equipment and generally depreciated in line with the fleet to which they relate. Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life between major overhaul. All other replacement spares and other costs relating to maintenance of fleet assets (including maintenance provided under \u2018pay-as-you-go\u2019 contracts) are charged to the Income statement on consumption or as incurred respectively. b Other property, plant and equipment Provision is made for the depreciation of all property, plant and equipment. Property, with the exception of freehold land, is depreciated over its expected useful life over periods not exceeding 50 years, or in the case of leasehold properties, over the duration of the lease if shorter, on a straight-line basis. Equipment is depreciated over periods ranging from four to 20 years.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-712": { "value": "
Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life
between major overhaul. All other replacement spares and other costs relating to maintenance of fleet assets (including maintenance
provided under \u2018pay-as-you-go\u2019 contracts) are charged to the Income statement on consumption or as incurred respectively.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepairsAndMaintenanceExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-713": { "value": "c Capitalisation of interest on progress payments Interest costs attributed to progress payments made on account of aircraft and other qualifying assets under construction are capitalised and added to the cost of the asset concerned. All other borrowing costs are recognised in the Income statement in the year in which they are incurred.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-725": { "value": "e Leases The Group leases various aircraft, properties, equipment and other assets. The lease terms of these assets are consistent with the determined useful economic life of similar assets within property, plant and equipment. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified tangible asset for a period in exchange for consideration. The Group has elected not to apply such consideration where the contract relates to an intangible asset, such as for landing rights or IT software, in which case payments associated with the contract are expensed as incurred. Leases are recognised as a ROU asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. Right of use assets At the lease commencement date a ROU asset is measured at cost comprising the following: the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date less any lease incentives received; and any initial direct costs. In addition, at the lease commencement date a ROU asset will incorporate unavoidable restoration costs, such as the removal of airline- specific branding and configuration, to return the asset to its original condition, for which a corresponding amount is recognised withi n Provisions. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If ownership o f the ROU asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Lease liabilities Lease liabilities are initially measured at their present value, which includes the following lease payments: fixed payments (including in- substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the Group under residual value guarantees; the exercise price of a purchase option if the Group is reasonably certain to exercise that option; payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option; and payments to be made under reasonably certain extension options. Aircraft lease payments are discounted using the interest rate implicit in the lease. The interest rate implicit in the lease is the discount rate that, at the inception of the lease, causes the aggregate present value of the minimum lease payments and the unguaranteed residual value to be equal to the fair value of the leased asset and any initial indirect costs of the lessor. For aircraft leases these inputs are either observable in the contract or readily available from external market data. The initial direct costs of the lessor are considered to be immaterial. If the interest rate implicit in the lease cannot be determined, the Group entity\u2019s incremental borrowing rate is used. Each lease payment is allocated between the principal and finance cost. The finance cost is charged to the Income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification of the lease contract, a re-assessment of the lease term (specifically in regard to assumptions regarding extension and termination options) and changes in variable lease payments that are based on an index or a rate. Amounts excluded from recognition as lease liabilities The Group has elected not to recognise ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less and those leases of low-value assets. Payments associated with short-term leases and leases of low-value assets are recognised on a straight line basis as an expense in the Income statement. Short-term leases are leases with a lease term of 12 months or less, that do not contain a purchase option. Low-value assets comprise IT equipment and small items of office furniture. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is re-assessed and adjusted against the ROU asset. Extension options are included in a number of aircraft, property and equipment leases across the Group and are reflected in the lease payments where the Group is reasonably certain that it will exercise the option. The Group is also exposed to variable lease payments based on usage or revenue generated over a defined period. Such variable lease payments are expensed to the Income statement as incurred. Sale and leaseback transactions The Group regularly uses sale and lease transactions to finance the acquisition of aircraft. Each transaction is assessed as to whether it meets the criteria within IFRS 15 \u2018Revenue from contracts with customers\u2019 for a sale to have occurred. The principal criterion for assessing whether a sale has occurred or not, is whether the contract contains the option, at the discretion of the Group, to repurchase the aircraft over the lease term; with the existence of such a repurchase option resulting in a sale having been deemed not to have occurred; and if no such repurchase option exists, then a sale is deemed to have occurred. The following defines the accounting for such transactions: \u2022 if a sale is determined to have occurred, then the associated asset is de-recognised and a ROU asset and lease liability are recognised. The ROU asset recognised is based on the proportion of the previous carrying amount of the asset that is retained. Any gain or loss is restricted to the amount that relates to the rights that have been transferred to the counter-party to the transaction; and \u2022 where a sale is determined to have not occurred, the asset is retained on the balance sheet within Property, plant and equipment and an Asset financed liability recognised equal to the financing proceeds. Cash flow presentation \u2013 lease liabilities Lease payments are presented as follows in the Consolidated cash flow statement: \u2022 where the proceeds received from sale and leaseback transactions represent the fair value of the asset being transferred, the total proceeds are presented within cash flows from investing activities. Where the proceeds received from sale and leaseback transactions exceed the fair value of the asset being transferred, the element of the proceeds equivalent to the fair value of the asset being transferred is presented within investing activities and the amount of proceeds in excess of the fair value is presented within financing activities; \u2022 the repayments of the principal element of lease liabilities are presented within cash flows from financing activities; \u2022 the payments of the interest element of lease liabilities are included within cash flows from operating activities; and \u2022 the payments arising from variable elements of a lease, short-term leases and low-value assets are presented within cash flows from operating activities. Cash flow presentation \u2013 asset financed liabilities Payments associated with asset financed liabilities are presented as follows in the Consolidated cash flow statement: \u2022 the proceeds received asset financed liabilities are presented within cash flows from financing activities; \u2022 the repayments of the principal element of asset financed liabilities are presented within cash flows from financing activities; and \u2022 the payments of the interest element of asset financed liabilities are included within cash flows from operating activities. COVID-19 related rent concessions On May 28, 2020, the IASB issued \u2018COVID-19 Related Rent Concessions \u2013 amendments to IFRS 16 Leases\u2019. The EU subsequently adopted the amendment on October 9, 2020. The amendment provides a practical expedient for lessees, up to June 30, 2021, not to assess whether a COVID-19 related rent concession is a lease modification. On March 31, 2021, the IASB extended the period for the application of these concessions through to June 30, 2022. The EU subsequently adopted the amendment on August 31, 2021. The extended amendment is effective for annual reporting periods commencing on or after April 1, 2021 and the Group has elected to adopt this amendment for the year to December 31, 2022. Lessor accounting From time to time the Group will lease, to third parties, specific assets, including certain property, plant and equipment. On inception of the lease, the Group determines whether each lease is a finance lease or an operating lease. In order to make this determination, the Group assesses whether the lease transfers substantially all of the risks and rewards of ownership to the lessee. Factors in making this assessment include, but are not limited to, whether the lease term is for the major part of the economic life of the underlying asset and whether the underlying asset transfers to the lessee or the lessee has the option to purchase the underlying asset at the end of the lease. Where substantially all of the risks and rewards of ownership have been transferred, then the lease is recorded as a finance lease, otherwise it is recorded as an operating lease.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-714": { "value": "Cash flow presentation \u2013 lease liabilities Lease payments are presented as follows in the Consolidated cash flow statement: \u2022 where the proceeds received from sale and leaseback transactions represent the fair value of the asset being transferred, the total proceeds are presented within cash flows from investing activities. Where the proceeds received from sale and leaseback transactions exceed the fair value of the asset being transferred, the element of the proceeds equivalent to the fair value of the asset being transferred is presented within investing activities and the amount of proceeds in excess of the fair value is presented within financing activities; \u2022 the repayments of the principal element of lease liabilities are presented within cash flows from financing activities; \u2022 the payments of the interest element of lease liabilities are included within cash flows from operating activities; and \u2022 the payments arising from variable elements of a lease, short-term leases and low-value assets are presented within cash flows from operating activities. Cash flow presentation \u2013 asset financed liabilities Payments associated with asset financed liabilities are presented as follows in the Consolidated cash flow statement: \u2022 the proceeds received asset financed liabilities are presented within cash flows from financing activities; \u2022 the repayments of the principal element of asset financed liabilities are presented within cash flows from financing activities; and \u2022 the payments of the interest element of asset financed liabilities are included within cash flows from operating activities. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-694": { "value": "Intangible assets a Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration paid over the net fair value of the identifiable assets and liabilities of the acquiree. Where the net fair value of the identifiable assets and liabilities of the acquiree is in excess of the consideration paid, a gain on bargain purchase is recognised immediately in the Income statement. For the purpose of assessing impairment, goodwill is grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is tested for impairment annually and whenever indicators exist that the carrying value may not be recoverable. b Brands Brands arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. Long established brands that are expected to be used indefinitely are not amortised but assessed annually for impairment. c Customer loyalty programmes Customer loyalty programmes arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. A customer loyalty programme with an expected useful life is amortised over the expected remaining useful life. Established customer loyalty programmes that are expected to be used indefinitely are not amortised but assessed annually for impairment. d Landing rights Landing rights acquired in a business combination are recognised at fair value at the acquisition date. Landing rights acquired from other airlines are capitalised at cost. Capitalised landing rights based outside of the UK and the EU are amortised on a straight-line basis over a period not exceeding 20 years. Capitalised landing rights based within the UK and the EU are not amortised, as regulations provide that these landing rights are perpetual. e Contract-based intangibles Contract based intangibles acquired in a business combination are recognised initially at fair value at the acquisition date and amortised over the remaining life of the contract. f Software The cost to purchase or develop computer software that is separable from an item of related hardware is capitalised separately and amortised on a straight-line basis generally over a period not exceeding five years, with certain specific software development s amortised over a period of up to ten years. g Emissions allowances Where an operating company purchases emissions allowances these amounts are recognised at cost and recorded within Intangible assets. As an operating company emits CO 2 equivalent and builds up an obligation to the relevant authorities, a provision is recognised. Emissions allowances recorded within Intangible assets are not revalued or amortised but are tested for impairment whenever indicators exist that the carrying value may not be recoverable. For those obligations arising for which the operating company has purchased emission allowances to offset the emissions, the provision is recognised at the weighted average cost of the intangible asset. For those obligations arising for which the operating company has not yet purchased emission allowances to offset the emissions, the provision is recognised at the market price of the allowances required at the reporting date. As the provision is recognised, a corresponding amount is recorded in the Income statement within Fuel, oil costs and emission charges. The Group\u2019s emissions obligation, recognised as a separate liability, is extinguished when the associated emission certificates are surrendered, which is typically within 12 months of the reporting date. From time to time the Group enters into sale and repurchase transactions for specified emission allowances. Such transactions do not meet the recognition criteria of a sale under IFRS 15 and accordingly the asset is retained on the balance sheet within Intangible assets and an Other financing liability recognised equal to the proceeds received.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-726": { "value": "a Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration paid over the net fair value of the identifiable assets and liabilities of the acquiree. Where the net fair value of the identifiable assets and liabilities of the acquiree is in excess of the consideration paid, a gain on bargain purchase is recognised immediately in the Income statement. For the purpose of assessing impairment, goodwill is grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is tested for impairment annually and whenever indicators exist that the carrying value may not be recoverable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-715": { "value": "b Brands Brands arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. Long established brands that are expected to be used indefinitely are not amortised but assessed annually for impairment. c Customer loyalty programmes Customer loyalty programmes arising on the acquisition of subsidiaries are initially recognised at fair value at the acquisition date. A customer loyalty programme with an expected useful life is amortised over the expected remaining useful life. Established customer loyalty programmes that are expected to be used indefinitely are not amortised but assessed annually for impairment. d Landing rights Landing rights acquired in a business combination are recognised at fair value at the acquisition date. Landing rights acquired from other airlines are capitalised at cost. Capitalised landing rights based outside of the UK and the EU are amortised on a straight-line basis over a period not exceeding 20 years. Capitalised landing rights based within the UK and the EU are not amortised, as regulations provide that these landing rights are perpetual. e Contract-based intangibles Contract based intangibles acquired in a business combination are recognised initially at fair value at the acquisition date and amortised over the remaining life of the contract. f Software The cost to purchase or develop computer software that is separable from an item of related hardware is capitalised separately and amortised on a straight-line basis generally over a period not exceeding five years, with certain specific software development s amortised over a period of up to ten years. g Emissions allowances Where an operating company purchases emissions allowances these amounts are recognised at cost and recorded within Intangible assets. As an operating company emits CO 2 equivalent and builds up an obligation to the relevant authorities, a provision is recognised. Emissions allowances recorded within Intangible assets are not revalued or amortised but are tested for impairment whenever indicators exist that the carrying value may not be recoverable. For those obligations arising for which the operating company has purchased emission allowances to offset the emissions, the provision is recognised at the weighted average cost of the intangible asset. For those obligations arising for which the operating company has not yet purchased emission allowances to offset the emissions, the provision is recognised at the market price of the allowances required at the reporting date. As the provision is recognised, a corresponding amount is recorded in the Income statement within Fuel, oil costs and emission charges. The Group\u2019s emissions obligation, recognised as a separate liability, is extinguished when the associated emission certificates are surrendered, which is typically within 12 months of the reporting date. From time to time the Group enters into sale and repurchase transactions for specified emission allowances. Such transactions do not meet the recognition criteria of a sale under IFRS 15 and accordingly the asset is retained on the balance sheet within Intangible assets and an Other financing liability recognised equal to the proceeds received.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-727": { "value": "g Emissions allowances Where an operating company purchases emissions allowances these amounts are recognised at cost and recorded within Intangible assets. As an operating company emits CO 2 equivalent and builds up an obligation to the relevant authorities, a provision is recognised. Emissions allowances recorded within Intangible assets are not revalued or amortised but are tested for impairment whenever indicators exist that the carrying value may not be recoverable. For those obligations arising for which the operating company has purchased emission allowances to offset the emissions, the provision is recognised at the weighted average cost of the intangible asset. For those obligations arising for which the operating company has not yet purchased emission allowances to offset the emissions, the provision is recognised at the market price of the allowances required at the reporting date. As the provision is recognised, a corresponding amount is recorded in the Income statement within Fuel, oil costs and emission charges. The Group\u2019s emissions obligation, recognised as a separate liability, is extinguished when the associated emission certificates are surrendered, which is typically within 12 months of the reporting date. From time to time the Group enters into sale and repurchase transactions for specified emission allowances. Such transactions do not meet the recognition criteria of a sale under IFRS 15 and accordingly the asset is retained on the balance sheet within Intangible assets and an Other financing liability recognised equal to the proceeds received. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmissionRightsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-730": { "value": "Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the value by which the asset\u2019s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less cost to sell and value-in-use. Non-financial assets other than goodwill that were subject to an impairment are reviewed for possible reversal of the impairment at each reporting date. a Property, plant and equipment, including Right of use assets The carrying value is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable and the cumulative impairment losses are shown as a reduction in the carrying value of property, plant and equipment. b Intangible assets Intangible assets are held at cost and are either amortised on a straight-line basis over their economic life, or they are deemed to have an indefinite economic life and are not amortised. Indefinite life intangible assets are tested annually for impairment or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-695": { "value": "Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the value by which the asset\u2019s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset\u2019s fair value less cost to sell and value-in-use. Non-financial assets other than goodwill that were subject to an impairment are reviewed for possible reversal of the impairment at each reporting date. a Property, plant and equipment, including Right of use assets The carrying value is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable and the cumulative impairment losses are shown as a reduction in the carrying value of property, plant and equipment. b Intangible assets Intangible assets are held at cost and are either amortised on a straight-line basis over their economic life, or they are deemed to have an indefinite economic life and are not amortised. Indefinite life intangible assets are tested annually for impairment or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-731": { "value": "Investments in associates and joint ventures An associate is an undertaking in which the Group has a long-term equity interest and over which it has the power to exercise significant influence. Where the Group cannot exercise control over an entity in which it has a shareholding greater than 51 per cent, the equity interest is treated as an associated undertaking. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates and joint ventures are accounted for using the equity method, and initially recognised at cost. The Group\u2019s interest in the net assets of associates and joint ventures is included in Investments accounted for using the equity method in the Balance sheet and its interest in their results is included in the Income statement, below operating result. The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-716": { "value": "Investments in associates and joint ventures An associate is an undertaking in which the Group has a long-term equity interest and over which it has the power to exercise significant influence. Where the Group cannot exercise control over an entity in which it has a shareholding greater than 51 per cent, the equity interest is treated as an associated undertaking. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates and joint ventures are accounted for using the equity method, and initially recognised at cost. The Group\u2019s interest in the net assets of associates and joint ventures is included in Investments accounted for using the equity method in the Balance sheet and its interest in their results is included in the Income statement, below operating result. The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-696": { "value": "Investments in associates and joint ventures An associate is an undertaking in which the Group has a long-term equity interest and over which it has the power to exercise significant influence. Where the Group cannot exercise control over an entity in which it has a shareholding greater than 51 per cent, the equity interest is treated as an associated undertaking. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Investments in associates and joint ventures are accounted for using the equity method, and initially recognised at cost. The Group\u2019s interest in the net assets of associates and joint ventures is included in Investments accounted for using the equity method in the Balance sheet and its interest in their results is included in the Income statement, below operating result. The attributable results of those companies acquired or disposed of during the year are included for the periods of ownership. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-697": { "value": "Financial instruments a Financial assets and liabilities Financial assets and financial liabilities are classified, upon initial recognition, as measured at amortised cost, at fair value through other comprehensive income (OCI), or fair value through profit or loss. Financial assets and financial liabilities are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets and financial liabilities. The classification of financial assets and financial liabilities at initial recognition depends on the financial assets\u2019 and financial liabilities\u2019 contractual cash flow characteristics and the Group\u2019s business model for managing them. In order for a financial asset and financial liability to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. A financial asset or financial liability that is not SPPI is classified and measured at fair value through profit or loss. This assessment is performed on an instrument by instrument basis. The Group\u2019s business model for managing financial assets and financial liabilities establishes how it manages its financial assets and financial liabilities in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets and financial liabilities classified and measured at amortised c ost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets and financial liabilities classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Long term borrowings Long-term borrowings are recorded at amortised cost, including lease liabilities which contain interest rate swaps that are closely related to the underlying financing and as such are not accounted for as an embedded derivative. Convertible debt Convertible bonds are classified as either compound financial instruments or hybrid financial instruments depending on the settlement alternatives upon redemption. Where the bondholders exercise their equity conversion options and the Group has no alternative other than to settle the convertible bonds into a fixed number of ordinary shares of the Company, then the bonds are classified as a compound financial instrument. Where the Group has an alternative settlement mechanism to the convertible bonds that permits settlement in cash, then the convertible instrument is classified as a hybrid financial instrument. Convertible bonds that are classified as compound financial instruments consist of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt, and is subsequently recorded on an amortised cost basis using the effective interest method until extinguished on conversion or maturity of the bonds, and is recognised within Long-term borrowings. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in the equity portion of the convertible bond in Other reserves and is not subsequently remeasured. The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this value and the interest paid is added to the carrying amount of the liability. Convertible bonds that are classified as hybrid financial instruments consist only of a liability component recognised within Long-term borrowings. At the date of issue, the entirety of the convertible bonds is accounted for at fair value with subsequent fair value gains or losses recorded within Long-term borrowings. The fair value of such financial instruments is obtained from their respective quoted prices in active markets, with the portion of the change in fair value attributable to changes in the credit risk of the convertible bonds recognised in Other comprehensive income and the portion of the change in fair value attributable to market conditions recognised in the Income statement within Finance costs. Issue costs associated with compound financial instruments are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying values at the date of issue. The portion relating to the equity component is charged directly against equity. Issue costs associated with hybrid financial instruments are expensed immediately to the Income statement. Other equity investments Other equity investments are non-derivative financial assets including listed and unlisted investments, excluding interests in associates and joint ventures. On initial recognition, these equity investments are irrevocably designated as measured at fair value through Other comprehensive income. They are subsequently measured at fair value, with changes in fair value recognised in Other comprehensive income with no recycling of these gains and losses to the Income statement when the investment is sold or a change in the structure of transaction changes its classification as an Other equity instrument. Dividends received on other equity investments are recognised in the Income statement. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Interest-bearing deposits Interest-bearing deposits, principally comprising funds held with banks and other financial institutions with contractual cash flows that are SPPI, and held in order to collect contractual cash flows, are carried at amortised cost using the effective interest method. Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation. b Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits with any qualifying financial institution repayable on demand or maturing within three months of the date of acquisition and which are subject to an insignificant risk of change in value. c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is en tered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. When a derivative is designated as a hedging instrument and that instrument expires, is sold or is restructured, if the initial forecast transaction is still expected to occur, any cumulative gain or loss remains in the cash flow hedge reserve until such time as the hedge item impacts the Income statement. Where there is a change in the risk management objective, then hedge accounting is discontinued and the associated cumulative gain or loss arising prior to the change in risk management objective remains in the cash flow hedge reserve until such time as the underlying hedged item impacts the Income statement had the risk management objective continued to have been met. Where a forecast transaction which was previously determined to be highly probable and for which hedge accounting applied, is no longer expected to occur, hedge accounting is discontinued and the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified to the Income statement. Each operating company enters into foreign currency derivative contracts, that are not designated in a hedge relationship, in order to mitigate foreign exchange movements on financial liabilities designated in currencies other than the presentational currency of each operating company, including but not limited to, lease liabilities. Movements in the fair value of such derivatives are recognised in the Income statement in the period in which they occur and are presented within Net currency retranslation charges. Exchange gains and losses on monetary investments are taken to the Income statement unless the item has been designated and is assessed as an effective hedging instrument. Exchange gains and losses on non-monetary investments are reflected in equity. d Cash flow hedges Changes in the fair value of derivative financial instruments designated as in a hedge relationship of a highly probable expected future transaction are assessed for effectiveness and accordingly recorded in the Cash flow hedge reserve within equity. Hedge effectiveness Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: (i) there is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument; (ii) the effect of credit risk does not dominate the value changes that result from that economic relationship; and (iii) the hedge ratio is aligned with the requirements of the Group\u2019s risk management strategy and in all instances is maintained at a ratio of 1:1. Sources of ineffectiveness include the following: \u2022 in hedges of fuel purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; \u2022 in hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; and \u2022 in hedges of interest rate payments, ineffectiveness may arise if there are differences in the critical terms between the interest rate derivative instrument and the underlying hedged item, or if there are changes in the credit risk of the Group or the derivative counterparty. Ineffectiveness is recorded within the Income statement as Realised/unrealised (losses)/gains on derivatives not qualifying for hedge accounting and presented within Other non-operating charges. Reclassification adjustments Gains and losses accumulated in the Cash flow hedge reserve within equity are reclassified from the Cash flow hedge reserve when the hedged item affects the Income statement as follows: \u2022 where the forecast hedged item results in the recognition of expenses within the Income statement (such as the purchase of jet fuel for which both fuel and the associated foreign currency derivatives are designated as the hedging instrument), the accumulated gains and losses recorded in both the cash flow hedge reserve and the cost of hedging reserve are reclassified and included in the Income statement within the same caption as the hedged item is presented. Such reclassification occurs in the same period as the hedged item is recognised in the Income statement; \u2022 where the forecast hedged item results in the recognition of a non-financial asset (such as the purchase of aircraft for which foreign currency derivatives are designated as the hedging instrument or where the purchase of jet fuel gives rise to the recognition of fuel inventory in storage facilities), or a non-financial liability (such as the sales in advance of carriage for which both foreign currency derivatives and non-financial derivative instruments are designated as the hedging instrument), the accumulated gains and losses recorded within both the cash flow hedge reserve and the cost of hedging reserve are included in the initial cost of the asset and liability, respectively. These gains or losses are recorded in the Income statement as the non-financial asset and the non-financial liability affects the Income statement (which for aircraft is through Depreciation over the expected life of the aircraft, for fuel inventory through Fuel, oil costs and emission charges and for sales in advance of carriage through Passenger revenue when the flight is flown); and \u2022 where the forecast hedged items results in the recognition of a financial asset or liability (such as variable rate debt for which interest rate swaps are designated as the hedging instrument), the accumulated gains and losses recorded within the cash flow hedge reserve are reclassified to Interest expense within the Income statement at the same time as the interest expense arises on the hedged item. Further information on the risk management activities of the Group is given in note 28d. e Interest rate benchmark reform In 2020 the Group adopted the amendments to IFRS 9 and IFRS 7 relating to the interest rate benchmark reform Phase 1, (\u2018Phase 1\u2019) and in 2021 the Group adopted the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to the interest rate benchmark reform Phase 2 (\u2018Phase 2\u2019). The Phase 1 amendments provide temporary relief from applying certain hedge accounting requirements to hedging relationships directly affected by Interbank Offered Rates (\u2018IBOR\u2019) reform. The reliefs have the effect that IBOR reform does not cause hedge accounting to terminate prior to contracts being amended. Where transition to an alternative benchmark rate has taken place, the Group ceases to apply the Phase 1 amendments and instead applies the Phase 2 amendments. Hedge accounting Where the Group continues to apply the Phase 1 amendments, the following reliefs are applied: \u2022 when considering the highly probable requirement, the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the Group\u2019s hedged long-term borrowings are based, do not change as a result of IBOR reform; \u2022 in assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the cash flows of the hedged long-term borrowings and the interest rate swaps that hedge them are based, are not altered by IBOR reform; and \u2022 the Group has not recycled the cash flow hedge reserve relating to the period after the IBOR reform is expected to take effect. When the Group ceases to apply the Phase 1 amendments, the Group amends its hedge designation to reflect changes which are required by IBOR reform, but only to make one or more of the following changes: \u2022 designating an alternative benchmark rate (contractually or non-contractually specified) as the hedged risk; \u2022 amending the description of the hedged item, including the description of the designated portion of the cash flows being hedged; or \u2022 amending the description of the hedging instrument. The associated hedge documentation is updated to reflect these changes in designation by the end of the reporting period in which the changes are made. Such amendments do not give rise to the hedge relationship being discontinued. When the Group transitions to an alternative benchmark rate, the accumulated amounts within the cash flow hedge reserve are determined to be based on the alternative benchmark rate and no reclassification adjustments are made from the cash flow hedge reserve to the Income statement. Long-term borrowings and lease liabilities Phase 2 of the amendments requires that, for financial instruments measured using amortised cost measurement, changes to the basis for determining the contractual cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest rate prospectively. No gain or loss is recognised upon transition to the new benchmark. The expedient is only applicable to direct changes that are required by interest rate benchmark reform. For lease liabilities where there is a change to the basis for determining the contractual cash flows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reflects the change in the interest rate where the change is required by IBOR reform. Further information on the management of and uncertainty arising from interest rate reform is given in note 27i. No amounts have been recorded in the current or prior periods as a result of these amendments. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-735": { "value": "a Financial assets and liabilities Financial assets and financial liabilities are classified, upon initial recognition, as measured at amortised cost, at fair value through other comprehensive income (OCI), or fair value through profit or loss. Financial assets and financial liabilities are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets and financial liabilities. The classification of financial assets and financial liabilities at initial recognition depends on the financial assets\u2019 and financial liabilities\u2019 contractual cash flow characteristics and the Group\u2019s business model for managing them. In order for a financial asset and financial liability to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. A financial asset or financial liability that is not SPPI is classified and measured at fair value through profit or loss. This assessment is performed on an instrument by instrument basis. The Group\u2019s business model for managing financial assets and financial liabilities establishes how it manages its financial assets and financial liabilities in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets and financial liabilities classified and measured at amortised c ost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets and financial liabilities classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Long term borrowings Long-term borrowings are recorded at amortised cost, including lease liabilities which contain interest rate swaps that are closely related to the underlying financing and as such are not accounted for as an embedded derivative. Convertible debt Convertible bonds are classified as either compound financial instruments or hybrid financial instruments depending on the settlement alternatives upon redemption. Where the bondholders exercise their equity conversion options and the Group has no alternative other than to settle the convertible bonds into a fixed number of ordinary shares of the Company, then the bonds are classified as a compound financial instrument. Where the Group has an alternative settlement mechanism to the convertible bonds that permits settlement in cash, then the convertible instrument is classified as a hybrid financial instrument. Convertible bonds that are classified as compound financial instruments consist of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt, and is subsequently recorded on an amortised cost basis using the effective interest method until extinguished on conversion or maturity of the bonds, and is recognised within Long-term borrowings. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in the equity portion of the convertible bond in Other reserves and is not subsequently remeasured. The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this value and the interest paid is added to the carrying amount of the liability. Convertible bonds that are classified as hybrid financial instruments consist only of a liability component recognised within Long-term borrowings. At the date of issue, the entirety of the convertible bonds is accounted for at fair value with subsequent fair value gains or losses recorded within Long-term borrowings. The fair value of such financial instruments is obtained from their respective quoted prices in active markets, with the portion of the change in fair value attributable to changes in the credit risk of the convertible bonds recognised in Other comprehensive income and the portion of the change in fair value attributable to market conditions recognised in the Income statement within Finance costs. Issue costs associated with compound financial instruments are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying values at the date of issue. The portion relating to the equity component is charged directly against equity. Issue costs associated with hybrid financial instruments are expensed immediately to the Income statement. Other equity investments Other equity investments are non-derivative financial assets including listed and unlisted investments, excluding interests in associates and joint ventures. On initial recognition, these equity investments are irrevocably designated as measured at fair value through Other comprehensive income. They are subsequently measured at fair value, with changes in fair value recognised in Other comprehensive income with no recycling of these gains and losses to the Income statement when the investment is sold or a change in the structure of transaction changes its classification as an Other equity instrument. Dividends received on other equity investments are recognised in the Income statement. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Interest-bearing deposits Interest-bearing deposits, principally comprising funds held with banks and other financial institutions with contractual cash flows that are SPPI, and held in order to collect contractual cash flows, are carried at amortised cost using the effective interest method. Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-728": { "value": "a Financial assets and liabilities Financial assets and financial liabilities are classified, upon initial recognition, as measured at amortised cost, at fair value through other comprehensive income (OCI), or fair value through profit or loss. Financial assets and financial liabilities are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets and financial liabilities. The classification of financial assets and financial liabilities at initial recognition depends on the financial assets\u2019 and financial liabilities\u2019 contractual cash flow characteristics and the Group\u2019s business model for managing them. In order for a financial asset and financial liability to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. A financial asset or financial liability that is not SPPI is classified and measured at fair value through profit or loss. This assessment is performed on an instrument by instrument basis. The Group\u2019s business model for managing financial assets and financial liabilities establishes how it manages its financial assets and financial liabilities in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets and financial liabilities classified and measured at amortised c ost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets and financial liabilities classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-717": { "value": "a Financial assets and liabilities Financial assets and financial liabilities are classified, upon initial recognition, as measured at amortised cost, at fair value through other comprehensive income (OCI), or fair value through profit or loss. Financial assets and financial liabilities are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets and financial liabilities. The classification of financial assets and financial liabilities at initial recognition depends on the financial assets\u2019 and financial liabilities\u2019 contractual cash flow characteristics and the Group\u2019s business model for managing them. In order for a financial asset and financial liability to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. A financial asset or financial liability that is not SPPI is classified and measured at fair value through profit or loss. This assessment is performed on an instrument by instrument basis. The Group\u2019s business model for managing financial assets and financial liabilities establishes how it manages its financial assets and financial liabilities in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets and financial liabilities classified and measured at amortised c ost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets and financial liabilities classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Long term borrowings Long-term borrowings are recorded at amortised cost, including lease liabilities which contain interest rate swaps that are closely related to the underlying financing and as such are not accounted for as an embedded derivative. Convertible debt Convertible bonds are classified as either compound financial instruments or hybrid financial instruments depending on the settlement alternatives upon redemption. Where the bondholders exercise their equity conversion options and the Group has no alternative other than to settle the convertible bonds into a fixed number of ordinary shares of the Company, then the bonds are classified as a compound financial instrument. Where the Group has an alternative settlement mechanism to the convertible bonds that permits settlement in cash, then the convertible instrument is classified as a hybrid financial instrument. Convertible bonds that are classified as compound financial instruments consist of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt, and is subsequently recorded on an amortised cost basis using the effective interest method until extinguished on conversion or maturity of the bonds, and is recognised within Long-term borrowings. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in the equity portion of the convertible bond in Other reserves and is not subsequently remeasured. The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this value and the interest paid is added to the carrying amount of the liability. Convertible bonds that are classified as hybrid financial instruments consist only of a liability component recognised within Long-term borrowings. At the date of issue, the entirety of the convertible bonds is accounted for at fair value with subsequent fair value gains or losses recorded within Long-term borrowings. The fair value of such financial instruments is obtained from their respective quoted prices in active markets, with the portion of the change in fair value attributable to changes in the credit risk of the convertible bonds recognised in Other comprehensive income and the portion of the change in fair value attributable to market conditions recognised in the Income statement within Finance costs. Issue costs associated with compound financial instruments are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying values at the date of issue. The portion relating to the equity component is charged directly against equity. Issue costs associated with hybrid financial instruments are expensed immediately to the Income statement. Other equity investments Other equity investments are non-derivative financial assets including listed and unlisted investments, excluding interests in associates and joint ventures. On initial recognition, these equity investments are irrevocably designated as measured at fair value through Other comprehensive income. They are subsequently measured at fair value, with changes in fair value recognised in Other comprehensive income with no recycling of these gains and losses to the Income statement when the investment is sold or a change in the structure of transaction changes its classification as an Other equity instrument. Dividends received on other equity investments are recognised in the Income statement. The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Interest-bearing deposits Interest-bearing deposits, principally comprising funds held with banks and other financial institutions with contractual cash flows that are SPPI, and held in order to collect contractual cash flows, are carried at amortised cost using the effective interest method. Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-729": { "value": "
Long term borrowings
Long-term borrowings are recorded at amortised cost, including lease liabilities which contain interest rate swaps that are closely related to
the underlying financing and as such are not accounted for as an embedded derivative.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-732": { "value": "Impairment of financial assets At each balance sheet date, the Group recognises provisions for expected credit losses on financial assets measured at amortised cost, based on either 12-month or lifetime losses depending on whether there has been a significant increase in credit risk since initial recognition. The simplified approach, based on the calculation and recognition of lifetime expected credit losses, is applied to contracts that have a maturity of one year or less, including trade receivables. When determining whether there has been a significant increase in credit risk since initial recognition and when estimating the expected credit loss, the Group considers reasonable and supportable information that is relevant and available. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, including forward-looking information. Such forward-looking information takes into consideration the forecast economic conditions expected to impact the outstanding balances at the balance sheet date. A financial asset is written off when there is no reasonable expectation of recovery, such as the customer having filed for liquidation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-736": { "value": "
b Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits with any qualifying financial institution repayable on demand or maturing
within three months of the date of acquisition and which are subject to an insignificant risk of change in value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-737": { "value": "c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is en tered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. When a derivative is designated as a hedging instrument and that instrument expires, is sold or is restructured, if the initial forecast transaction is still expected to occur, any cumulative gain or loss remains in the cash flow hedge reserve until such time as the hedge item impacts the Income statement. Where there is a change in the risk management objective, then hedge accounting is discontinued and the associated cumulative gain or loss arising prior to the change in risk management objective remains in the cash flow hedge reserve until such time as the underlying hedged item impacts the Income statement had the risk management objective continued to have been met. Where a forecast transaction which was previously determined to be highly probable and for which hedge accounting applied, is no longer expected to occur, hedge accounting is discontinued and the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified to the Income statement. Each operating company enters into foreign currency derivative contracts, that are not designated in a hedge relationship, in order to mitigate foreign exchange movements on financial liabilities designated in currencies other than the presentational currency of each operating company, including but not limited to, lease liabilities. Movements in the fair value of such derivatives are recognised in the Income statement in the period in which they occur and are presented within Net currency retranslation charges. Exchange gains and losses on monetary investments are taken to the Income statement unless the item has been designated and is assessed as an effective hedging instrument. Exchange gains and losses on non-monetary investments are reflected in equity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-733": { "value": "c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is en tered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. When a derivative is designated as a hedging instrument and that instrument expires, is sold or is restructured, if the initial forecast transaction is still expected to occur, any cumulative gain or loss remains in the cash flow hedge reserve until such time as the hedge item impacts the Income statement. Where there is a change in the risk management objective, then hedge accounting is discontinued and the associated cumulative gain or loss arising prior to the change in risk management objective remains in the cash flow hedge reserve until such time as the underlying hedged item impacts the Income statement had the risk management objective continued to have been met. Where a forecast transaction which was previously determined to be highly probable and for which hedge accounting applied, is no longer expected to occur, hedge accounting is discontinued and the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified to the Income statement. Each operating company enters into foreign currency derivative contracts, that are not designated in a hedge relationship, in order to mitigate foreign exchange movements on financial liabilities designated in currencies other than the presentational currency of each operating company, including but not limited to, lease liabilities. Movements in the fair value of such derivatives are recognised in the Income statement in the period in which they occur and are presented within Net currency retranslation charges. Exchange gains and losses on monetary investments are taken to the Income statement unless the item has been designated and is assessed as an effective hedging instrument. Exchange gains and losses on non-monetary investments are reflected in equity. d Cash flow hedges Changes in the fair value of derivative financial instruments designated as in a hedge relationship of a highly probable expected future transaction are assessed for effectiveness and accordingly recorded in the Cash flow hedge reserve within equity. Hedge effectiveness Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: (i) there is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument; (ii) the effect of credit risk does not dominate the value changes that result from that economic relationship; and (iii) the hedge ratio is aligned with the requirements of the Group\u2019s risk management strategy and in all instances is maintained at a ratio of 1:1. Sources of ineffectiveness include the following: \u2022 in hedges of fuel purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; \u2022 in hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; and \u2022 in hedges of interest rate payments, ineffectiveness may arise if there are differences in the critical terms between the interest rate derivative instrument and the underlying hedged item, or if there are changes in the credit risk of the Group or the derivative counterparty. Ineffectiveness is recorded within the Income statement as Realised/unrealised (losses)/gains on derivatives not qualifying for hedge accounting and presented within Other non-operating charges. Reclassification adjustments Gains and losses accumulated in the Cash flow hedge reserve within equity are reclassified from the Cash flow hedge reserve when the hedged item affects the Income statement as follows: \u2022 where the forecast hedged item results in the recognition of expenses within the Income statement (such as the purchase of jet fuel for which both fuel and the associated foreign currency derivatives are designated as the hedging instrument), the accumulated gains and losses recorded in both the cash flow hedge reserve and the cost of hedging reserve are reclassified and included in the Income statement within the same caption as the hedged item is presented. Such reclassification occurs in the same period as the hedged item is recognised in the Income statement; \u2022 where the forecast hedged item results in the recognition of a non-financial asset (such as the purchase of aircraft for which foreign currency derivatives are designated as the hedging instrument or where the purchase of jet fuel gives rise to the recognition of fuel inventory in storage facilities), or a non-financial liability (such as the sales in advance of carriage for which both foreign currency derivatives and non-financial derivative instruments are designated as the hedging instrument), the accumulated gains and losses recorded within both the cash flow hedge reserve and the cost of hedging reserve are included in the initial cost of the asset and liability, respectively. These gains or losses are recorded in the Income statement as the non-financial asset and the non-financial liability affects the Income statement (which for aircraft is through Depreciation over the expected life of the aircraft, for fuel inventory through Fuel, oil costs and emission charges and for sales in advance of carriage through Passenger revenue when the flight is flown); and \u2022 where the forecast hedged items results in the recognition of a financial asset or liability (such as variable rate debt for which interest rate swaps are designated as the hedging instrument), the accumulated gains and losses recorded within the cash flow hedge reserve are reclassified to Interest expense within the Income statement at the same time as the interest expense arises on the hedged item. Further information on the risk management activities of the Group is given in note 28d. e Interest rate benchmark reform In 2020 the Group adopted the amendments to IFRS 9 and IFRS 7 relating to the interest rate benchmark reform Phase 1, (\u2018Phase 1\u2019) and in 2021 the Group adopted the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to the interest rate benchmark reform Phase 2 (\u2018Phase 2\u2019). The Phase 1 amendments provide temporary relief from applying certain hedge accounting requirements to hedging relationships directly affected by Interbank Offered Rates (\u2018IBOR\u2019) reform. The reliefs have the effect that IBOR reform does not cause hedge accounting to terminate prior to contracts being amended. Where transition to an alternative benchmark rate has taken place, the Group ceases to apply the Phase 1 amendments and instead applies the Phase 2 amendments. Hedge accounting Where the Group continues to apply the Phase 1 amendments, the following reliefs are applied: \u2022 when considering the highly probable requirement, the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the Group\u2019s hedged long-term borrowings are based, do not change as a result of IBOR reform; \u2022 in assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the cash flows of the hedged long-term borrowings and the interest rate swaps that hedge them are based, are not altered by IBOR reform; and \u2022 the Group has not recycled the cash flow hedge reserve relating to the period after the IBOR reform is expected to take effect. When the Group ceases to apply the Phase 1 amendments, the Group amends its hedge designation to reflect changes which are required by IBOR reform, but only to make one or more of the following changes: \u2022 designating an alternative benchmark rate (contractually or non-contractually specified) as the hedged risk; \u2022 amending the description of the hedged item, including the description of the designated portion of the cash flows being hedged; or \u2022 amending the description of the hedging instrument. The associated hedge documentation is updated to reflect these changes in designation by the end of the reporting period in which the changes are made. Such amendments do not give rise to the hedge relationship being discontinued. When the Group transitions to an alternative benchmark rate, the accumulated amounts within the cash flow hedge reserve are determined to be based on the alternative benchmark rate and no reclassification adjustments are made from the cash flow hedge reserve to the Income statement. Long-term borrowings and lease liabilities Phase 2 of the amendments requires that, for financial instruments measured using amortised cost measurement, changes to the basis for determining the contractual cash flows required by interest rate benchmark reform are reflected by adjusting their effective interest rate prospectively. No gain or loss is recognised upon transition to the new benchmark. The expedient is only applicable to direct changes that are required by interest rate benchmark reform. For lease liabilities where there is a change to the basis for determining the contractual cash flows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reflects the change in the interest rate where the change is required by IBOR reform. Further information on the management of and uncertainty arising from interest rate reform is given in note 27i. No amounts have been recorded in the current or prior periods as a result of these amendments. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-718": { "value": "c Derivative and non-derivative financial instruments and hedging activities Derivative financial instruments, comprising interest rate swap derivatives, foreign exchange derivatives and fuel hedging derivatives (including options, swaps and forward contracts) are initially recognised at fair value on the date a derivative contract is en tered into and are subsequently remeasured at their fair value. They are classified as financial instruments through the Income statement. The method of recognising the resulting gain or loss arising from remeasurement depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged (as detailed below under cash flow hedges). The time value of options is excluded from the designated hedging instrument and accounted for as a cost of hedging. Movements in the time value of options are recognised in Other comprehensive income until the underlying transaction affects the Income statement. When forward contracts are used to hedge forecast transactions, the Group generally designates only the spot component of the forward contract as the hedging instrument within a hedge relationship. Gains or losses arising on the change in fair value of the spot component are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. The forward component of a forward contract is not designated within a hedge relationship, with the associated gains and losses on the forward component recorded within Other comprehensive income in the Cost of hedging reserve within equity until the underlying transaction affects the Income statement. To manage foreign exchange movements on foreign currency customer cash inflows (denominated in US dollars, euros and Japanese yen), certain non-derivative repayment instalments on foreign currency-denominated interest-bearing liabilities are designated as hedging instruments within a hedge relationship. Gains or losses arising from movements in foreign exchange rates are recognised within Other comprehensive income in the Cash flow hedge reserve within equity. Accumulated gains or losses within the cash flow hedge reserve are transferred to Sales in advance of carriage in the same period as the forecast transaction occurs or when hedge accounting is discontinued when the forecast transaction is no longer expected to occur, at which point amounts are immediately reclassified to Passenger revenue. When a derivative is designated as a hedging instrument and that instrument expires, is sold or is restructured, if the initial forecast transaction is still expected to occur, any cumulative gain or loss remains in the cash flow hedge reserve until such time as the hedge item impacts the Income statement. Where there is a change in the risk management objective, then hedge accounting is discontinued and the associated cumulative gain or loss arising prior to the change in risk management objective remains in the cash flow hedge reserve until such time as the underlying hedged item impacts the Income statement had the risk management objective continued to have been met. Where a forecast transaction which was previously determined to be highly probable and for which hedge accounting applied, is no longer expected to occur, hedge accounting is discontinued and the cumulative gain or loss in the cash flow hedge reserve is immediately reclassified to the Income statement. Each operating company enters into foreign currency derivative contracts, that are not designated in a hedge relationship, in order to mitigate foreign exchange movements on financial liabilities designated in currencies other than the presentational currency of each operating company, including but not limited to, lease liabilities. Movements in the fair value of such derivatives are recognised in the Income statement in the period in which they occur and are presented within Net currency retranslation charges. Exchange gains and losses on monetary investments are taken to the Income statement unless the item has been designated and is assessed as an effective hedging instrument. Exchange gains and losses on non-monetary investments are reflected in equity. d Cash flow hedges Changes in the fair value of derivative financial instruments designated as in a hedge relationship of a highly probable expected future transaction are assessed for effectiveness and accordingly recorded in the Cash flow hedge reserve within equity. Hedge effectiveness Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: (i) there is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument; (ii) the effect of credit risk does not dominate the value changes that result from that economic relationship; and (iii) the hedge ratio is aligned with the requirements of the Group\u2019s risk management strategy and in all instances is maintained at a ratio of 1:1. Sources of ineffectiveness include the following: \u2022 in hedges of fuel purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; \u2022 in hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty; and \u2022 in hedges of interest rate payments, ineffectiveness may arise if there are differences in the critical terms between the interest rate derivative instrument and the underlying hedged item, or if there are changes in the credit risk of the Group or the derivative counterparty. Ineffectiveness is recorded within the Income statement as Realised/unrealised (losses)/gains on derivatives not qualifying for hedge accounting and presented within Other non-operating charges. Reclassification adjustments Gains and losses accumulated in the Cash flow hedge reserve within equity are reclassified from the Cash flow hedge reserve when the hedged item affects the Income statement as follows: \u2022 where the forecast hedged item results in the recognition of expenses within the Income statement (such as the purchase of jet fuel for which both fuel and the associated foreign currency derivatives are designated as the hedging instrument), the accumulated gains and losses recorded in both the cash flow hedge reserve and the cost of hedging reserve are reclassified and included in the Income statement within the same caption as the hedged item is presented. Such reclassification occurs in the same period as the hedged item is recognised in the Income statement; \u2022 where the forecast hedged item results in the recognition of a non-financial asset (such as the purchase of aircraft for which foreign currency derivatives are designated as the hedging instrument or where the purchase of jet fuel gives rise to the recognition of fuel inventory in storage facilities), or a non-financial liability (such as the sales in advance of carriage for which both foreign currency derivatives and non-financial derivative instruments are designated as the hedging instrument), the accumulated gains and losses recorded within both the cash flow hedge reserve and the cost of hedging reserve are included in the initial cost of the asset and liability, respectively. These gains or losses are recorded in the Income statement as the non-financial asset and the non-financial liability affects the Income statement (which for aircraft is through Depreciation over the expected life of the aircraft, for fuel inventory through Fuel, oil costs and emission charges and for sales in advance of carriage through Passenger revenue when the flight is flown); and \u2022 where the forecast hedged items results in the recognition of a financial asset or liability (such as variable rate debt for which interest rate swaps are designated as the hedging instrument), the accumulated gains and losses recorded within the cash flow hedge reserve are reclassified to Interest expense within the Income statement at the same time as the interest expense arises on the hedged item. Further information on the risk management activities of the Group is given in note 28d. e Interest rate benchmark reform In 2020 the Group adopted the amendments to IFRS 9 and IFRS 7 relating to the interest rate benchmark reform Phase 1, (\u2018Phase 1\u2019) and in 2021 the Group adopted the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to the interest rate benchmark reform Phase 2 (\u2018Phase 2\u2019). The Phase 1 amendments provide temporary relief from applying certain hedge accounting requirements to hedging relationships directly affected by Interbank Offered Rates (\u2018IBOR\u2019) reform. The reliefs have the effect that IBOR reform does not cause hedge accounting to terminate prior to contracts being amended. Where transition to an alternative benchmark rate has taken place, the Group ceases to apply the Phase 1 amendments and instead applies the Phase 2 amendments. Hedge accounting Where the Group continues to apply the Phase 1 amendments, the following reliefs are applied: \u2022 when considering the highly probable requirement, the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the Group\u2019s hedged long-term borrowings are based, do not change as a result of IBOR reform; \u2022 in assessing whether the hedge is expected to be highly effective on a forward-looking basis the Group has assumed that those benchmark rates that need to be transitioned to an alternative benchmark rate, on which the cash flows of the hedged long-term borrowings and the interest rate swaps that hedge them are based, are not altered by IBOR reform; and \u2022 the Group has not recycled the cash flow hedge reserve relating to the period after the IBOR reform is expected to take effect. When the Group ceases to apply the Phase 1 amendments, the Group amends its hedge designation to reflect changes which are required by IBOR reform, but only to make one or more of the following changes: \u2022 designating an alternative benchmark rate (contractually or non-contractually specified) as the hedged risk; \u2022 amending the description of the hedged item, including the description of the designated portion of the cash flows being hedged; or \u2022 amending the description of the hedging instrument. The associated hedge documentation is updated to reflect these changes in designation by the end of the reporting period in which the changes are made. Such amendments do not give rise to the hedge relationship being discontinued. When the Group transitions to an alternative benchmark rate, the accumulated amounts within the cash flow hedge reserve are determined to be based on the alternative benchmark rate and no reclassification adjustments are made from the cash flow hedge reserve to the Income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-698": { "value": "Employee benefit plans a Pension obligations The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior years. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior years. The benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. The discount rate is the yield at the balance sheet date on AA-rated corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. When the net obligation calculation results in an asset for the Group, the recognition of an asset is limited to the present value of any future refunds, net of the relevant taxes, from the plan or reductions in future contributions to the plan (\u2018the asset ceiling\u2019). The fair value of the plan assets is based on market price information and, in the case of quoted securities, is the published bid price. The fair value of insurance policies which exactly match the amount and timing of some or all benefits payable under the scheme are deemed to be the present value of the related obligations. Longevity swaps are measured at their fair value. Current service costs are recognised within employee costs in the year in which they arise. Past service costs are recognised in the event of a plan amendment or curtailment, or when the Group recognises related restructuring costs or severance obligations. The net interest is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest and other expenses related to the defined benefit plans are recognised in the Income statement. Remeasurements, comprising IAS 19 gains and losses, the effect of the asset ceiling (excluding interest) and the return on plan assets (excluding interest), are recognised immediately in Other comprehensive income. Remeasurements are not reclassified to the Income statement in subsequent periods. b Severance obligations Severance obligations are recognised when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises a provision for severance payments when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without realistic possibility of withdrawal, or providing severance payments as a result of an offer made to encourage voluntary redundancy. Other employee benefits are recognised when there is deemed to be a present obligation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-699": { "value": "Taxation Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the balance sheet date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: \u2022 where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; \u2022 in respect of taxable temporary differences associated with investments in subsidiaries or associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and \u2022 deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the Income statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-719": { "value": "
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, with the following exceptions:
\u2022 where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
\u2022 in respect of taxable temporary differences associated with investments in subsidiaries or associates, where the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future;
and
\u2022 deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the
related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-700": { "value": "
Inventories
Inventories are valued at the lower of cost and net realisable value. Such cost is determined by the weighted average cost method.
Inventories include mainly aircraft spare parts, repairable aircraft engine parts and fuel held in storage facilities.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-701": { "value": "Share-based payments The Group operates a number of equity-settled, share-based payment plans, under which the Group awards equity instruments of the Group for services rendered by employees. The fair value of the share-based payment plans is measured at the date of grant using a valuation model provided by external specialists. The resulting cost, as adjusted for the expected and actual level of vesting of the plan, is charged to the Income statement over the period in which the options vest. At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management\u2019s best estimate of the achievement or otherwise of non-market conditions, and accordingly the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous balance sheet date is recognised in the Income statement with a corresponding entry in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-702": { "value": "Provisions Provisions are made when an obligation exists for a present liability in respect of a past event and where the amount of the obligation can be reliably estimated and where it is considered probable that an outflow of economic resources will be required to settle the obligation. Where it is not considered probable that there will be an outflow of economic resources required to settle the obligation, the Group does not recognise a provision, but discloses the matter as a contingent liability. The Group assesses whether each matter is probable of there being an outflow of economic resources to settle the obligation at each reporting date. Employee leaving indemnities and other employee provisions are recorded for flight crew who, meeting certain conditions, have the option of being placed on reserve or of taking early retirement. The Group is obligated to remunerate these employees until they reach the statutory retirement age. The calculation is performed by independent actuaries using the projected unit credit method. Other employee related provisions are recognised for direct expenditures of business reorganisation such as severance payments (restructuring provisions) where plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken at the balance sheet date. Restoration and handback provisions arising on inception of a lease are recognised as a provision with a corresponding amount recognised as part of the ROU asset. Any subsequent change in estimation relating to such costs are reflected in the ROU asset. Maintenance and handback provisions that occur through usage or through the passage of time are recognised as such activity occurs, with a corresponding expense recorded in the Income statement. Any subsequent change in estimation are recognised in the Income statement. The method for determining legal claims provisions is determined on a claim by claim basis. Where a claim includes a significant population of items, the weighted average provision is estimated by determining all potential outcomes and the probability of their occurrence. Where a claim relates to a single item, then the Group determines the associated provision by applying the most likely outcome giving consideration to alternative outcomes. Where an individual claim is significant, the disclosure of quantitative information is restricted to the extent that it does not prejudice the outcome of the claim. If the effect is material, expected future cash flows are discounted using a rate that reflects, where appropriate, the risks specific to the provision. Where discounting is used, the effect of unwinding the discount rate is recognised as a finance cost in the Income statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-703": { "value": "Revenue recognition Passenger revenue The Group\u2019s revenue primarily derives from transportation services for both passengers and cargo. Revenue is recognised when the transportation service has been provided. Passenger tickets are generally paid for in advance of transportation and are recognised, net of discounts, as Deferred revenue on ticket sales in current liabilities until either the customer has flown or, for flexible tickets, when unused ticket revenue is recognised or the ticket expires unused. At the time of expected travel, revenue is recognised in relation to flexible tickets where a customer can reschedule the date of intended travel, that are not expected to be used, a term referred to as \u2018unused flexible tickets\u2019. This revenue is recognised based on the terms and conditions of the ticket and analysis of historical experience. For these unused flexible tickets, revenue is recognised only when the risk of a significant reversal of revenue is remote based on the terms and conditions of the ticket and analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. Where a flight is cancelled, the passenger is entitled to either compensation, a refund, changing to an alternative flight or the receipt of a voucher. Where compensation is issued to the customer, such payments are presented net within Passenger revenue against the original ticket purchased. Where the Group provides a refund to a customer, Deferred revenue on ticket sales is reduced and no amount is recorded within revenue. Where a voucher is issued it is retained within Deferred revenue on ticket sales until such time as it is redeemed for a flight or it expires, at which time it is recorded within Passenger revenue. The Group also recognises revenue by estimating the amount of vouchers that are not expected to be redeemed prior to expiry using analysis of historical experience. The estimation regarding historical experience is updated at each reporting date. The amount of such revenue recognised is constrained, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Payments received in relation to certain ancillary services regarding passenger transportation, such as change fees, are not considered to be distinct from the performance obligation to provide the passenger flight. Payments relating to these ancillary services are recognised in Deferred revenue on ticket sales in current liabilities until the customer has flown. The Group considers whether it is an agent or a principal in relation to passenger transportation services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. The Group acts as an agent where (i) it collects various taxes, duties and fees assessed on the sale of tickets to passengers and remits these to the relevant taxing authorities; and (ii) where it provides interline services to airline partners outside of the Group. Commissions earned in relation to agency services are recognised as revenue when the underlying goods or services have been transferred to the customer. In all other instances, the Group considers it acts as the principal in relation to passenger transportation services. Cargo revenue The Group has identified a single performance obligation in relation to cargo services and the associated revenue is measured at its standalone selling price and recognised on satisfaction of the performance obligation, which occurs on the fulfilment of the transportation service. Other revenue The Group has identified several performance obligations in relation to services that give rise to revenue being recognised within Other revenue. These services, their performance obligations and associated revenue recognition include: \u2022 the provision of maintenance services and overhaul services for engines and airframes, where the Group is engaged to enhance an asset while the customer retains control of the asset. Accordingly, the performance obligations are satisfied, and revenue recognised, over time. The Group estimates the proportion of the contract completed at the reporting date and recognises revenue based on the percentage of completion of the contract; \u2022 the provision of ground handling services, where the performance obligations are fulfilled when the services are provided; \u2022 the provision of holiday and hotel services, where the performance obligations are satisfied over time as the customer receives the benefit of the service; and \u2022 brand and marketing activities, where the performance obligations are satisfied as the associated activities occur.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-704": { "value": "Customer loyalty programmes The Group operates four loyalty programmes: the British Airways Executive Club, Iberia Plus, Vueling Club and the Aer Lingus Aer Club. The customer loyalty programmes award travellers Avios to redeem for various rewards, primarily redemption travel, including flights, hotels and car hire. Avios are also sold to commercial partners to use in loyalty activity. Avios issuance When issued, the standalone selling price of an Avios is recorded within Deferred revenue on ticket sales in current liabilities until the customer redeems the Avios. The standalone selling price of Avios is based on the value of the awards for which the points could be redeemed. The Group also recognises revenue associated with the proportion of Avios which are not expected to be redeemed, referred to as \u2018breakage\u2019, based on the results of modelling using historical experiences and expected future trends in customer behaviour, up until the reporting date. The amount of such revenue recognised is limited, where necessary, such that the risk of a significant reversal of revenue in the future is remote. Where the issuance of Avios arises from travel on the Group\u2019s airlines, the consideration received from the customer may differ to the aggregation of the relative standalone selling prices. In such instances the allocation of the consideration to each performance obligation is undertaken on a proportional basis using the relative standalone selling prices. The Group has contractual arrangements with non-Group airlines and non-air partners for the issuance and redemption of Avios, for which it has identified the following performance obligations: Companion vouchers Certain non-air partners issue their card holders with companion vouchers, which forms part of the variable consideration of the overall contract, depending on the level of expenditure by the card holders, for redemption on the airlines of the Group for the same flight and class of cabin as the underlying fare being purchased. The Group estimates the standalone selling price of the companion voucher performance obligation, using valuation techniques, by reference to the amount that a third party would be prepared to pay in an arm\u2019s length transaction. Brand and marketing activities For both air and non-air partners, the Group licenses the Avios and the airline brands for certain activities, such as the creation of co- branded credit cards. In addition, the Group has certain contractual arrangements whereby it commits to provide marketing services to the members of the loyalty schemes on behalf of those partners. For the provision of both brand and marketing services, the partner receives benefits incremental to the issuance of Avios. The Group estimates the standalone selling price of the brand and marketing performance obligations, using valuation techniques, by reference to the amount that a third party would be prepared to pay in an arm\u2019s length transaction for access to comparable brands for the period over which they use the brand. For brand services, as the Group considers that the partner has the right to use the brand, revenue is recognised as the brand service is provided and not over time. For marketing performance obligations, revenue is recognised as the marketing activities occur based on when the partner receives the benefit of those services. Upfront payments Where a partner makes an upfront payment to the Group which does not relate to any specific performance obligation, then the Group considers such payments as advance payments for future goods and services and the associated revenue is recognised as those goods and services are provided, as detailed above. In such instances the payment is allocated across all of the performance obligations over the contract term. The Group estimates the expected level of Avios to be issued over the contract term using experience, historical and expected future trends, and allocates the payments to the relevant performance obligations accordingly. At each reporting date, the Group updates its estimate of the number of Avios expected to be issued over the total contract term and recognises a cumulative catch-up adjustment where necessary. When a partner makes an upfront payment to the Group, the Group assesses whether such a payment is representative of a significant financing event. Where a significant financing component is identified, the Group estimates a market rate of interest that an arm\u2019s length financial liability of similar size and tenor would yield. The Group recognises the imputed interest as a Finance expense in the Income statement. Other considerations The Group considers whether it is an agent or a principal in relation to the loyalty services by considering whether it has a performance obligation to provide services to the customer or whether the obligation is to arrange for the services to be provided by a third party. In particular, the Group acts as an agent where customers redeem their Avios on interline partner flights outside of the Group, where the fees payable to the interline partner are presented net against the associated release of the Deferred revenue from ticket sales. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCustomerLoyaltyProgrammesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-705": { "value": "Exceptional items Exceptional items are those that in management\u2019s view need to be separately disclosed by virtue of their size or nature and where such presentation is relevant to an understanding of the Group\u2019s financial performance. While management has defined a list of items and a quantitative threshold that would merit categorisation as exceptional that has been established through historical experience, the Group retains the flexibility to add additional items should their size or nature merit such presentation. The accounting policy in respect of exceptional items and classification of an item as exceptional is approved by the Board, through the Audit and Compliance Committee. The financial performance of the Group is monitored by the Management Committee and the Board on a pre-exceptional basis to enable comparison to prior reporting periods as well as to other selected companies, and also for making strategic, financial and operational decisions. The exceptional items recorded in the Income statement include, but are not limited to, items such as significant settlement agreements with the Group\u2019s pension schemes; significant restructuring; the impact of business combination transactions that do not contribute to the ongoing results of the Group; significant discontinuance of hedge accounting; legal settlements; individually significant tax transactions; and the impact of the sale, disposal or impairment of an asset or investment in a business. Where exceptional items are separately disclosed, the resultant tax impact is additionally separately disclosed. Certain exceptional items may cover more than a single reporting period, such as significant restructuring events, but not more than two reporting periods. Further information is given in the Alternative performance measures section. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExceptionalItemsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-706": { "value": "Government grants Government grants are recognised where there is reasonable assurance that the grant will be received. Loans provided and/or guaranteed by governments that represent market rates of interest are recorded at the amount of the proceeds received and recognised within Borrowings. Those loans provided and/or guaranteed by governments that represent below market rates of interest are measured at inception at their fair value and recognised within Borrowings, with the differential to the proceeds received recorded within Deferred income and released to the relevant financial statement caption in the Income statement on a systematic basis. Grants that compensate the Group for expenses incurred are recognised in the Income statement in the relevant financial statement caption on a systematic basis in the periods in which the expenses are recognised. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-707": { "value": "Critical accounting estimates, assumptions and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These judgements, estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results in the future may differ from judgements and estimates upon which financial information has been prepared. These underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Estimates The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: a Employee benefit obligations, employee leaving indemnities, other employee related restructuring At December 31, 2022 the Group recognised \u20ac2,334 million in respect of employee benefit assets (2021: \u20ac1,775 million) and \u20ac217 million in respect of employee benefit obligations (2021: \u20ac285 million). Further information on employee benefit obligations is disclosed in note 32. The cost of employee benefit obligations, employee leaving indemnities and other employee-related provisions is determined using the valuation requirements of IAS 19. These valuations involve making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these schemes, such assumptions are subject to significant uncertainty. The assumptions relating to these schemes are disclosed in note 32. The Group determines the assumptions to be adopted in discussion with qualified actuaries. Any difference between these assumptions and the actual outcome will impact future net assets and total comprehensive income. The sensitivity to changes in pension assumptions is disclosed in note 32. Under the Group\u2019s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) defined benefit schemes, increases to pensions are based on the annual Government Pension Increase (Review) Orders, which since 2011 have been based on the Consumer Prices Index (CPI). Additionally, in APS there is provision for the Trustee to pay increases up to the level of the Retail Prices Index (RPI), subject to certain affordability tests. Historically market expectations for RPI could be derived by comparing the prices of UK Government fixed-interest and index-linked gilts, with CPI assessed by considering the Bank of England\u2019s inflation target and comparison of the construction of the two inflation indices. In November 2020, the UK Government and UK Statistics Authority (UKSA) confirmed alignment of RPI with CPIH (a variant of CPI) from February 2030. In assessing RPI and CPI inflation from investment market data, allowance has been made for alignment of RPI with CPIH from 2030 and, therefore, effectively no gap between RPI and CPI inflation from that date. CPI inflation before 2030 is assumed to be 1 per cent per annum below RPI inflation. b Revenue recognition At December 31, 2022 the Group recognised \u20ac7,644 million (2021: \u20ac6,552 million) in respect of deferred revenue on ticket sales of which \u20ac2,630 million (2021: \u20ac2,820 million) related to customer loyalty programmes. Further information on deferred revenue from ticket sales is included in note 23. Passenger revenue Passenger revenue is recognised when the transportation service is provided. At the time of transportation, revenue is also recognised in respect of unused tickets and is estimated based on the terms and conditions of the tickets and historical experience. The Group considers that there is no reasonably possible change to unused ticket assumptions that would have a material impact on Passenger revenue recorded in the year. Historically, where a voucher has been issued to a customer in the event of a flight cancellation, the Group estimated, based on historical experience, the level of such vouchers not expected to be used prior to expiry and recognised revenue accordingly. During 2020 and 2021, due to the significant level of flight cancellations arising from COVID-19, the Group issued a greater volume of vouchers than it would have otherwise done so. In addition, given the uncertainty as to the timing of customers redeeming these vouchers, the Group was unable to estimate with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the historical expiry trends over the period of the pandemic. Accordingly, for the years ended December 31, 2020, and December 31, 2021, the Group did not recognise revenue arising from those vouchers issued due to COVID-19 related cancellations until either the voucher was redeemed or it expired. During 2022, while the recovery from COVID-19 has seen much lower levels of voucher issuance and high levels of voucher redemption, the Group\u2019s operating companies\u2019 voucher programmes have had limited voucher expiry in 2022, with the majority not expected until 2023 at the earliest. Accordingly, the Group has had insufficient historical expiry experience relating to vouchers issued during the pandemic and therefore has not applied any breakage to existing voucher liabilities as it cannot confirm that there would not be a subsequent significant reversal of revenue if it were to do so. Customer loyalty schemes Revenue associated with the issuance of Avios under customer loyalty programmes is based on the relative standalone selling prices of the related performance obligations (brand, marketing and Avios), determined using estimation techniques. The transaction price of brand and marketing services is determined using specific brand valuation methodologies. The transaction price of an Avios is determined as the price of the rewards against which they can be redeemed and is reduced to take account of the proportion of Avios that are not expected to be redeemed by customers. During 2020 and 2021, due to the significant restrictions imposed on the ability of customers to redeem Avios coupled with the disruption in the patterns of redemption caused by COVID-19, the Group considered that the trends experienced since the start of the COVID-19 pandemic were not reflective of the long-term expected patterns of redemption and accordingly, the Group was unable to determine with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the redemption trends over the period of the pandemic. Accordingly, for the years to December 31, 2020 and December 31, 2021, the Group continued to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. While 2022 has seen all operating companies recover from the COVID-19 pandemic, there remains uncertainty as to whether recent redemption data is representative of long-term behavioural trends and accordingly the Group cannot confirm that there would not be a subsequent significant reversal of revenue if the level of redemption estimates were to be updated to reflect behaviours during the COVID-19 period. Accordingly, the Group continues to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. The Group estimates the number of Avios not expected to be redeemed using statistical modelling based on historical experience and expected future trends in customer behaviour. A five percentage point increase in the assumption of Avios outstanding and not expected to be redeemed would result in an adjustment to Deferred revenue from ticket sales of \u20ac95 million, with an offsetting adjustment to increase revenue and operating profit recognised in the year. c Income taxes At December 31, 2022 the Group recognised \u20ac1,282 million in respect of deferred tax assets (2021: \u20ac1,282 million). Further information on current and deferred tax is disclosed in note 10. The Group is subject to income taxes in numerous jurisdictions. Estimates are required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain because it may be unclear how tax law applies to a particular transaction or circumstance. Where the Group determines that it is more likely than not that the tax authorities would accept the position taken in the tax return, amounts are recognised in the financial statements on that basis. Where the amount of tax payable or recoverable is uncertain, the Group recognises a liability based on either: the Group\u2019s judgement of the most likely outcome; or, when there is a wide range of possible outcomes, a probability-weighted average approach. The Group recognises deferred tax assets only to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Management uses judgement, including the consideration of past and current operating performance and the future projections of performance laid out in the approved business plan in order to assess the probability of recoverability. In exercising this judgement, while there are no time restrictions on the utilisation of historic tax losses in the principal jurisdictions in which the Group operates, future cash flow projections are forecast for a period of up to ten years from the balance sheet date, which represents the period over which it is probable that future taxable profits will be available. At December 31, 2022, the Group had unrecognised deferred tax assets of \u20ac2,084 million relating to tax losses the Group does not reasonably expect to utilise. In applying the aforementioned judgement, had the Group extended the period of future cash flow projections indefinitely, then the amount of unrecognised deferred tax assets would have reduced by \u20ac1,608 million. Conversely, if the forecast profit before tax for each operating company was reduced by two percentage points over the forecast period, the amount of the unrecognised deferred tax asset relating to tax losses would increase by \u20ac11 million. d Impairment of non-financial assets At December 31, 2022 the Group recognised \u20ac2,423 million (2021: \u20ac2,439 million) in respect of intangible assets with an indefinite life, including goodwill. Further information on these assets is included in note 17. Goodwill and intangible assets with indefinite economic lives are tested, as part of the cash-generating units to which they relate, for impairment annually and at other times when such indicators exist. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which use a weighted average multi-scenario discounted cash flow model, which are then compared to the carrying amount of the associated cash-generating unit. In determining the carrying value of each cash generating unit, the Group allocates all associated operating tangible and intangible assets, including ROU assets. In addition the Group has allocated certain liabilities to the carrying value of each CGU where those liabilities are critical to the underlying operations of the cash-generating unit and in the event of a disposal of the cash-generating unit would be required to be transferred to the purchaser. Such liabilities include lease liabilities. The Group has applied judgement in the weighting of each scenario in the discounted cash flow model and these calculations require the use of estimates in the determination of key assumptions and sensitivities as disclosed in notes 4 and 17. The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. When such indicators are identified, then non-financial assets are tested for impairment. e Engineering and other aircraft costs At December 31, 2022, the Group recognised \u20ac2,400 million in respect of maintenance, restoration and handback provisions (2021: \u20ac1,832 million). Information on movements on the provision is disclosed in note 26. The Group has a number of contracts with service providers to replace or repair engine parts and for other maintenance checks. These agreements are complex and generally cover a number of years. Provisions for maintenance, restoration and handback are made based on the best estimate of the likely committed cash outflow. In determining this best estimate, the Group applies significant judgement as to the level of forecast costs expected to be incurred when the aircraft is returned to the lessor. The assumptions of this significant judgement include aircraft utilisation, expected maintenance intervals, future maintenance costs and the aircraft\u2019s condition. The associated forecast costs are discounted to their present value. In 2021, the Group considered that there was no reasonably possible change to a single assumption that would have had a material impact on the provisions, however a combination of changes in multiple assumptions may have. In 2022, with the status of the macro-economic environment, the Group considers that a reasonable possible change in the inflation rate and discount rate assumptions of a 100 basis points increase would give rise to an increase of \u20ac51 million and a decrease of \u20ac68 million, respectively, when applied in isolation to one another. Judgements a Determining the lease term of contracts with renewal and termination options The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. Such judgement includes consideration of fleet plans which underpin approved business plans and historical experience regarding the extension of leases. After the commencement date, the Group re-assesses the lease term if there is a significant event or change in circumstances that affects the Group\u2019s ability to exercise or not to exercise the option to renew or to terminate. Further information is given in note 14. b Determining whether the Group has significant influence over Air Europa Holdings The Group applies judgement in the determination as to whether it has the power with which to participate in the decision making of, and as a result significant influence over, Air Europa Holdings, S.L. (Air Europa Holdings). Such judgement includes the consideration as to the ability of the Group to: have representation on the board of Air Europa Holdings; participate in the policy-making processes, including participation in decisions regarding dividends and other distributions; the existence of material transactions between Air Europa Holdings and the Group; enable the interchange of management personnel and provide essential technical information. In forming its judgement, the Group notes that: it does not have the ability to have representation on the board of Air Europa Holdings; it does not have the ability to participate in the policy-making processes; has not entered into material transactions outside of the normal course of business; it does not have the ability to enable the interchange of management personnel and it does not have the ability to provide essential technical information. The Group has therefore concluded that it does not have significant influence over Air Europa Holdings. Accordingly, the Group accounts for its shareholding in Air Europa Holdings as an Other equity investment and measures it at fair value through Other comprehensive income. Had the Group concluded that it does have significant influence over Air Europa Holdings, then the shareholding would have been classified as an associate, measured at fair value on inception and subsequently measured using the equity method. At December 31, 2022, the fair value of its shareholding in Air Europa Holdings was \u20ac24 million. Further information is given in note 19. New standards, amendments and interpretations The following amendments and interpretations apply for the first time in 2022, but do not have a material impact on the consolidated financial statements of the Group: \u2022 property, plant and equipment: proceeds before intended use \u2013 amendments to IAS 16 effective for periods beginning on or after January 1, 2022; \u2022 reference to the Conceptual Framework \u2013 amendments to IFRS 3 effective for periods beginning on or after January 1, 2022; \u2022 onerous contracts \u2013 cost of fulfilling a contract \u2013 amendments to IAS 37 effective for periods beginning on or after January 1, 2022; and \u2022 annual improvements to IFRS standards 2018\u20132020 \u2013 effective for periods beginning on or after January 1, 2022. The IASB and IFRIC have issued the following standards, amendments and interpretations with an effective date after the year end of these financial statements which management believe could impact the Group in future periods. The Group has assessed the impact of these standards, amendments and interpretations and it is not expected that these will have a material effect on the reported income or net assets of the Group. Unless otherwise stated, the Group plans to adopt the following standards, interpretations and amendments on the date they become mandatory: \u2022 IFRS 17 Insurance contracts - effective for periods beginning on or after January 1, 2023; \u2022 definition of accounting estimate \u2013 amendments to IAS 8 effective for periods beginning on or after January 1, 2023; \u2022 disclosure of accounting policies \u2013 amendments to IAS 1 and IFRS Practice statement 2 effective for periods beginning on or after January 1, 2023; and \u2022 deferred tax related to assets and liabilities arising from a single transaction \u2013 amendments to IAS 12 effective for periods beginning on or after January 1, 2023. On October 31, 2022, the IASB issued the amendments to IAS 1 \u2013 classification of liabilities as current or non-current (the \u2018Amendments\u2019), effective for periods beginning on or after January 1, 2024. The Amendments will require the \u20ac825 million convertible bond that matures in 2028, which as at December 31, 2022, had a carrying value of \u20ac605 million, to be reclassified from a non-current liability to a current liability with the comparative presentation as at December 31, 2023 also reclassified. The Amendments require that where the conversion feature of a convertible instrument does not meet the recognition criteria for separate presentation within equity and where the associated bond holders have the irrevocable right to exercise the conversion feature within twelve months of the balance sheet date, that such convertible instruments be presented as current. Other than this reclassification, the Amendments will not have a material effect on the reported results or net assets of the Group. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-720": { "value": "Estimates The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: a Employee benefit obligations, employee leaving indemnities, other employee related restructuring At December 31, 2022 the Group recognised \u20ac2,334 million in respect of employee benefit assets (2021: \u20ac1,775 million) and \u20ac217 million in respect of employee benefit obligations (2021: \u20ac285 million). Further information on employee benefit obligations is disclosed in note 32. The cost of employee benefit obligations, employee leaving indemnities and other employee-related provisions is determined using the valuation requirements of IAS 19. These valuations involve making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these schemes, such assumptions are subject to significant uncertainty. The assumptions relating to these schemes are disclosed in note 32. The Group determines the assumptions to be adopted in discussion with qualified actuaries. Any difference between these assumptions and the actual outcome will impact future net assets and total comprehensive income. The sensitivity to changes in pension assumptions is disclosed in note 32. Under the Group\u2019s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) defined benefit schemes, increases to pensions are based on the annual Government Pension Increase (Review) Orders, which since 2011 have been based on the Consumer Prices Index (CPI). Additionally, in APS there is provision for the Trustee to pay increases up to the level of the Retail Prices Index (RPI), subject to certain affordability tests. Historically market expectations for RPI could be derived by comparing the prices of UK Government fixed-interest and index-linked gilts, with CPI assessed by considering the Bank of England\u2019s inflation target and comparison of the construction of the two inflation indices. In November 2020, the UK Government and UK Statistics Authority (UKSA) confirmed alignment of RPI with CPIH (a variant of CPI) from February 2030. In assessing RPI and CPI inflation from investment market data, allowance has been made for alignment of RPI with CPIH from 2030 and, therefore, effectively no gap between RPI and CPI inflation from that date. CPI inflation before 2030 is assumed to be 1 per cent per annum below RPI inflation. b Revenue recognition At December 31, 2022 the Group recognised \u20ac7,644 million (2021: \u20ac6,552 million) in respect of deferred revenue on ticket sales of which \u20ac2,630 million (2021: \u20ac2,820 million) related to customer loyalty programmes. Further information on deferred revenue from ticket sales is included in note 23. Passenger revenue Passenger revenue is recognised when the transportation service is provided. At the time of transportation, revenue is also recognised in respect of unused tickets and is estimated based on the terms and conditions of the tickets and historical experience. The Group considers that there is no reasonably possible change to unused ticket assumptions that would have a material impact on Passenger revenue recorded in the year. Historically, where a voucher has been issued to a customer in the event of a flight cancellation, the Group estimated, based on historical experience, the level of such vouchers not expected to be used prior to expiry and recognised revenue accordingly. During 2020 and 2021, due to the significant level of flight cancellations arising from COVID-19, the Group issued a greater volume of vouchers than it would have otherwise done so. In addition, given the uncertainty as to the timing of customers redeeming these vouchers, the Group was unable to estimate with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the historical expiry trends over the period of the pandemic. Accordingly, for the years ended December 31, 2020, and December 31, 2021, the Group did not recognise revenue arising from those vouchers issued due to COVID-19 related cancellations until either the voucher was redeemed or it expired. During 2022, while the recovery from COVID-19 has seen much lower levels of voucher issuance and high levels of voucher redemption, the Group\u2019s operating companies\u2019 voucher programmes have had limited voucher expiry in 2022, with the majority not expected until 2023 at the earliest. Accordingly, the Group has had insufficient historical expiry experience relating to vouchers issued during the pandemic and therefore has not applied any breakage to existing voucher liabilities as it cannot confirm that there would not be a subsequent significant reversal of revenue if it were to do so. Customer loyalty schemes Revenue associated with the issuance of Avios under customer loyalty programmes is based on the relative standalone selling prices of the related performance obligations (brand, marketing and Avios), determined using estimation techniques. The transaction price of brand and marketing services is determined using specific brand valuation methodologies. The transaction price of an Avios is determined as the price of the rewards against which they can be redeemed and is reduced to take account of the proportion of Avios that are not expected to be redeemed by customers. During 2020 and 2021, due to the significant restrictions imposed on the ability of customers to redeem Avios coupled with the disruption in the patterns of redemption caused by COVID-19, the Group considered that the trends experienced since the start of the COVID-19 pandemic were not reflective of the long-term expected patterns of redemption and accordingly, the Group was unable to determine with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the redemption trends over the period of the pandemic. Accordingly, for the years to December 31, 2020 and December 31, 2021, the Group continued to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. While 2022 has seen all operating companies recover from the COVID-19 pandemic, there remains uncertainty as to whether recent redemption data is representative of long-term behavioural trends and accordingly the Group cannot confirm that there would not be a subsequent significant reversal of revenue if the level of redemption estimates were to be updated to reflect behaviours during the COVID-19 period. Accordingly, the Group continues to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. The Group estimates the number of Avios not expected to be redeemed using statistical modelling based on historical experience and expected future trends in customer behaviour. A five percentage point increase in the assumption of Avios outstanding and not expected to be redeemed would result in an adjustment to Deferred revenue from ticket sales of \u20ac95 million, with an offsetting adjustment to increase revenue and operating profit recognised in the year. and future pension increases. Due to the long-term nature of these schemes, such assumptions are subject to significant uncertainty. The assumptions relating to these schemes are disclosed in note 32. The Group determines the assumptions to be adopted in discussion with qualified actuaries. Any difference between these assumptions and the actual outcome will impact future net assets and total comprehensive income. The sensitivity to changes in pension assumptions is disclosed in note 32. Under the Group\u2019s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) defined benefit schemes, increases to pensions are based on the annual Government Pension Increase (Review) Orders, which since 2011 have been based on the Consumer Prices Index (CPI). Additionally, in APS there is provision for the Trustee to pay increases up to the level of the Retail Prices Index (RPI), subject to certain affordability tests. Historically market expectations for RPI could be derived by comparing the prices of UK Government fixed-interest and index-linked gilts, with CPI assessed by considering the Bank of England\u2019s inflation target and comparison of the construction of the two inflation indices. In November 2020, the UK Government and UK Statistics Authority (UKSA) confirmed alignment of RPI with CPIH (a variant of CPI) from February 2030. In assessing RPI and CPI inflation from investment market data, allowance has been made for alignment of RPI with CPIH from 2030 and, therefore, effectively no gap between RPI and CPI inflation from that date. CPI inflation before 2030 is assumed to be 1 per cent per annum below RPI inflation. b Revenue recognition At December 31, 2022 the Group recognised \u20ac7,644 million (2021: \u20ac6,552 million) in respect of deferred revenue on ticket sales of which \u20ac2,630 million (2021: \u20ac2,820 million) related to customer loyalty programmes. Further information on deferred revenue from ticket sales is included in note 23. Passenger revenue Passenger revenue is recognised when the transportation service is provided. At the time of transportation, revenue is also recognised in respect of unused tickets and is estimated based on the terms and conditions of the tickets and historical experience. The Group considers that there is no reasonably possible change to unused ticket assumptions that would have a material impact on Passenger revenue recorded in the year. Historically, where a voucher has been issued to a customer in the event of a flight cancellation, the Group estimated, based on historical experience, the level of such vouchers not expected to be used prior to expiry and recognised revenue accordingly. During 2020 and 2021, due to the significant level of flight cancellations arising from COVID-19, the Group issued a greater volume of vouchers than it would have otherwise done so. In addition, given the uncertainty as to the timing of customers redeeming these vouchers, the Group was unable to estimate with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the historical expiry trends over the period of the pandemic. Accordingly, for the years ended December 31, 2020, and December 31, 2021, the Group did not recognise revenue arising from those vouchers issued due to COVID-19 related cancellations until either the voucher was redeemed or it expired. During 2022, while the recovery from COVID-19 has seen much lower levels of voucher issuance and high levels of voucher redemption, the Group\u2019s operating companies\u2019 voucher programmes have had limited voucher expiry in 2022, with the majority not expected until 2023 at the earliest. Accordingly, the Group has had insufficient historical expiry experience relating to vouchers issued during the pandemic and therefore has not applied any breakage to existing voucher liabilities as it cannot confirm that there would not be a subsequent significant reversal of revenue if it were to do so. Customer loyalty schemes Revenue associated with the issuance of Avios under customer loyalty programmes is based on the relative standalone selling prices of the related performance obligations (brand, marketing and Avios), determined using estimation techniques. The transaction price of brand and marketing services is determined using specific brand valuation methodologies. The transaction price of an Avios is determined as the price of the rewards against which they can be redeemed and is reduced to take account of the proportion of Avios that are not expected to be redeemed by customers. During 2020 and 2021, due to the significant restrictions imposed on the ability of customers to redeem Avios coupled with the disruption in the patterns of redemption caused by COVID-19, the Group considered that the trends experienced since the start of the COVID-19 pandemic were not reflective of the long-term expected patterns of redemption and accordingly, the Group was unable to determine with a high degree of probability that there would not be a significant reversal of revenue in the future had it applied the redemption trends over the period of the pandemic. Accordingly, for the years to December 31, 2020 and December 31, 2021, the Group continued to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. While 2022 has seen all operating companies recover from the COVID-19 pandemic, there remains uncertainty as to whether recent redemption data is representative of long-term behavioural trends and accordingly the Group cannot confirm that there would not be a subsequent significant reversal of revenue if the level of redemption estimates were to be updated to reflect behaviours during the COVID-19 period. Accordingly, the Group continues to estimate the level of redemption activity based on pre-COVID-19 customer behaviour. The Group estimates the number of Avios not expected to be redeemed using statistical modelling based on historical experience and expected future trends in customer behaviour. A five percentage point increase in the assumption of Avios outstanding and not expected to be redeemed would result in an adjustment to Deferred revenue from ticket sales of \u20ac95 million, with an offsetting adjustment to increase revenue and operating profit recognised in the year. c Income taxes At December 31, 2022 the Group recognised \u20ac1,282 million in respect of deferred tax assets (2021: \u20ac1,282 million). Further information on current and deferred tax is disclosed in note 10. The Group is subject to income taxes in numerous jurisdictions. Estimates are required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain because it may be unclear how tax law applies to a particular transaction or circumstance. Where the Group determines that it is more likely than not that the tax authorities would accept the position taken in the tax return, amounts are recognised in the financial statements on that basis. Where the amount of tax payable or recoverable is uncertain, the Group recognises a liability based on either: the Group\u2019s judgement of the most likely outcome; or, when there is a wide range of possible outcomes, a probability-weighted average approach. The Group recognises deferred tax assets only to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Management uses judgement, including the consideration of past and current operating performance and the future projections of performance laid out in the approved business plan in order to assess the probability of recoverability. In exercising this judgement, while there are no time restrictions on the utilisation of historic tax losses in the principal jurisdictions in which the Group operates, future cash flow projections are forecast for a period of up to ten years from the balance sheet date, which represents the period over which it is probable that future taxable profits will be available. At December 31, 2022, the Group had unrecognised deferred tax assets of \u20ac2,084 million relating to tax losses the Group does not reasonably expect to utilise. In applying the aforementioned judgement, had the Group extended the period of future cash flow projections indefinitely, then the amount of unrecognised deferred tax assets would have reduced by \u20ac1,608 million. Conversely, if the forecast profit before tax for each operating company was reduced by two percentage points over the forecast period, the amount of the unrecognised deferred tax asset relating to tax losses would increase by \u20ac11 million. d Impairment of non-financial assets At December 31, 2022 the Group recognised \u20ac2,423 million (2021: \u20ac2,439 million) in respect of intangible assets with an indefinite life, including goodwill. Further information on these assets is included in note 17. Goodwill and intangible assets with indefinite economic lives are tested, as part of the cash-generating units to which they relate, for impairment annually and at other times when such indicators exist. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which use a weighted average multi-scenario discounted cash flow model, which are then compared to the carrying amount of the associated cash-generating unit. In determining the carrying value of each cash generating unit, the Group allocates all associated operating tangible and intangible assets, including ROU assets. In addition the Group has allocated certain liabilities to the carrying value of each CGU where those liabilities are critical to the underlying operations of the cash-generating unit and in the event of a disposal of the cash-generating unit would be required to be transferred to the purchaser. Such liabilities include lease liabilities. The Group has applied judgement in the weighting of each scenario in the discounted cash flow model and these calculations require the use of estimates in the determination of key assumptions and sensitivities as disclosed in notes 4 and 17. The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. When such indicators are identified, then non-financial assets are tested for impairment. e Engineering and other aircraft costs At December 31, 2022, the Group recognised \u20ac2,400 million in respect of maintenance, restoration and handback provisions (2021: \u20ac1,832 million). Information on movements on the provision is disclosed in note 26. The Group has a number of contracts with service providers to replace or repair engine parts and for other maintenance checks. These agreements are complex and generally cover a number of years. Provisions for maintenance, restoration and handback are made based on the best estimate of the likely committed cash outflow. In determining this best estimate, the Group applies significant judgement as to the level of forecast costs expected to be incurred when the aircraft is returned to the lessor. The assumptions of this significant judgement include aircraft utilisation, expected maintenance intervals, future maintenance costs and the aircraft\u2019s condition. The associated forecast costs are discounted to their present value. In 2021, the Group considered that there was no reasonably possible change to a single assumption that would have had a material impact on the provisions, however a combination of changes in multiple assumptions may have. In 2022, with the status of the macro-economic environment, the Group considers that a reasonable possible change in the inflation rate and discount rate assumptions of a 100 basis points increase would give rise to an increase of \u20ac51 million and a decrease of \u20ac68 million, respectively, when applied in isolation to one another.", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-606": { "value": "3 Significant changes and transactions in the current reporting period The financial performance and position of the Group was affected by the following significant events and transactions in the year to December 31, 2022 as detailed below: \u2022 on March 4, 2022 Aer Lingus entered into a financing arrangement with the Ireland Strategic Investment Fund (ISIF), which subsequently increased the existing \u20ac150 million of facilities to \u20ac350 million and extended the maturity to March 2025. On December 13, 2022, Aer Lingus repaid \u20ac100 million of the \u20ac150 million it had previously drawn against this facility. At December 31, 2022, \u20ac300 million of undrawn facilities remains available for draw down; \u2022 on April 12, 2022, the Group entered into an asset-financing structure, under which five aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the Iberia Pass Through Certificates, Series 2022-1, commonly referred to as EETCs. In doing so, the asset financing structure provides committed aircraft financing of \u20ac680 million; \u2022 on May 19, 2022, the Group entered into an agreement with Boeing to purchase 25 737-8200 and 25 737-10 aircraft, plus 100 options. The aircraft will be delivered between 2023 and 2027 and will be used for shorthaul fleet renewal. The fleet order was subsequently approved by shareholders on October 26, 2022; \u2022 on June 15, 2022, following approval from Sociedad Estatal de Participaciones Industriales (SEPI) (the Spanish state holding company that has a direct participation in Air Europa Holdings) and the Instituto de Cr\u00e9dito Oficial (ICO) in Spain, the Group entered into a financing arrangement with Globalia Corporaci\u00f3n Empresarial, S,A, (\u2018Globalia\u2019), whereby, the Group provided a \u20ac100 million seven-year unsecured loan. The loan was convertible for a period of two years from inception into a fixed number of the shares of Air Europa Holdings; \u2022 in the first half of 2022, the Group converted 22 Airbus A320neos options into firm orders for 17 Airbus A320neos and five Airbus A321neos; \u2022 on July 28, 2022, IAG announced a further order for more fuel-efficient Airbus A320neo family aircraft, as part of its plan to meet climate commitments. The Group converted 12 Airbus A320neo/A321neo options into firm orders and ordered a further 25 Airbus A320neo/A321neo aircraft, with the option to purchase 50 additional aircraft. The firm orders will replace existing Airbus A320ceo family aircraft and are for delivery between 2025 and 2028; the split between A320neos and A321neos will be determined nearer to delivery. The fleet order was subsequently approved by shareholders on October 26, 2022; \u2022 on August 16, 2022, the Group exercised its exchange option and converted the \u20ac100 million loan it had made to Globalia into 20 per cent of the share capital of Air Europa Holdings, which has been recognised within Other equity instruments. The fair value of the loan immediately prior to conversion was \u20ac65 million, representing a reduction of \u20ac35 million from inception, which has been recorded within the Income statement. Upon converting the loan into share capital of Air Europa Holdings, the fair value of the investment was determined to be \u20ac22 million, with the difference between the fair value of the loan immediately prior to conversion and the fair value of the equity investment immediately after conversion, representing \u20ac43 million, being recorded as a loss within the Income statement. Further details regarding the investment in Air Europa Holdings are given in note 19; \u2022 on August 23, 2022, the Group extended its $1.755 billion secured Revolving Credit Facility accessible by British Airways, Iberia and Aer Lingus, previously due to mature on March 23, 2024, by a further 12 months to March 23, 2025; \u2022 on October 21, 2022, the Group entered into an asset-financing structure, under which four aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2022-1, commonly referred to as EETCs. In doing so, the asset financing structure provides committed aircraft financing of \u20ac416 million; and \u2022 on November 17, 2022, the Group redeemed the convertible bond issued in November 2015 for its nominal value of \u20ac500 million. ", "dimensions": { "concept": "iag:DisclosureOfSignificantChangesAndTransactionsInTheCurrentReportingPeriod", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-607": { "value": "4 Impact of climate change on financial reporting Significant transactions and critical accounting estimates, assumptions and judgements in the determination of the impact of climate change As a result of climate change the Group has designed and approved its Flightpath Net Zero climate strategy, which commits the Group to net zero emissions by 2050. While approved business plans currently have a duration of three years, the Flightpath Net Zero climate strategy impacts both the short, medium and long-term operations of the Group. The details regarding the inputs and assumptions used in the determination of the Flightpath Net Zero climate strategy include, but are not limited to, the following that are within the control of the Group: \u2022 the additional cost of the Group\u2019s commitment to increasing the level of Sustainable Aviation Fuels (SAF) to ten per cent by 2030 and to seventy per cent by 2050; \u2022 the cost of incurring an increase in the level of carbon offsetting and carbon capture schemes; and \u2022 the impact of introducing more fuel-efficient aircraft and being able to operate these more efficiently. In addition to these inputs and measures within the control of management, Flightpath Net Zero includes assumptions pertaining to consumers, governments and regulators regarding the following: \u2022 the impact on passenger demand for air travel as a result of both passenger trends regarding climate change and government policies; \u2022 investment and policy regarding the development of SAF production facilities; \u2022 investment and improvements in air traffic management; and \u2022 the price of carbon through the EU, Swiss and UK Emissions Trading Schemes (ETS) and the UN Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The level of uncertainty regarding the impact of these factors increases over time. Accordingly, the Group has applied critical estimation and judgement in the evaluation of the impact of climate change regarding the recognition and measurement of assets and liabilities within the financial statements. Critical accounting estimates, assumptions and judgements \u2013 cash flow forecast estimation With the Flightpath Net Zero climate strategy assessing the impact over a long-term horizon to 2050, the level of estimation uncertainty in the determination of cash flow forecasts increases over time. For those assets and liabilities, where their recoverability is dependent on long-term cash flows, the following critical accounting estimates, assumptions and judgements, to the extent they can be reliably measured, have been applied: a Long-term fleet plans and useful economic lives The Group\u2019s Flightpath Net Zero climate strategy has been developed in conjunction with the long-term fleet plans of each operating company. This includes the annual assessment of useful lives and the residual values of each aircraft type. During the course of 2020 as a result of the impact of COVID-19, the Group permanently stood down 82 aircraft (of which ten were subsequently stood back up), their associated engines and rotable inventories. These permanently stood down aircraft were older generation aircraft, that were less fuel efficient, more carbon intensive and more expensive to operate than more modern models. With the permanent standing down of these aircraft, coupled with the future committed delivery of 192 fuel efficient aircraft as detailed in note 15, the Group considers the existing fleet assets align with the long-term fleet plans to achieve its Flightpath Net Zero climate strategy. All aircraft in the fleet, and those due to be delivered in the future, have the capability to utilise SAF in their operations without impediment. Accordingly, no impairment has arisen in the current or prior year, nor have the useful lives and residual values of aircraft been amended, as a result of the Group\u2019s decarbonisation plans. b Impairment testing of the Group\u2019s cash generating units The Group applies discounted cash flow models, for each cash generating unit, derived from the cash flow forecasts from the approved three-year business plans. The Group\u2019s Flightpath Net Zero climate strategy is long-term in nature and includes commitments that will occur at differing points over this time horizon. To the extent that certain of those commitments occur over the short-term, then they have been incorporated into the three-year business plans. The Group adjusts the final year (being the third year) of these probability weighted cash flows to incorporate the impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy that are expected to occur over the medium term. These adjustments are limited to those that: (i) the Group can reliably estimate at the reporting date; (ii) only relate to the Group\u2019s existing asset base in its current condition; and (iii) incorporate legislation and regulation that is expected to be required to achieve the Group\u2019s Flightpath Net Zero climate strategy, and which is sufficiently progressed at the reporting date. As a result, the Group\u2019s impairment modelling incorporates the following aspects of the Group\u2019s Flightpath Net Zero climate strategy through to 2030, after which time the level of uncertainty regarding timing and costing becomes insufficiently reliable to estimate: (i) an increase in the level of SAF consumption of 10 per cent of the overall fuel mix; (ii) forecast cost of carbon, including SAF, ETS allowances and CORSIA allowances (all derived from externally sourced or derived information); (iii) the removal of existing free ETS allowances issued by the EU member states, Switzerland and the UK; (iv) forecast kerosene taxes applied to jet fuel for all intra EU flight activity; and (v) assumptions regarding the ability of the Group to recover these incremental costs through increased ticket pricing. In preparing the impairment models, the Group cash flow projections are prepared on the basis of using the current fleet in its current condition. The Group excludes the estimated cash flows expected to arise from future restructuring unless already committed and assets not currently in use by the Group. In addition, for the avoidance of doubt, the Group\u2019s impairment modelling excludes the following aspects of the Group\u2019s Flightpath Net Zero climate strategy: (i) the expected transition to electric and hydrogen aircraft, as well as future technological developments to jet engines and airframes; (ii) any savings from the transition to more fuel efficient aircraft other than those either in the Group\u2019s fleet or those committed orders due to be delivered over the business plan period; (iii) the benefit of the development of carbon capture technologies and enhanced carbon offsetting mechanisms; (iv) the required beneficial reforms to air traffic management regulation and legislation; and (v) the required government incentives and/or support across the supply chain. As detailed in note 17, the Group applies a long-term growth rate to these adjusted probability weighted cash flows, per CGU, and each of the long-term growth rates include a specific adjustment to reduce the rate to reflect the Group\u2019s assumptions regarding the reduced demand and elasticity impact arising from climate change. These impacts are derived with reference to external market data, industry publications and internal analysis. Given the inherent uncertainty associated with the impact of climate change, the Group has applied additional sensitivities in note 17 to reflect a more adverse impact of climate change than currently expected. This has been captured through both the downward sensitivities of the long-term growth rates, ASKs, operating margins and the increased fuel price sensitivity. c Valuation of employee benefit scheme assets The Group\u2019s employee benefit schemes are principally represented by the British Airways APS and NAPS schemes in the UK. The schemes are structured to make post-employment payments to members over the long term, with the Trustee having established both return seeking assets and liability matching assets that mature over the long-term to align with the forecast benefit payments. The assets of these schemes are invested predominantly in a diversified range of equities, bonds and property. The valuation of these assets ranges from those with quoted prices in active markets, where prices are readily and regularly available, through to those wher e the valuations are not based on observable market data, often requiring complex valuation models. The trustees of the schemes have integrated climate change considerations into their long-term decision making and reporting processes across all classes of assets, actively engaging with all fund and portfolio managers to ensure that where unobservable inputs are required into valuation models, that such valuation models incorporate long-term expectations regarding the impact of climate change. d Recoverability of deferred tax assets In determining the recoverable amounts of the Group\u2019s deferred tax assets, the Group applies the future cash flow projections for a period of up to ten years derived from the approved three-year business plans. The Group applies a medium-term growth rate subsequent to the three-year business plans, specific to each operating company. In considering the impact of the Group\u2019s Flightpath Net Zero climate strategy, management adjusts this medium-term growth rate, where applicable, to incorporate the assumed impacts on both revenue and costs to the Group. e The price of carbon through the EU, Swiss and UK Emissions Trading Schemes The EU, Swiss and the UK\u2019s ETS were established to reduce greenhouse gas emissions cost effectively. Under these schemes, companies, including the Group, are required to buy emission allowances, or are issued them under existing quotas. The Group is required to surrender these allowances to the relevant authorities annually dependent on the level of CO 2 equivalent emitted within a 12-month period. Over time the level of available emission allowances decreases in order to reduce total emissions, which has the effect of increasing the price of such allowances. The Group expects that the future price of such allowances will continue to increase and that the free allocation of emission allowances will cease. Given the relative illiquid nature of the emission allowance market there is uncertainty as to the future pricing of such allowances. As detailed in note 2, the Group accounts for the purchase of allowances as an addition to Intangible assets, which are measured at amortised cost. In addition, as the Group emits CO 2 equivalent as part of its flight operations, a provision is recorded to settle the obligation. For emissions for which the Group has already purchased allowances, the provision is valued at the weighted cost of those allowances. Where the level of emissions exceeds the amounts of allowances held, this deficit is measured at the market price of such allowances at the reporting date. At December 31, 2022, the Group has recorded ETS allowances within Intangibles assets of \u20ac407 million, representing sufficient allowances, by operating company, to settle its forecast obligations through to at least December 31, 2023. At December 31, 2022, the Group has recorded a provision for settling its 2022 emissions obligation of \u20ac132 million.", "dimensions": { "concept": "iag:DisclosureOfImpactOfClimateChangeOnFinancialReporting", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-668": { "value": "5 Segment information a Business segments The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the IAG Management Committee (IAG MC). The Group has a number of entities which are managed as individual operating companies including airline and platform functions. Each airline operates its network operations as a single business unit and the IAG MC assesses performance based on measures including operating profit, and makes resource allocation decisions for the airlines based on network profitability, primarily by reference to the passenger markets in which the companies operate. The objective in making resource allocation decisions is to optimise consolidated financial results. The Group has determined its operating segments based on the way that it treats its businesses and the manner in which resource allocation decisions are made. British Airways, Iberia, Vueling, Aer Lingus and IAG Loyalty have been identified for financial reporting purposes as reportable operating segments. LEVEL is also an operating segment but does not exceed the quantitative thresholds to be reportable and management has concluded that there are currently no other reasons why LEVEL should be separately disclosed. The platform functions of the business primarily support the airline operations. These activities are not considered to be reportable operating segments as they either earn revenues incidental to the activities of the Group and resource allocation decisions are made based on the passenger business or are not reviewed regularly by the IAG MC and are included within Other Group companies. For the year to December 31, 2022 2022 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty Other Group companies 1 Total Revenue Passenger revenue 10,523 4,002 2,584 1,665 451 233 19,458 Cargo revenue 1,239 284 \u2013 80 \u2013 12 1,615 Other revenue 848 799 14 10 322 \u2013 1,993 External revenue 12,610 5,085 2,598 1,755 773 245 23,066 Inter-segment revenue 311 426 \u2013 14 228 378 1,357 Segment revenue 12,921 5,511 2,598 1,769 1,001 623 24,423 Depreciation and amortisation charge (1,272) (371) (222) (146) (8) (59) (2,078) Impairment reversal \u2013 \u2013 8 \u2013 \u2013 \u2013 8 Operating profit/(loss) 362 382 195 45 282 (10) 1,256 Exceptional items 2 23 \u2013 8 \u2013 \u2013 \u2013 31 Operating profit/(loss) before exceptional items 339 382 187 45 282 (10) 1,225 Net non-operating costs (841) Profit before tax 415 Total assets 23,788 9,200 3,177 1,946 3,303 (2,111) 39,303 Total liabilities (20,975) (9,005) (3,774) (1,942) (2,914) 1,329 (37,281) 1 Includes eliminations on total assets of \u20ac16,159 million and total liabilities of \u20ac5,755 million. 2 For details on exceptional items refer to the Alternative performance measures section. For the year to December 31, 2021 2021 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty 1 Other Group companies 1,2 Total Revenue Passenger revenue 2,607 1,707 1,011 302 180 28 5,835 Cargo revenue 1,268 333 \u2013 65 \u2013 7 1,673 Other revenue 314 443 5 4 181 \u2013 947 External revenue 4,189 2,483 1,016 371 361 35 8,455 Inter-segment revenue 129 301 \u2013 5 77 293 805 Segment revenue 4,318 2,784 1,016 376 438 328 9,260 Depreciation and amortisation charge (1,104) (350) (240) (140) (7) (74) (1,915) Impairment (charge)/reversal (30) \u2013 13 \u2013 \u2013 \u2013 (17) Operating (loss)/profit (2,041) (220) (233) (338) 131 (64) (2,765) Exceptional items 3 151 14 29 9 \u2013 2 205 Operating (loss)/profit before exceptional items (2,192) (234) (262) (347) 131 (66) (2,970) Net non-operating costs 4 (742) Loss before tax (3,507) Total assets 20,891 6,919 2,671 1,820 3,184 (1,079) 34,406 Total liabilities (18,795) (7,062) (3,364) (1,806) (3,009) 476 (33,560) 1 In 2022, based on size thresholds the Group determined that IAG Loyalty was a reportable segment and accordingly presented the financial information of the segment separately. The prior year segment note has been re-presented to align with the current year presentation. 2 Includes eliminations on total assets of \u20ac16,023 million and total liabilities of \u20ac5,833 million. 3 For details on exceptional items refer to the Alternative performance measures section. 4 Includes \u20ac75 million of exceptional items relating to the Air Europa Holdings termination settlement payment . b Geographical analysis Revenue by area of original sale Year to December 31 \u20ac million 2022 2021 UK 7,923 2,435 Spain 4,313 2,189 USA 3,735 931 Rest of world 7,095 2,900 23,066 8,455 ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-641": { "value": "5 Segment information a Business segments The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the IAG Management Committee (IAG MC). The Group has a number of entities which are managed as individual operating companies including airline and platform functions. Each airline operates its network operations as a single business unit and the IAG MC assesses performance based on measures including operating profit, and makes resource allocation decisions for the airlines based on network profitability, primarily by reference to the passenger markets in which the companies operate. The objective in making resource allocation decisions is to optimise consolidated financial results. The Group has determined its operating segments based on the way that it treats its businesses and the manner in which resource allocation decisions are made. British Airways, Iberia, Vueling, Aer Lingus and IAG Loyalty have been identified for financial reporting purposes as reportable operating segments. LEVEL is also an operating segment but does not exceed the quantitative thresholds to be reportable and management has concluded that there are currently no other reasons why LEVEL should be separately disclosed. The platform functions of the business primarily support the airline operations. These activities are not considered to be reportable operating segments as they either earn revenues incidental to the activities of the Group and resource allocation decisions are made based on the passenger business or are not reviewed regularly by the IAG MC and are included within Other Group companies. For the year to December 31, 2022 2022 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty Other Group companies 1 Total Revenue Passenger revenue 10,523 4,002 2,584 1,665 451 233 19,458 Cargo revenue 1,239 284 \u2013 80 \u2013 12 1,615 Other revenue 848 799 14 10 322 \u2013 1,993 External revenue 12,610 5,085 2,598 1,755 773 245 23,066 Inter-segment revenue 311 426 \u2013 14 228 378 1,357 Segment revenue 12,921 5,511 2,598 1,769 1,001 623 24,423 Depreciation and amortisation charge (1,272) (371) (222) (146) (8) (59) (2,078) Impairment reversal \u2013 \u2013 8 \u2013 \u2013 \u2013 8 Operating profit/(loss) 362 382 195 45 282 (10) 1,256 Exceptional items 2 23 \u2013 8 \u2013 \u2013 \u2013 31 Operating profit/(loss) before exceptional items 339 382 187 45 282 (10) 1,225 Net non-operating costs (841) Profit before tax 415 Total assets 23,788 9,200 3,177 1,946 3,303 (2,111) 39,303 Total liabilities (20,975) (9,005) (3,774) (1,942) (2,914) 1,329 (37,281) 1 Includes eliminations on total assets of \u20ac16,159 million and total liabilities of \u20ac5,755 million. 2 For details on exceptional items refer to the Alternative performance measures section. For the year to December 31, 2021 2021 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty 1 Other Group companies 1,2 Total Revenue Passenger revenue 2,607 1,707 1,011 302 180 28 5,835 Cargo revenue 1,268 333 \u2013 65 \u2013 7 1,673 Other revenue 314 443 5 4 181 \u2013 947 External revenue 4,189 2,483 1,016 371 361 35 8,455 Inter-segment revenue 129 301 \u2013 5 77 293 805 Segment revenue 4,318 2,784 1,016 376 438 328 9,260 Depreciation and amortisation charge (1,104) (350) (240) (140) (7) (74) (1,915) Impairment (charge)/reversal (30) \u2013 13 \u2013 \u2013 \u2013 (17) Operating (loss)/profit (2,041) (220) (233) (338) 131 (64) (2,765) Exceptional items 3 151 14 29 9 \u2013 2 205 Operating (loss)/profit before exceptional items (2,192) (234) (262) (347) 131 (66) (2,970) Net non-operating costs 4 (742) Loss before tax (3,507) Total assets 20,891 6,919 2,671 1,820 3,184 (1,079) 34,406 Total liabilities (18,795) (7,062) (3,364) (1,806) (3,009) 476 (33,560) 1 In 2022, based on size thresholds the Group determined that IAG Loyalty was a reportable segment and accordingly presented the financial information of the segment separately. The prior year segment note has been re-presented to align with the current year presentation. 2 Includes eliminations on total assets of \u20ac16,023 million and total liabilities of \u20ac5,833 million. 3 For details on exceptional items refer to the Alternative performance measures section. 4 Includes \u20ac75 million of exceptional items relating to the Air Europa Holdings termination settlement payment b Geographical analysis Revenue by area of original sale Year to December 31 \u20ac million 2022 2021 UK 7,923 2,435 Spain 4,313 2,189 USA 3,735 931 Rest of world 7,095 2,900 23,066 8,455 ", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-608": { "value": "5 Segment information a Business segments The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the IAG Management Committee (IAG MC). The Group has a number of entities which are managed as individual operating companies including airline and platform functions. Each airline operates its network operations as a single business unit and the IAG MC assesses performance based on measures including operating profit, and makes resource allocation decisions for the airlines based on network profitability, primarily by reference to the passenger markets in which the companies operate. The objective in making resource allocation decisions is to optimise consolidated financial results. The Group has determined its operating segments based on the way that it treats its businesses and the manner in which resource allocation decisions are made. British Airways, Iberia, Vueling, Aer Lingus and IAG Loyalty have been identified for financial reporting purposes as reportable operating segments. LEVEL is also an operating segment but does not exceed the quantitative thresholds to be reportable and management has concluded that there are currently no other reasons why LEVEL should be separately disclosed. The platform functions of the business primarily support the airline operations. These activities are not considered to be reportable operating segments as they either earn revenues incidental to the activities of the Group and resource allocation decisions are made based on the passenger business or are not reviewed regularly by the IAG MC and are included within Other Group companies. For the year to December 31, 2022 2022 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty Other Group companies 1 Total Revenue Passenger revenue 10,523 4,002 2,584 1,665 451 233 19,458 Cargo revenue 1,239 284 \u2013 80 \u2013 12 1,615 Other revenue 848 799 14 10 322 \u2013 1,993 External revenue 12,610 5,085 2,598 1,755 773 245 23,066 Inter-segment revenue 311 426 \u2013 14 228 378 1,357 Segment revenue 12,921 5,511 2,598 1,769 1,001 623 24,423 Depreciation and amortisation charge (1,272) (371) (222) (146) (8) (59) (2,078) Impairment reversal \u2013 \u2013 8 \u2013 \u2013 \u2013 8 Operating profit/(loss) 362 382 195 45 282 (10) 1,256 Exceptional items 2 23 \u2013 8 \u2013 \u2013 \u2013 31 Operating profit/(loss) before exceptional items 339 382 187 45 282 (10) 1,225 Net non-operating costs (841) Profit before tax 415 Total assets 23,788 9,200 3,177 1,946 3,303 (2,111) 39,303 Total liabilities (20,975) (9,005) (3,774) (1,942) (2,914) 1,329 (37,281) 1 Includes eliminations on total assets of \u20ac16,159 million and total liabilities of \u20ac5,755 million. 2 For details on exceptional items refer to the Alternative performance measures section. For the year to December 31, 2021 2021 \u20ac million British Airways Iberia Vueling Aer Lingus IAG Loyalty 1 Other Group companies 1,2 Total Revenue Passenger revenue 2,607 1,707 1,011 302 180 28 5,835 Cargo revenue 1,268 333 \u2013 65 \u2013 7 1,673 Other revenue 314 443 5 4 181 \u2013 947 External revenue 4,189 2,483 1,016 371 361 35 8,455 Inter-segment revenue 129 301 \u2013 5 77 293 805 Segment revenue 4,318 2,784 1,016 376 438 328 9,260 Depreciation and amortisation charge (1,104) (350) (240) (140) (7) (74) (1,915) Impairment (charge)/reversal (30) \u2013 13 \u2013 \u2013 \u2013 (17) Operating (loss)/profit (2,041) (220) (233) (338) 131 (64) (2,765) Exceptional items 3 151 14 29 9 \u2013 2 205 Operating (loss)/profit before exceptional items (2,192) (234) (262) (347) 131 (66) (2,970) Net non-operating costs 4 (742) Loss before tax (3,507) Total assets 20,891 6,919 2,671 1,820 3,184 (1,079) 34,406 Total liabilities (18,795) (7,062) (3,364) (1,806) (3,009) 476 (33,560) 1 In 2022, based on size thresholds the Group determined that IAG Loyalty was a reportable segment and accordingly presented the financial information of the segment separately. The prior year segment note has been re-presented to align with the current year presentation. 2 Includes eliminations on total assets of \u20ac16,023 million and total liabilities of \u20ac5,833 million. 3 For details on exceptional items refer to the Alternative performance measures section. 4 Includes \u20ac75 million of exceptional items relating to the Air Europa Holdings termination settlement payment . b Geographical analysis Revenue by area of original sale Year to December 31 \u20ac million 2022 2021 UK 7,923 2,435 Spain 4,313 2,189 USA 3,735 931 Rest of world 7,095 2,900 23,066 8,455 Assets by area December 31, 2022 \u20ac million Property, plant and equipment Intangible assets UK 12,026 1,490 Spain 5,082 1,462 USA 47 9 Rest of world 1,191 595 18,346 3,556 December 31, 2021 \u20ac million Property, plant and equipment Intangible assets UK 11,544 1,317 Spain 4,404 1,333 USA 76 13 Rest of world 1,137 576 17,161 3,239 ", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-669": { "value": "6 Expenses by nature Operating result is arrived at after charging Depreciation, amortisation and impairment of non-current assets: \u20ac million 2022 2021 Depreciation charge on right of use assets 1,092 1,058 Depreciation charge on owned assets 748 638 Gain arising on de-designation of foreign exchange hedges recorded in Depreciation 1 (29) \u2013 Impairment reversal on owned property, plant and equipment \u2013 (4) Amortisation and impairment of intangible assets 218 178 Impairment (reversal)/charge on right of use assets (8) 20 Depreciation charge on other leasehold assets 49 42 2,070 1,932 1 Included in the Depreciation charge, not included within note 13 is a credit of \u20ac29 million relating to the de-designation of hedge accounting that had been applied to mitigate the foreign currency exposure on aircraft purchases. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-642": { "value": "6 Expenses by nature Operating result is arrived at after charging Depreciation, amortisation and impairment of non-current assets: \u20ac million 2022 2021 Depreciation charge on right of use assets 1,092 1,058 Depreciation charge on owned assets 748 638 Gain arising on de-designation of foreign exchange hedges recorded in Depreciation 1 (29) \u2013 Impairment reversal on owned property, plant and equipment \u2013 (4) Amortisation and impairment of intangible assets 218 178 Impairment (reversal)/charge on right of use assets (8) 20 Depreciation charge on other leasehold assets 49 42 2,070 1,932 1 Included in the Depreciation charge, not included within note 13 is a credit of \u20ac29 million relating to the de-designation of hedge accounting that had been applied to mitigate the foreign currency exposure on aircraft purchases. Cost of inventories: \u20ac million 2022 2021 Cost of inventories recognised as an expense 749 1,038 749 1,038 ", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-609": { "value": "6 Expenses by nature Operating result is arrived at after charging Depreciation, amortisation and impairment of non-current assets: \u20ac million 2022 2021 Depreciation charge on right of use assets 1,092 1,058 Depreciation charge on owned assets 748 638 Gain arising on de-designation of foreign exchange hedges recorded in Depreciation 1 (29) \u2013 Impairment reversal on owned property, plant and equipment \u2013 (4) Amortisation and impairment of intangible assets 218 178 Impairment (reversal)/charge on right of use assets (8) 20 Depreciation charge on other leasehold assets 49 42 2,070 1,932 1 Included in the Depreciation charge, not included within note 13 is a credit of \u20ac29 million relating to the de-designation of hedge accounting that had been applied to mitigate the foreign currency exposure on aircraft purchases. Cost of inventories: \u20ac million 2022 2021 Cost of inventories recognised as an expense 749 1,038 749 1,038 ", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-610": { "value": "
7 Auditor\u2019s remuneration
The fees for the year to December 31, 2022, for audit and non-audit services provided by the auditor of the Group\u2019s consolidated financial
statements and of certain individual financial statements of the consolidated companies, KPMG Auditores S.L., and by companies belonging
to KPMG\u2019s network, were as follows:
\u20ac\u2019000 2022 2021
Fees payable for the audit of the Group and individual accounts 6,378 4,860
Fees payable for other services:
Audit of the Group's subsidiaries pursuant to legislation 985 532
Other services pursuant to legislation
195 431
Other audit and assurance services 1,644 569
Services relating to working capital review 1,022 776
10,224 7,168
Fees payable to the Group's auditor for the audit of the Group's pension scheme during the year total \u20ac236 thousand (2021: \u20ac182 thousand).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-611": { "value": "8 Employee costs and numbers \u20ac million 2022 2021 Wages and salaries 3,207 2,135 Social security costs 519 307 Costs related to pension scheme benefits 272 232 Share-based payment charge 39 23 Other employee costs 1 610 316 Total employee costs 4,647 3,013 1 Other employee costs include allowances and accommodation for crew. The number of employees during the year and at December 31 was as follows: 2022 2021 December 31, 2022 December 31, 2021 Average number of employees 1 Number of employees Percentage of women Average number of employees 1 Number of employees Percentage of women In the air: Cabin crew 19,801 22,278 70% 9,304 17,865 70% Pilots 7,340 7,864 7% 3,879 7,607 6% On the ground: Airports 13,798 15,087 38% 6,728 12,842 37% Corporate 11,741 13,819 49% 8,612 10,709 52% Maintenance 6,908 6,775 8% 6,345 7,448 8% Senior executives 212 221 34% 167 187 33% 59,800 66,044 44% 35,035 56,658 42% 1 The average number of employees excludes those employees who were on furlough, wage support and equivalent schemes, including the Temporary Redundancy Plan arrangements in Spain. For further details see note 34. The total average number of employees including these schemes is 61,192. The number of employees is based on actual headcount at December 31. The average manpower equivalent for 2022 was 59,505 (2021: 50,222), which includes employees on furlough, wage support and equivalent schemes, including Temporary Redundancy Plan arrangements in Spain. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-612": { "value": "9 Finance costs, income and other non-operating charges a Finance costs \u20ac million 2022 2021 Interest expense on: Bank borrowings (191) (133) Asset financed liabilities (107) (65) Lease liabilities (464) (408) Bonds 1 (83) (63) Provisions unwinding of discount (43) (12) Other borrowings 1 (102) (90) Capitalised interest on progress payments 11 3 Other finance costs (38) (62) (1,017) (830) 1 The 2021 total finance costs include a reclassification of results to conform with the current basis of presentation. A charge of \u20ac63 million has been reclassified from Other borrowings to Bonds. There is no change to total finance costs. b Finance income \u20ac million 2022 2021 Interest on other interest-bearing deposits 51 5 Other finance income 1 8 52 13 c Net change in fair value of financial instruments \u20ac million 2022 2021 Net change in the fair value of convertible bond 159 89 Net fair value losses on financial assets at fair value through profit or loss (35) \u2013 Net fair value losses on de-recognition of financial assets and recognition of other equity investment (43) \u2013 81 89 d Net financing credit/(charge) relating to pensions \u20ac million 2022 2021 Net financing credit/(charge) relating to pensions 26 (2) e Other non-operating charges \u20ac million 2022 2021 Gains on sale of property, plant and equipment and investments 1 22 59 Charge related to equity investments (note 19) (3) \u2013 Share of profits in investments accounted for using the equity method (note 18) 5 2 Realised gains on derivatives not qualifying for hedge accounting 190 37 Unrealised (losses)/gains on derivatives not qualifying for hedge accounting (82) 47 Air Europa Holdings termination settlement payment \u2013 (75) 132 70 1 2021 includes a gain of \u20ac24 million arising from the disposal of Compa\u00f1\u00eda Auxiliar al Cargo Expr\u00e9s, S.A. and Auxiliar Log\u00edstica Aeroportuaria, S.A. The Group previously owned 75 per cent of the share capital of these companies and disposed of them during the fourth quarter of 2021. The disposal led to the de- recognition of \u20ac12 million of net assets from the consolidated financial statements of the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-643": { "value": "
a Finance costs
\u20ac million 2022 2021
Interest expense on:
Bank borrowings (191) (133)
Asset financed liabilities
(107) (65)
Lease liabilities (464) (408)
Bonds
1
(83) (63)
Provisions unwinding of discount (43) (12)
Other borrowings
1
(102) (90)
Capitalised interest on progress payments 11 3
Other finance costs (38) (62)
(1,017) (830)
1 The 2021 total finance costs include a reclassification of results to conform with the current basis of presentation. A charge of \u20ac63 million has been reclassified
from Other borrowings to Bonds. There is no change to total finance costs.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-681": { "value": "a Finance costs \u20ac million 2022 2021 Interest expense on: Bank borrowings (191) (133) Asset financed liabilities (107) (65) Lease liabilities (464) (408) Bonds 1 (83) (63) Provisions unwinding of discount (43) (12) Other borrowings 1 (102) (90) Capitalised interest on progress payments 11 3 Other finance costs (38) (62) (1,017) (830) 1 The 2021 total finance costs include a reclassification of results to conform with the current basis of presentation. A charge of \u20ac63 million has been reclassified from Other borrowings to Bonds. There is no change to total finance costs. b Finance income \u20ac million 2022 2021 Interest on other interest-bearing deposits 51 5 Other finance income 1 8 52 13 ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-670": { "value": "a Finance costs \u20ac million 2022 2021 Interest expense on: Bank borrowings (191) (133) Asset financed liabilities (107) (65) Lease liabilities (464) (408) Bonds 1 (83) (63) Provisions unwinding of discount (43) (12) Other borrowings 1 (102) (90) Capitalised interest on progress payments 11 3 Other finance costs (38) (62) (1,017) (830) 1 The 2021 total finance costs include a reclassification of results to conform with the current basis of presentation. A charge of \u20ac63 million has been reclassified from Other borrowings to Bonds. There is no change to total finance costs. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-644": { "value": "
b Finance income
\u20ac million 2022 2021
Interest on other interest-bearing deposits 51 5
Other finance income 1 8
52 13
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-671": { "value": "b Finance income \u20ac million 2022 2021 Interest on other interest-bearing deposits 51 5 Other finance income 1 8 52 13 ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-613": { "value": "10 Tax a Tax credits/(charges) Tax credits/(charges) recognised in the Income statement, Other comprehensive income and directly in equity: 2022 2021 \u20ac million Income statement Other comprehensive income Recognised directly in equity Total Income statement Other comprehensive income Recognised directly in equity Total Current tax Movement in respect of prior years (6) \u2013 \u2013 (6) 10 \u2013 (1) 9 Movement in respect of current year (64) 3 \u2013 (61) (9) 5 \u2013 (4) Total current tax (70) 3 \u2013 (67) 1 5 (1) 5 Deferred tax Movement in respect of prior years (36) (2) \u2013 (38) (23) \u2013 \u2013 (23) Movement in respect of current year 105 (60) 5 50 518 (420) \u2013 98 Rate change/rate differences 17 (10) \u2013 7 78 61 \u2013 139 Total deferred tax 86 (72) 5 19 573 (359) \u2013 214 Total tax 16 (69) 5 (48) 574 (354) (1) 219 The current tax credit in Other comprehensive income relates to the fair value movements on the convertible bond of \u20ac2 million (2021: \u20ac5 million) and movements relating to employee benefit plans of \u20ac1 million (2021: \u20acnil). Tax recognised directly in equity relates to cash flow hedges of \u20ac5 million (2021: \u20acnil) and share-based payment schemes of \u20acnil (2021: \u20ac1 million). Within tax in Other comprehensive income is a tax credit of \u20ac8 million (2021: tax charge of \u20ac123 million) that may be reclassified to the Income statement and a tax charge of \u20ac77 million (2021: tax charge of \u20ac231 million) that will not. b Current tax asset/(liability) \u20ac million 2022 2021 Balance at January 1 (5) 53 Income statement (70) 1 Other comprehensive income 3 5 Recognised directly in equity \u2013 (1) Cash 134 (63) Exchange movements and other 2 \u2013 Balance at December 31 64 (5) Current tax asset 72 16 Current tax liability (8) (21) Balance at December 31 64 (5) c Deferred tax asset/(liability) \u20ac million Fixed assets Right of use assets Lease liabilities Employee leaving indemnities and others Employee benefit plans Fair value gains/ losses 1 Share- based payment schemes Tax loss carried forward and tax credits Other temporary differences Total Balance at January 1, 2022 (477) (220) 19 196 62 57 11 1,573 61 1,282 Income statement (194) 169 (9) 19 1 \u2013 6 87 7 86 Other comprehensive income 2 \u2013 \u2013 \u2013 (17) (12) (46) \u2013 3 \u2013 (72) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 5 \u2013 \u2013 \u2013 5 Exchange movements and other (9) 7 (1) (1) 3 (19) \u2013 (27) 28 (19) Balance at December 31, 2022 (680) (44) 9 197 54 (3) 17 1,636 96 1,282 Balance at January 1, 2021 (589) (248) 21 194 298 195 10 1,090 64 1,035 Income statement 106 67 (3) 9 (11) (14) 1 408 10 573 Other comprehensive income \u2013 \u2013 \u2013 (9) (237) (133) \u2013 20 \u2013 (359) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Exchange movements and other 6 (39) 1 2 12 9 \u2013 55 (13) 33 Balance at December 31, 2021 (477) (220) 19 196 62 57 11 1,573 61 1,282 1 Fair value gains/losses include both the Cash flow hedge reserve and the Cost of hedging reserve, of which the movement in relation to Other comprehensive income recognised in the Cash flow hedge reserve for 2022 was \u20ac68 million (refer to note 28d). 2 Movements in Other comprehensive income relating to post-employment benefit obligations increase the Group\u2019s tax losses by \u20ac3 million (tax value) at December 31, 2022 (2021: \u20ac20 million) and have therefore been disclosed as tax loss carried forward and tax credits in the above table. \u20ac million 2022 2021 Deferred tax asset 1,282 1,282 Deferred tax liability \u2013 \u2013 Balance at December 31 1,282 1,282 The deferred tax assets mainly arise in Spain and the UK and are expected to reverse in full beyond one year. Recognition of the deferred tax assets is supported by the expected reversal of deferred tax liabilities in corresponding periods, and projections of operating performance laid out in the management approved business plans. d Reconciliation of the total tax charge in the Income statement The tax (charge)/credit is calculated at the domestic rates applicable to pro\ufb01ts/(losses) in the country in which the profits/(losses) arise. The differences between the expected tax charge (2021: credit) and the actual tax credit (2021: credit) on the profit for the year to December 31, 2022 (2021: loss) are explained below: \u20ac million 2022 2021 Accounting profit/(loss) before tax 415 (3,507) Weighted average tax (charge)/credit of the Group 1 (102) 683 Unrecognised losses and deductible temporary differences arising in the year (2) (193) Disposal and write down of investments \u2013 8 Effect of tax rate changes 17 78 Prior year tax assets recognised 153 44 Effect of lower tax rate in the Canary Islands 5 (23) Movement in respect of prior years (42) (13) Non-deductible expenses (22) (15) Other items 9 5 Tax credit in the Income statement 16 574 1 The expected tax credit is calculated by aggregating the expected tax (charges)/credits arising in each company in the Group and changes each year as tax rates and profit mix change. The 2022 corporate tax rates for the Group's main countries of operation are Spain 25% (2021: 25%), the UK 19% (2021: 19%) and Ireland 12.5% (2021: 12.5%). e Payroll-related taxes and UK Air Passenger Duty The Group was also subject to other taxes paid during the year which are as follows: \u20ac million 2022 2021 Payroll related taxes 522 310 UK Air Passenger Duty 722 204 1,244 514 f Factors that may affect future tax charges Unrecognised deductible temporary differences and losses \u20ac million 2022 2021 Income tax losses Spanish corporate income tax losses 1,596 1,993 Openskies SASU trading losses 405 390 UK trading losses 72 72 Other trading losses 11 3 2,084 2,458 Other losses and temporary differences Spanish deductible temporary differences 481 648 UK capital losses 343 361 Irish capital losses 17 17 841 1,026 None of the unrecognised temporary differences have an expiry date. Further information with regard to the sensitivity of the recoverability of deferred tax assets is given in note 2. Unrecognised temporary differences \u2013 investment in subsidiaries and associates No deferred tax liability has been recognised in respect of \u20ac823 million (2021: \u20ac617 million) of temporary differences relating to subsidiaries and associates. The Group either controls the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future or no tax consequences would arise from their reversal to a material extent. Tax rate changes On March 3, 2021 the UK Chancellor of the Exchequer announced that legislation would be introduced in the Finance Bill 2021 to set the main rate of corporation tax at 25 per cent from April 2023. On May 24, 2021 the Finance Bill was substantively enacted, which has led to the remeasurement of deferred tax balances and will increase the Group's future current tax charge accordingly. As a result of the remeasurement of deferred tax balances in UK entities, a credit of \u20ac17 million (2021: \u20ac78 million credit) is recorded in the Income statement and a charge of \u20ac10 million (2021: \u20ac61 million credit) is recorded in Other comprehensive income. On October 8, 2021 Ireland announced that it would increase the rate of corporation tax for certain multinational businesses to 15 per cent with effect from 2023. This expected tax rate change has not been reflected in these results because it has not yet been substantively enacted. The effect of the proposed rate change is not expected to be material over the period of the management approved business plan. Tax policy developments The Group is monitoring the OECD\u2019s proposed two-pillar solution to address the tax challenges arising from the digitalisation of the economy. This proposed reform to the international tax system addresses the geographical allocation of profits for the purposes of taxation and is designed to ensure that multinational enterprises will be subject to a minimum 15 per cent effective tax rate. On December 15, 2022, the Council of the European Union formally adopted the EU Pillar Two Directive. Member States are expected to transpose the Directive into national law by the end of 2023 and effective from 2024. The Group is continuing to assess the implications of the reform and these will be determined when the relevant legislation is finalised. g Tax-related contingent liabilities The Group has certain contingent liabilities that could be reliably estimated, across all taxes, at December 31, 2022 amounting to \u20ac110 million (December 31, 2021: \u20ac106 million). No material losses are likely to arise from such contingent liabilities. As such the Group does not consider it appropriate to make a provision for these amounts. Included in the tax related contingent liabilities are the following: Merger gain Following tax audits covering the period 2011 to 2014, the Spanish Tax Authorities issued a corporate income tax assessment to the Company regarding the merger in 2011 between British Airways and Iberia. The maximum exposure in this case is \u20ac98 million (December 31, 2021: \u20ac95 million), being the amount in the tax assessment with an estimate of the interest accrued on that assessment through to December 31, 2022. The Company appealed the assessment to the Tribunal Econ\u00f3mico-Administrativo Central or \u2018TEAC\u2019 (Central Administrative Tax Tribunal). On October 23, 2019, the TEAC ruled in favour of the Spanish Tax Authorities. The Company subsequently appealed this ruling to the Audiencia Nacional (National High Court) on December 20, 2019, and on July 24, 2020 filed submissions in support of its case. The Company does not expect a hearing at the National High Court until late 2023 at the earliest. The Company disputes the technical merits of the assessment and ruling of the TEAC, both in terms of whether a gain arose and in terms of the quantum of any gain. The Company believes that it has strong arguments to support its appeals. The Company does not consider it appropriate to make a provision for these amounts and accordingly has classified this matter as a contingent liability. IAG Loyalty VAT In the year ended December 31, 2022 and through to the date of this report, His Majesty\u2019s Revenue and Customs (HMRC) has issued notices of VAT assessments for the 13 months ended March 2019 to Avios Group (AGL) Limited, a controlled undertaking of the Group trading as IAG Loyalty. At December 31, 2022 and through to the date of these financial statements HMRC\u2019s enquiries into IAG Loyalty\u2019s VAT position remain at an early stage. The Group has reviewed the position with its advisors and considers it has strong arguments to support its VAT accounting, including having received rulings previously from HMRC on the matter, and therefore does not consider it probable that an adverse ruling will eventuate. Given the above the Group does not consider it appropriate to record any provision. It is further not possible to estimate reliably any exposure that may arise from this matter until HMRC\u2019s enquiries are further progressed. The Group expects further developments of these matters during the remainder of 2023. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-672": { "value": "b Current tax asset/(liability) \u20ac million 2022 2021 Balance at January 1 (5) 53 Income statement (70) 1 Other comprehensive income 3 5 Recognised directly in equity \u2013 (1) Cash 134 (63) Exchange movements and other 2 \u2013 Balance at December 31 64 (5) Current tax asset 72 16 Current tax liability (8) (21) Balance at December 31 64 (5) b Current tax asset/(liability) \u20ac million 2022 2021 Balance at January 1 (5) 53 Income statement (70) 1 Other comprehensive income 3 5 Recognised directly in equity \u2013 (1) Cash 134 (63) Exchange movements and other 2 \u2013 Balance at December 31 64 (5) Current tax asset 72 16 Current tax liability (8) (21) Balance at December 31 64 (5) c Deferred tax asset/(liability) \u20ac million Fixed assets Right of use assets Lease liabilities Employee leaving indemnities and others Employee benefit plans Fair value gains/ losses 1 Share- based payment schemes Tax loss carried forward and tax credits Other temporary differences Total Balance at January 1, 2022 (477) (220) 19 196 62 57 11 1,573 61 1,282 Income statement (194) 169 (9) 19 1 \u2013 6 87 7 86 Other comprehensive income 2 \u2013 \u2013 \u2013 (17) (12) (46) \u2013 3 \u2013 (72) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 5 \u2013 \u2013 \u2013 5 Exchange movements and other (9) 7 (1) (1) 3 (19) \u2013 (27) 28 (19) Balance at December 31, 2022 (680) (44) 9 197 54 (3) 17 1,636 96 1,282 Balance at January 1, 2021 (589) (248) 21 194 298 195 10 1,090 64 1,035 Income statement 106 67 (3) 9 (11) (14) 1 408 10 573 Other comprehensive income \u2013 \u2013 \u2013 (9) (237) (133) \u2013 20 \u2013 (359) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Exchange movements and other 6 (39) 1 2 12 9 \u2013 55 (13) 33 Balance at December 31, 2021 (477) (220) 19 196 62 57 11 1,573 61 1,282 1 Fair value gains/losses include both the Cash flow hedge reserve and the Cost of hedging reserve, of which the movement in relation to Other comprehensive income recognised in the Cash flow hedge reserve for 2022 was \u20ac68 million (refer to note 28d). 2 Movements in Other comprehensive income relating to post-employment benefit obligations increase the Group\u2019s tax losses by \u20ac3 million (tax value) at December 31, 2022 (2021: \u20ac20 million) and have therefore been disclosed as tax loss carried forward and tax credits in the above table. \u20ac million 2022 2021 Deferred tax asset 1,282 1,282 Deferred tax liability \u2013 \u2013 Balance at December 31 1,282 1,282 The deferred tax assets mainly arise in Spain and the UK and are expected to reverse in full beyond one year. Recognition of the deferred tax assets is supported by the expected reversal of deferred tax liabilities in corresponding periods, and projections of operating performance laid out in the management approved business plans. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-645": { "value": "c Deferred tax asset/(liability) \u20ac million Fixed assets Right of use assets Lease liabilities Employee leaving indemnities and others Employee benefit plans Fair value gains/ losses 1 Share- based payment schemes Tax loss carried forward and tax credits Other temporary differences Total Balance at January 1, 2022 (477) (220) 19 196 62 57 11 1,573 61 1,282 Income statement (194) 169 (9) 19 1 \u2013 6 87 7 86 Other comprehensive income 2 \u2013 \u2013 \u2013 (17) (12) (46) \u2013 3 \u2013 (72) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 5 \u2013 \u2013 \u2013 5 Exchange movements and other (9) 7 (1) (1) 3 (19) \u2013 (27) 28 (19) Balance at December 31, 2022 (680) (44) 9 197 54 (3) 17 1,636 96 1,282 Balance at January 1, 2021 (589) (248) 21 194 298 195 10 1,090 64 1,035 Income statement 106 67 (3) 9 (11) (14) 1 408 10 573 Other comprehensive income \u2013 \u2013 \u2013 (9) (237) (133) \u2013 20 \u2013 (359) Recognised directly in equity \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 \u2013 Exchange movements and other 6 (39) 1 2 12 9 \u2013 55 (13) 33 Balance at December 31, 2021 (477) (220) 19 196 62 57 11 1,573 61 1,282 1 Fair value gains/losses include both the Cash flow hedge reserve and the Cost of hedging reserve, of which the movement in relation to Other comprehensive income recognised in the Cash flow hedge reserve for 2022 was \u20ac68 million (refer to note 28d). 2 Movements in Other comprehensive income relating to post-employment benefit obligations increase the Group\u2019s tax losses by \u20ac3 million (tax value) at December 31, 2022 (2021: \u20ac20 million) and have therefore been disclosed as tax loss carried forward and tax credits in the above table. \u20ac million 2022 2021 Deferred tax asset 1,282 1,282 Deferred tax liability \u2013 \u2013 Balance at December 31 1,282 1,282 The deferred tax assets mainly arise in Spain and the UK and are expected to reverse in full beyond one year. Recognition of the deferred tax assets is supported by the expected reversal of deferred tax liabilities in corresponding periods, and projections of operating performance laid out in the management approved business plans. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-682": { "value": "g Tax-related contingent liabilities The Group has certain contingent liabilities that could be reliably estimated, across all taxes, at December 31, 2022 amounting to \u20ac110 million (December 31, 2021: \u20ac106 million). No material losses are likely to arise from such contingent liabilities. As such the Group does not consider it appropriate to make a provision for these amounts. Included in the tax related contingent liabilities are the following: Merger gain Following tax audits covering the period 2011 to 2014, the Spanish Tax Authorities issued a corporate income tax assessment to the Company regarding the merger in 2011 between British Airways and Iberia. The maximum exposure in this case is \u20ac98 million (December 31, 2021: \u20ac95 million), being the amount in the tax assessment with an estimate of the interest accrued on that assessment through to December 31, 2022. The Company appealed the assessment to the Tribunal Econ\u00f3mico-Administrativo Central or \u2018TEAC\u2019 (Central Administrative Tax Tribunal). On October 23, 2019, the TEAC ruled in favour of the Spanish Tax Authorities. The Company subsequently appealed this ruling to the Audiencia Nacional (National High Court) on December 20, 2019, and on July 24, 2020 filed submissions in support of its case. The Company does not expect a hearing at the National High Court until late 2023 at the earliest. The Company disputes the technical merits of the assessment and ruling of the TEAC, both in terms of whether a gain arose and in terms of the quantum of any gain. The Company believes that it has strong arguments to support its appeals. The Company does not consider it appropriate to make a provision for these amounts and accordingly has classified this matter as a contingent liability. IAG Loyalty VAT In the year ended December 31, 2022 and through to the date of this report, His Majesty\u2019s Revenue and Customs (HMRC) has issued notices of VAT assessments for the 13 months ended March 2019 to Avios Group (AGL) Limited, a controlled undertaking of the Group trading as IAG Loyalty. At December 31, 2022 and through to the date of these financial statements HMRC\u2019s enquiries into IAG Loyalty\u2019s VAT position remain at an early stage. The Group has reviewed the position with its advisors and considers it has strong arguments to support its VAT accounting, including having received rulings previously from HMRC on the matter, and therefore does not consider it probable that an adverse ruling will eventuate. Given the above the Group does not consider it appropriate to record any provision. It is further not possible to estimate reliably any exposure that may arise from this matter until HMRC\u2019s enquiries are further progressed. The Group expects further developments of these matters during the remainder of 2023. 33 Contingent liabilities There are a number of legal and regulatory proceedings against the Group in a number of jurisdictions which at December 31, 2022, where they could be reliably estimated, amounted to \u20ac11 million (December 31, 2021: \u20ac22 million). The Group does not consider it probable that there will be an outflow of economic resources with regard to these proceedings and accordingly no provisions have been recorded. Contingent liabilities associated with income taxes, deferred taxes and indirect taxes are presented in note 10. ", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-646": { "value": "g Tax-related contingent liabilities The Group has certain contingent liabilities that could be reliably estimated, across all taxes, at December 31, 2022 amounting to \u20ac110 million (December 31, 2021: \u20ac106 million). No material losses are likely to arise from such contingent liabilities. As such the Group does not consider it appropriate to make a provision for these amounts. Included in the tax related contingent liabilities are the following: Merger gain Following tax audits covering the period 2011 to 2014, the Spanish Tax Authorities issued a corporate income tax assessment to the Company regarding the merger in 2011 between British Airways and Iberia. The maximum exposure in this case is \u20ac98 million (December 31, 2021: \u20ac95 million), being the amount in the tax assessment with an estimate of the interest accrued on that assessment through to December 31, 2022. The Company appealed the assessment to the Tribunal Econ\u00f3mico-Administrativo Central or \u2018TEAC\u2019 (Central Administrative Tax Tribunal). On October 23, 2019, the TEAC ruled in favour of the Spanish Tax Authorities. The Company subsequently appealed this ruling to the Audiencia Nacional (National High Court) on December 20, 2019, and on July 24, 2020 filed submissions in support of its case. The Company does not expect a hearing at the National High Court until late 2023 at the earliest. The Company disputes the technical merits of the assessment and ruling of the TEAC, both in terms of whether a gain arose and in terms of the quantum of any gain. The Company believes that it has strong arguments to support its appeals. The Company does not consider it appropriate to make a provision for these amounts and accordingly has classified this matter as a contingent liability. IAG Loyalty VAT In the year ended December 31, 2022 and through to the date of this report, His Majesty\u2019s Revenue and Customs (HMRC) has issued notices of VAT assessments for the 13 months ended March 2019 to Avios Group (AGL) Limited, a controlled undertaking of the Group trading as IAG Loyalty. At December 31, 2022 and through to the date of these financial statements HMRC\u2019s enquiries into IAG Loyalty\u2019s VAT position remain at an early stage. The Group has reviewed the position with its advisors and considers it has strong arguments to support its VAT accounting, including having received rulings previously from HMRC on the matter, and therefore does not consider it probable that an adverse ruling will eventuate. Given the above the Group does not consider it appropriate to record any provision. It is further not possible to estimate reliably any exposure that may arise from this matter until HMRC\u2019s enquiries are further progressed. The Group expects further developments of these matters during the remainder of 2023. 15 Capital expenditure commitments Capital expenditure authorised and contracted but not provided for in the accounts, including outstanding aircraft commitments, at December 31, 2022 amounted to \u20ac13,749 million (December 31, 2021: \u20ac10,911 million). The outstanding aircraft commitments including the expected delivery timeframes, totalling \u20ac13,484 million (2021: \u20ac10,813 million), are as follows: Aircraft future deliveries at December 31 2022 1 2021 1 Airbus A320 (from 2023 to 2028) 45 22 Airbus A321 (from 2023 to 2028) 46 20 Airbus A321 XLR (from 2024 to 2026) 14 14 Airbus A350-900 (from 2023 to 2030) 7 16 Airbus A350-1000 (from 2023 to 2024) 5 10 Boeing 777-9 (from 2026 to 2028) 18 18 Boeing 787-10 (from 2023 to 2024) 7 10 Boeing 737-8200 (from 2024 to 2025) 25 \u2013 Boeing 737-10 (from 2026 to 2027) 25 \u2013 Total 192 110 1 Capital commitments exclude options to purchase additional aircraft. In May 2022, the Group agreed to purchase 25 Boeing 737-8200 and 25 737-10 aircraft, with 100 options to purchase further such aircraft. In addition, in July 2022, the Group agreed to exercise its option over 12 Airbus A320neos/A321neos and to purchase 25 Airbus A320neos/A321neos with 50 options to purchase further such aircraft. The determination of the split between A320neos and A321neos will be made closer to delivery. Both of these agreements were subject to shareholder approval and were subsequently approved at the Extraordinary General Meeting of the Company on October 26, 2022. The majority of these commitments are denominated in US dollars translated at the closing exchange rate at the reporting date and include escalation clauses dependent on the timing of aircraft deliveries. Under the terms of the committed purchase agreements, the Group is required to make periodic advance payments towards the purchase price, with the commitments above stated net of advance payments that have been made at the reporting date. The Group has certain rights to defer aircraft deliveries and to cancel commitments in the event of significant delays to aircraft deliveries caused by the aircraft manufacturers. No such rights had been exercised as at December 31, 2022.
33 Contingent liabilities
There are a number of legal and regulatory proceedings against the Group in a number of jurisdictions which at December 31, 2022, where
they could be reliably estimated, amounted to \u20ac11 million (December 31, 2021: \u20ac22 million). The Group does not consider it probable that
there will be an outflow of economic resources with regard to these proceedings and accordingly no provisions have been recorded.
Contingent liabilities associated with income taxes, deferred taxes and indirect taxes are presented in note 10.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-614": { "value": "11 Earnings per share \u20ac million 2022 2021 Earnings/(losses) attributable to equity holders of the parent for basic earnings/(losses) per share 431 (2,933) Income statement impact of convertible bonds (104) \u2013 Diluted earnings/(losses) attributable to equity holders of the parent and diluted earnings/(losses) per share 327 (2,933) 2022 Number \u2018000 2021 Number \u2018000 Weighted average number of ordinary shares in issue 4,958,420 4,963,945 Weighted average number of ordinary shares in issue for diluted earnings/(losses) per share 5,344,152 4,963,945 \u20ac cents 2022 2021 Basic earnings/(losses) per share 8.7 (59.1) Diluted earnings/(losses) per share 6.1 (59.1) The effect of the assumed conversion of the \u20ac825 million convertible bond 2028 and outstanding employee share schemes have a dilutive impact on the earnings per share for the year to December 31, 2022 due to the reported profit after tax for the year, but are antidilutive for the year to December 31, 2021 due to the reported loss after tax for the year, and therefore have not been included in the diluted loss per share calculation for 2021. For information relating to Adjusted earnings/(losses) per share refer to the Alternative performance measures section.", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-615": { "value": "12 Dividends The Directors propose that no dividend be paid for the year to December 31, 2022 (2021: \u20acnil). The future dividend capacity of the Group is dependent on the liquidity requirements and the distributable reserves of the Group\u2019s main operating companies and their capacity to pay dividends to the Company, together with the Company\u2019s distributable reserves and liquidity. Certain debt obligations place restrictions or conditions on the payment of dividends from the Group\u2019s main operating companies to the Company, including a loan to British Airways partially guaranteed by UKEF and loans to Iberia and Vueling partially guaranteed by the Instituto de Cr\u00e9dito Oficial (ICO) in Spain; these loans can be repaid early without penalty at the election of each company. In Spain, Iberia and Vueling are not permitted to make dividend payments in the reporting period in which they are in receipt of Expedientes de Regulaci\u00f3n Temporal de Empleo or \u2018ERTE\u2019 (Temporary Employment Regulation Records). British Airways agreed with the Trustee of its main UK defined benefit pension scheme (NAPS) as part of the triennial valuation as at March 31, 2021 that, subject to the over-funding protection mechanism, no dividends will be paid to IAG before December 31, 2023 and that any dividends paid to IAG from January 1, 2024 through to September 30, 2025, will trigger a pension contribution of 50 per cent of the amount of the dividend. Further details on the British Airways dividend restrictions agreed with NAPS are given in note 32a. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-616": { "value": "13 Property, plant and equipment \u20ac million Fleet Property Equipment Total Cost Balance at January 1, 2021 26,936 2,982 1,501 31,419 Additions 709 38 37 784 Modification of leases 236 (2) (26) 208 Disposals (3,035) (74) (135) (3,244) Reclassifications (4) \u2013 (1) (5) Transfers to Non-current assets held for sale (note 16) (111) \u2013 \u2013 (111) Exchange movements 1,265 181 74 1,520 Balance at December 31, 2021 25,996 3,125 1,450 30,571 Additions 3,765 61 101 3,927 Modification of leases 241 129 \u2013 370 Disposals (1,700) (406) (120) (2,226) Reclassifications (4) \u2013 \u2013 (4) Transfers to Non-current assets held for sale (note 16) (44) \u2013 \u2013 (44) Exchange movements (552) (73) (31) (656) December 31, 2022 27,702 2,836 1,400 31,938 Depreciation and impairment Balance at January 1, 2021 11,571 1,282 1,035 13,888 Depreciation charge for the year 1,500 154 84 1,738 Impairment (reversal)/charge for the year 1 (3) 19 \u2013 16 Disposals (2,699) (63) (105) (2,867) Modification of leases \u2013 \u2013 (14) (14) Transfers to Non-current assets held for sale (note 16) (91) \u2013 \u2013 (91) Exchange movements 602 81 57 740 Balance at December 31, 2021 10,880 1,473 1,057 13,410 Depreciation charge for the year 1,642 168 79 1,889 Impairment reversal for the year 1 (8) \u2013 \u2013 (8) Disposals (857) (403) (107) (1,367) Transfers to Non-current assets held for sale (note 16) (25) \u2013 \u2013 (25) Exchange movements (247) (32) (28) (307) December 31, 2022 11,385 1,206 1,001 13,592 1 For details regarding the impairment reversal on fleet assets refer to the Alternative performance measures section. For details regarding the operating segment in which the impairment (reversal)/charge arose, refer to note 5. Net book values December 31, 2022 16,317 1,630 399 18,346 December 31, 2021 15,116 1,652 393 17,161 Analysis at December 31, 2022 Owned 7,242 833 338 8,413 Right of use assets (note 14) 7,993 684 20 8,697 Progress payments 1,071 113 40 1,224 Assets not in current use 11 \u2013 1 12 Property, plant and equipment 16,317 1,630 399 18,346 Analysis at December 31, 2021 Owned 5,736 916 330 6,982 Right of use assets (note 14) 8,626 640 37 9,303 Progress payments 748 96 26 870 Assets not in current use 6 \u2013 \u2013 6 Property, plant and equipment 15,116 1,652 393 17,161
The net book value of property comprises:
\u20ac million 2022 2021
Freehold 469 495
Right of use assets (note 14) 684 640
Long leasehold improvements with a contractual life in excess of 50 years 301 311
Short leasehold improvements with a contractual life of less than 50 years
176 206
Property 1,630 1,652
At December 31, 2022, bank and other loans of the Group are secured on owned fleet assets with a net book value of \u20ac3,931 million
(2021: \u20ac3,081 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-617": { "value": "14 Leases a Amounts recognised in the Consolidated balance sheet Property, plant and equipment includes the following amounts relating to right of use assets: \u20ac million Fleet Property Equipment Total Cost Balance at January 1, 2021 14,008 893 99 15,000 Additions 240 15 \u2013 255 Modifications of leases 236 (2) (26) 208 Disposals (72) (12) (1) (85) Reclassifications 1 (759) \u2013 \u2013 (759) Exchange movements 565 55 2 622 December 31, 2021 14,218 949 74 15,241 Additions 586 28 1 615 Modification of leases 241 129 \u2013 370 Disposals (214) (171) (2) (387) Reclassifications 1 (849) \u2013 (24) (873) Exchange movements (232) (24) \u2013 (256) December 31, 2022 13,750 911 49 14,710 Depreciation and impairment Balance at January 1, 2021 4,884 198 43 5,125 Depreciation charge for the year 963 87 8 1,058 Impairment charge for the year 2 4 16 \u2013 20 Disposals (71) (4) (1) (76) Modification of leases \u2013 \u2013 (14) (14) Reclassifications 1 (394) \u2013 \u2013 (394) Exchange movements 206 12 1 219 December 31, 2021 5,592 309 37 5,938 Depreciation charge for the year 991 93 8 1,092 Impairment reversal for the year 2 (8) \u2013 \u2013 (8) Disposals (191) (170) (1) (362) Reclassifications 1 (528) \u2013 (14) (542) Exchange movements (99) (5) (1) (105) December 31, 2022 5,757 227 29 6,013 Net book value December 31, 2022 7,993 684 20 8,697 December 31, 2021 8,626 640 37 9,303 1 Amounts with a net book value of \u20ac331 million (2021: \u20ac365 million) were reclassified from ROU assets to Owned Property, plant and equipment at the cessation of the respective leases. The assets reclassified relate to leases with purchase options that were grandfathered as ROU assets upon transition to IFRS 16, for which the Group had been depreciating over the expected useful life of the aircraft, incorporating the purchase option. 2 For details regarding the impairment (reversal)/charge on fleet assets refer to the Alternative performance measures section. Interest-bearing long-term borrowings includes the following amount relating to lease liabilities: \u20ac million 2022 2021 January 1 9,637 10,024 Additions 639 310 Modifications of leases 378 208 Repayments (1,886) (1,855) Interest expense 464 400 Disposals (28) (8) Exchange movements 415 558 December 31 9,619 9,637 Current 1,766 1,521 Non-current 7,853 8,116 b Amounts recognised in the Consolidated income statement \u20ac million 2022 2021 Amounts not included in the measurement of lease liabilities Variable lease payments 2 1 Expenses relating to short-term leases 39 26 Amounts expensed as a result of the recognition of ROU assets and lease liabilities Interest expense on lease liabilities 464 400 Gains/(losses) arising from sale and leaseback transactions 1 (6) Depreciation charge for the year 1,092 1,058 Impairment (reversal)/charge for the year (8) 20 During 2020 the IASB issued \u2018COVID-19 related rent concessions \u2013 amendment to IFRS 16 Leases\u2019 to provide a practical expedient to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions for those lease modifications arising as a direct result of COVID-19. During 2021, the IASB extended the period for the application of the practical expedient. The Group has applied this practical expedient to all such modifications in the preparation of the consolidated financial statements. The net impact on the Income statement for 2022 was \u20acnil (2021: credit of \u20ac8 million) reflecting the changes to lease payments that arose from such concessions. c Amounts recognised in the Consolidated cash flow statement \u20ac million 2022 2021 1 Cash flows arising from transactions giving rise to lease liabilities Total cash outflows arising from lease liabilities \u2013 aircraft 1,699 1,711 Total cash outflows arising from lease liabilities \u2013 other 178 137 Total cash inflows arising from sale and leaseback transactions \u2013 aircraft 718 213 Cash flows arising from transactions that do not give rise to the recognition of lease liabilities Total cash outflows arising from short-term leases, low-value assets and variable lease payments 41 27 Total cash outflows arising from asset financed liabilities 292 209 1 During 2022, the Group has re-presented cash flow amounts to disclose amounts arising from all contractual leases as opposed to only those that give rise to right of use assets and lease liabilities. The Group is not exposed to future cash outflows as at December 31, 2022 and December 31, 2021, for which no amount has been recognised in relation to leases not yet commenced to which the Group is committed. d Maturity profile of the lease liabilities The maturity profile of the lease liabilities is disclosed in note 27f. e Extension options The Group has certain leases which contain extension options exercisable by the Group prior to the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The Group assesses at lease commencement whether it is reasonably certain to exercise the extension options. The Group is exposed to future cash outflows (on an undiscounted basis) at December 31, 2022, for which no amount has been recognised, for potential extension options of \u20ac945 million (2021: \u20ac795 million) due to it not being reasonably certain that these leases will be extended. f Lessor accounting The Group leases out certain of its property, plant and equipment. The Group has classified those leases that transfer substantially all of the risks and rewards of ownership to the lessee as finance leases and those leases that do not transfer substantially all of the risks and rewards of ownership to the lessee as operating leases. Finance leases Rental income from finance leases recognised by the Group in 2022 was \u20ac4 million (2021: \u20acnil). Rental income is recorded within Property, IT and other within the Income statement. The following table sets out a maturity analysis of finance lease receipts, showing the undiscounted lease receipts to be received after the reporting date: \u20ac million 2022 2021 Within one year 2 4 One to two years 6 5 Two to five years \u2013 2 More than five years \u2013 \u2013 Total 8 11", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-619": { "value": "15 Capital expenditure commitments Capital expenditure authorised and contracted but not provided for in the accounts, including outstanding aircraft commitments, at December 31, 2022 amounted to \u20ac13,749 million (December 31, 2021: \u20ac10,911 million). The outstanding aircraft commitments including the expected delivery timeframes, totalling \u20ac13,484 million (2021: \u20ac10,813 million), are as follows: Aircraft future deliveries at December 31 2022 1 2021 1 Airbus A320 (from 2023 to 2028) 45 22 Airbus A321 (from 2023 to 2028) 46 20 Airbus A321 XLR (from 2024 to 2026) 14 14 Airbus A350-900 (from 2023 to 2030) 7 16 Airbus A350-1000 (from 2023 to 2024) 5 10 Boeing 777-9 (from 2026 to 2028) 18 18 Boeing 787-10 (from 2023 to 2024) 7 10 Boeing 737-8200 (from 2024 to 2025) 25 \u2013 Boeing 737-10 (from 2026 to 2027) 25 \u2013 Total 192 110 1 Capital commitments exclude options to purchase additional aircraft. In May 2022, the Group agreed to purchase 25 Boeing 737-8200 and 25 737-10 aircraft, with 100 options to purchase further such aircraft. In addition, in July 2022, the Group agreed to exercise its option over 12 Airbus A320neos/A321neos and to purchase 25 Airbus A320neos/A321neos with 50 options to purchase further such aircraft. The determination of the split between A320neos and A321neos will be made closer to delivery. Both of these agreements were subject to shareholder approval and were subsequently approved at the Extraordinary General Meeting of the Company on October 26, 2022. The majority of these commitments are denominated in US dollars translated at the closing exchange rate at the reporting date and include escalation clauses dependent on the timing of aircraft deliveries. Under the terms of the committed purchase agreements, the Group is required to make periodic advance payments towards the purchase price, with the commitments above stated net of advance payments that have been made at the reporting date. The Group has certain rights to defer aircraft deliveries and to cancel commitments in the event of significant delays to aircraft deliveries caused by the aircraft manufacturers. No such rights had been exercised as at December 31, 2022.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-618": { "value": "
16 Non-current assets held for sale
As at December 31, 2022, the non-current assets held for sale of \u20ac19 million represented two Airbus A321 aircraft. No gain or loss was
recognised on classification as non-current assets held for sale. These aircraft were presented within the British Airways segment and are
expected to exit the business during 2023.
As at December 31, 2021, the non-current assets held for sale of \u20ac20 million represented three Airbus A321 aircraft. No gain or loss was
recognised on classification as non-current assets held for sale. These aircraft are presented within the Aer Lingus segment and exited the
business during 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-647": { "value": "16 Non-current assets held for sale As at December 31, 2022, the non-current assets held for sale of \u20ac19 million represented two Airbus A321 aircraft. No gain or loss was recognised on classification as non-current assets held for sale. These aircraft were presented within the British Airways segment and are expected to exit the business during 2023. As at December 31, 2021, the non-current assets held for sale of \u20ac20 million represented three Airbus A321 aircraft. No gain or loss was recognised on classification as non-current assets held for sale. These aircraft are presented within the Aer Lingus segment and exited the business during 2022. ", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-673": { "value": "17 Intangible assets and impairment review a Intangible assets \u20ac million Goodwill Brand Customer loyalty programmes Landing rights 1 Software ETS assets 2 Other 2 Total Cost Balance at January 1, 2021 593 451 253 1,555 1,474 76 85 4,487 Additions \u2013 \u2013 \u2013 \u2013 149 33 1 183 Disposals \u2013 \u2013 \u2013 (6) (19) (49) \u2013 (74) Exchange movements 3 \u2013 \u2013 56 70 2 1 132 Balance at December 31, 2021 596 451 253 1,605 1,674 62 87 4,728 Additions \u2013 \u2013 \u2013 14 218 360 1 593 Disposals \u2013 \u2013 \u2013 (6) (52) (9) \u2013 (67) Exchange movements (1) \u2013 \u2013 (25) (34) (6) \u2013 (66) December 31, 2022 595 451 253 1,588 1,806 407 88 5,188 Amortisation and impairment Balance at January 1, 2021 249 \u2013 \u2013 132 836 \u2013 62 1,279 Amortisation charge for the year \u2013 \u2013 \u2013 6 167 \u2013 5 178 Disposals \u2013 \u2013 \u2013 \u2013 (13) \u2013 \u2013 (13) Exchange movements \u2013 \u2013 \u2013 4 42 \u2013 (1) 45 Balance at December 31, 2021 249 \u2013 \u2013 142 1,032 \u2013 66 1,489 Amortisation charge for the year \u2013 \u2013 \u2013 6 210 \u2013 2 218 Disposals \u2013 \u2013 \u2013 \u2013 (50) \u2013 \u2013 (50) Exchange movements \u2013 \u2013 \u2013 (2) (23) \u2013 \u2013 (25) December 31, 2022 249 \u2013 \u2013 146 1,169 \u2013 68 1,632 Net book values December 31, 2022 346 451 253 1,442 637 407 20 3,556 December 31, 2021 347 451 253 1,463 642 62 21 3,239 1 The net book value includes non-UK and non-EU based landing rights of \u20ac69 million (2021: \u20ac75 million) that have a definite life. The remaining average life of these landing rights is 13 years. 2 During 2022 the Group separated the ETS assets from Other intangible assets. This change resulted in an amount of \u20ac76 million and \u20ac62 million recorded within ETS assets at January 1, 2021 and January 1, 2022, respectively. There was no net change in total intangible assets. b Impairment review The carrying amounts of intangible assets with indefinite life and goodwill allocated to cash generating units (CGUs) of the Group are: \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2022 Iberia January 1 and December 31, 2022 \u2013 423 306 \u2013 729 British Airways January 1, 2022 47 809 \u2013 \u2013 856 Additions \u2013 14 \u2013 \u2013 14 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements (1) (23) \u2013 \u2013 (24) December 31, 2022 46 794 \u2013 \u2013 840 Vueling January 1 and December 31, 2022 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2022 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2022 \u2013 \u2013 \u2013 253 253 December 31, 2022 346 1,373 451 253 2,423 \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2021 Iberia January 1 and December 31, 2021 \u2013 423 306 \u2013 729 British Airways January 1, 2021 44 763 \u2013 \u2013 807 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements 3 52 \u2013 \u2013 55 December 31, 2021 47 809 \u2013 \u2013 856 Vueling January 1 and December 31, 2021 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2021 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2021 \u2013 \u2013 \u2013 253 253 December 31, 2021 347 1,388 451 253 2,439 Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Summary of results At December 31, 2022 management reviewed the recoverable amount of each of the CGUs and concluded the recoverable amounts exceeded the carrying values. Reasonable possible changes in key assumptions, both individually and in combination, have been considered for each CGU, where applicable, which include reducing the operating margin by 2 percentage points in each year, ASKs by 5 percentage points in each year, long-term growth rates in the terminal value calculation to zero, increasing pre-tax discount rates by 2.5 percentage points, changing the weighting of the Base Case and the Downside Case to be 100 per cent weighted towards the Downside Case and increasing the fuel price (both jet fuel and SAF) by 45 per cent with no assumed cost recovery. Given the inherent uncertainty associated with the impact of climate change, these sensitivities represent a reasonably possible greater impact of climate change on the CGUs than that included in the impairment models. For the British Airways, Iberia, Vueling and Aer Lingus CGUs, while the recoverable amounts are estimated to exceed the carrying amounts by \u20ac15,432 million, \u20ac3,213 million, \u20ac1,606 million and \u20ac1,407 million, respectively, the recoverable amounts would be below the carrying amounts when applying reasonable possible changes, over the forecast period, in assumptions in each of the following scenarios: \u2022 British Airways: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 22 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Iberia: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 20 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Vueling: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 15 per cent; and (ii) if the fuel price had been 20 per cent higher without cost recovery; and \u2022 Aer Lingus: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 7 per cent; and (ii) if the fuel price had been 14 per cent higher without cost recovery. For the remainder of the reasonably possible changes in key assumptions applied to the British Airways, Iberia, Vueling and Aer Lingus CGUs and for all the reasonably possible changes in key assumptions applied to the IAG Loyalty CGU, no impairment arises. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-648": { "value": "17 Intangible assets and impairment review a Intangible assets \u20ac million Goodwill Brand Customer loyalty programmes Landing rights 1 Software ETS assets 2 Other 2 Total Cost Balance at January 1, 2021 593 451 253 1,555 1,474 76 85 4,487 Additions \u2013 \u2013 \u2013 \u2013 149 33 1 183 Disposals \u2013 \u2013 \u2013 (6) (19) (49) \u2013 (74) Exchange movements 3 \u2013 \u2013 56 70 2 1 132 Balance at December 31, 2021 596 451 253 1,605 1,674 62 87 4,728 Additions \u2013 \u2013 \u2013 14 218 360 1 593 Disposals \u2013 \u2013 \u2013 (6) (52) (9) \u2013 (67) Exchange movements (1) \u2013 \u2013 (25) (34) (6) \u2013 (66) December 31, 2022 595 451 253 1,588 1,806 407 88 5,188 Amortisation and impairment Balance at January 1, 2021 249 \u2013 \u2013 132 836 \u2013 62 1,279 Amortisation charge for the year \u2013 \u2013 \u2013 6 167 \u2013 5 178 Disposals \u2013 \u2013 \u2013 \u2013 (13) \u2013 \u2013 (13) Exchange movements \u2013 \u2013 \u2013 4 42 \u2013 (1) 45 Balance at December 31, 2021 249 \u2013 \u2013 142 1,032 \u2013 66 1,489 Amortisation charge for the year \u2013 \u2013 \u2013 6 210 \u2013 2 218 Disposals \u2013 \u2013 \u2013 \u2013 (50) \u2013 \u2013 (50) Exchange movements \u2013 \u2013 \u2013 (2) (23) \u2013 \u2013 (25) December 31, 2022 249 \u2013 \u2013 146 1,169 \u2013 68 1,632 Net book values December 31, 2022 346 451 253 1,442 637 407 20 3,556 December 31, 2021 347 451 253 1,463 642 62 21 3,239 1 The net book value includes non-UK and non-EU based landing rights of \u20ac69 million (2021: \u20ac75 million) that have a definite life. The remaining average life of these landing rights is 13 years. 2 During 2022 the Group separated the ETS assets from Other intangible assets. This change resulted in an amount of \u20ac76 million and \u20ac62 million recorded within ETS assets at January 1, 2021 and January 1, 2022, respectively. There was no net change in total intangible assets. b Impairment review The carrying amounts of intangible assets with indefinite life and goodwill allocated to cash generating units (CGUs) of the Group are: \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2022 Iberia January 1 and December 31, 2022 \u2013 423 306 \u2013 729 British Airways January 1, 2022 47 809 \u2013 \u2013 856 Additions \u2013 14 \u2013 \u2013 14 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements (1) (23) \u2013 \u2013 (24) December 31, 2022 46 794 \u2013 \u2013 840 Vueling January 1 and December 31, 2022 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2022 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2022 \u2013 \u2013 \u2013 253 253 December 31, 2022 346 1,373 451 253 2,423 \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2021 Iberia January 1 and December 31, 2021 \u2013 423 306 \u2013 729 British Airways January 1, 2021 44 763 \u2013 \u2013 807 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements 3 52 \u2013 \u2013 55 December 31, 2021 47 809 \u2013 \u2013 856 Vueling January 1 and December 31, 2021 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2021 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2021 \u2013 \u2013 \u2013 253 253 December 31, 2021 347 1,388 451 253 2,439 Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Summary of results At December 31, 2022 management reviewed the recoverable amount of each of the CGUs and concluded the recoverable amounts exceeded the carrying values. Reasonable possible changes in key assumptions, both individually and in combination, have been considered for each CGU, where applicable, which include reducing the operating margin by 2 percentage points in each year, ASKs by 5 percentage points in each year, long-term growth rates in the terminal value calculation to zero, increasing pre-tax discount rates by 2.5 percentage points, changing the weighting of the Base Case and the Downside Case to be 100 per cent weighted towards the Downside Case and increasing the fuel price (both jet fuel and SAF) by 45 per cent with no assumed cost recovery. Given the inherent uncertainty associated with the impact of climate change, these sensitivities represent a reasonably possible greater impact of climate change on the CGUs than that included in the impairment models. For the British Airways, Iberia, Vueling and Aer Lingus CGUs, while the recoverable amounts are estimated to exceed the carrying amounts by \u20ac15,432 million, \u20ac3,213 million, \u20ac1,606 million and \u20ac1,407 million, respectively, the recoverable amounts would be below the carrying amounts when applying reasonable possible changes, over the forecast period, in assumptions in each of the following scenarios: \u2022 British Airways: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 22 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Iberia: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 20 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Vueling: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 15 per cent; and (ii) if the fuel price had been 20 per cent higher without cost recovery; and \u2022 Aer Lingus: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 7 per cent; and (ii) if the fuel price had been 14 per cent higher without cost recovery. For the remainder of the reasonably possible changes in key assumptions applied to the British Airways, Iberia, Vueling and Aer Lingus CGUs and for all the reasonably possible changes in key assumptions applied to the IAG Loyalty CGU, no impairment arises. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-620": { "value": "17 Intangible assets and impairment review a Intangible assets \u20ac million Goodwill Brand Customer loyalty programmes Landing rights 1 Software ETS assets 2 Other 2 Total Cost Balance at January 1, 2021 593 451 253 1,555 1,474 76 85 4,487 Additions \u2013 \u2013 \u2013 \u2013 149 33 1 183 Disposals \u2013 \u2013 \u2013 (6) (19) (49) \u2013 (74) Exchange movements 3 \u2013 \u2013 56 70 2 1 132 Balance at December 31, 2021 596 451 253 1,605 1,674 62 87 4,728 Additions \u2013 \u2013 \u2013 14 218 360 1 593 Disposals \u2013 \u2013 \u2013 (6) (52) (9) \u2013 (67) Exchange movements (1) \u2013 \u2013 (25) (34) (6) \u2013 (66) December 31, 2022 595 451 253 1,588 1,806 407 88 5,188 Amortisation and impairment Balance at January 1, 2021 249 \u2013 \u2013 132 836 \u2013 62 1,279 Amortisation charge for the year \u2013 \u2013 \u2013 6 167 \u2013 5 178 Disposals \u2013 \u2013 \u2013 \u2013 (13) \u2013 \u2013 (13) Exchange movements \u2013 \u2013 \u2013 4 42 \u2013 (1) 45 Balance at December 31, 2021 249 \u2013 \u2013 142 1,032 \u2013 66 1,489 Amortisation charge for the year \u2013 \u2013 \u2013 6 210 \u2013 2 218 Disposals \u2013 \u2013 \u2013 \u2013 (50) \u2013 \u2013 (50) Exchange movements \u2013 \u2013 \u2013 (2) (23) \u2013 \u2013 (25) December 31, 2022 249 \u2013 \u2013 146 1,169 \u2013 68 1,632 Net book values December 31, 2022 346 451 253 1,442 637 407 20 3,556 December 31, 2021 347 451 253 1,463 642 62 21 3,239 1 The net book value includes non-UK and non-EU based landing rights of \u20ac69 million (2021: \u20ac75 million) that have a definite life. The remaining average life of these landing rights is 13 years. 2 During 2022 the Group separated the ETS assets from Other intangible assets. This change resulted in an amount of \u20ac76 million and \u20ac62 million recorded within ETS assets at January 1, 2021 and January 1, 2022, respectively. There was no net change in total intangible assets. b Impairment review The carrying amounts of intangible assets with indefinite life and goodwill allocated to cash generating units (CGUs) of the Group are: \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2022 Iberia January 1 and December 31, 2022 \u2013 423 306 \u2013 729 British Airways January 1, 2022 47 809 \u2013 \u2013 856 Additions \u2013 14 \u2013 \u2013 14 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements (1) (23) \u2013 \u2013 (24) December 31, 2022 46 794 \u2013 \u2013 840 Vueling January 1 and December 31, 2022 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2022 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2022 \u2013 \u2013 \u2013 253 253 December 31, 2022 346 1,373 451 253 2,423 \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2021 Iberia January 1 and December 31, 2021 \u2013 423 306 \u2013 729 British Airways January 1, 2021 44 763 \u2013 \u2013 807 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements 3 52 \u2013 \u2013 55 December 31, 2021 47 809 \u2013 \u2013 856 Vueling January 1 and December 31, 2021 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2021 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2021 \u2013 \u2013 \u2013 253 253 December 31, 2021 347 1,388 451 253 2,439 Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Summary of results At December 31, 2022 management reviewed the recoverable amount of each of the CGUs and concluded the recoverable amounts exceeded the carrying values. Reasonable possible changes in key assumptions, both individually and in combination, have been considered for each CGU, where applicable, which include reducing the operating margin by 2 percentage points in each year, ASKs by 5 percentage points in each year, long-term growth rates in the terminal value calculation to zero, increasing pre-tax discount rates by 2.5 percentage points, changing the weighting of the Base Case and the Downside Case to be 100 per cent weighted towards the Downside Case and increasing the fuel price (both jet fuel and SAF) by 45 per cent with no assumed cost recovery. Given the inherent uncertainty associated with the impact of climate change, these sensitivities represent a reasonably possible greater impact of climate change on the CGUs than that included in the impairment models. For the British Airways, Iberia, Vueling and Aer Lingus CGUs, while the recoverable amounts are estimated to exceed the carrying amounts by \u20ac15,432 million, \u20ac3,213 million, \u20ac1,606 million and \u20ac1,407 million, respectively, the recoverable amounts would be below the carrying amounts when applying reasonable possible changes, over the forecast period, in assumptions in each of the following scenarios: \u2022 British Airways: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 22 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Iberia: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 20 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Vueling: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 15 per cent; and (ii) if the fuel price had been 20 per cent higher without cost recovery; and \u2022 Aer Lingus: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 7 per cent; and (ii) if the fuel price had been 14 per cent higher without cost recovery. For the remainder of the reasonably possible changes in key assumptions applied to the British Airways, Iberia, Vueling and Aer Lingus CGUs and for all the reasonably possible changes in key assumptions applied to the IAG Loyalty CGU, no impairment arises. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-683": { "value": "b Impairment review The carrying amounts of intangible assets with indefinite life and goodwill allocated to cash generating units (CGUs) of the Group are: \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2022 Iberia January 1 and December 31, 2022 \u2013 423 306 \u2013 729 British Airways January 1, 2022 47 809 \u2013 \u2013 856 Additions \u2013 14 \u2013 \u2013 14 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements (1) (23) \u2013 \u2013 (24) December 31, 2022 46 794 \u2013 \u2013 840 Vueling January 1 and December 31, 2022 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2022 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2022 \u2013 \u2013 \u2013 253 253 December 31, 2022 346 1,373 451 253 2,423 \u20ac million Goodwill Landing rights Brand Customer loyalty programmes Total 2021 Iberia January 1 and December 31, 2021 \u2013 423 306 \u2013 729 British Airways January 1, 2021 44 763 \u2013 \u2013 807 Disposals \u2013 (6) \u2013 \u2013 (6) Exchange movements 3 52 \u2013 \u2013 55 December 31, 2021 47 809 \u2013 \u2013 856 Vueling January 1 and December 31, 2021 28 94 35 \u2013 157 Aer Lingus January 1 and December 31, 2021 272 62 110 \u2013 444 IAG Loyalty January 1 and December 31, 2021 \u2013 \u2013 \u2013 253 253 December 31, 2021 347 1,388 451 253 2,439 Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Basis for calculating recoverable amount The recoverable amounts of the Group\u2019s CGUs have been measured based on their value-in-use, which utilises a weighted average multi- scenario discounted cash flow model. The details of these scenarios are given in the going concern section of note 2, with a weighting of 70 per cent to the Base Case and 30 per cent to the Downside Case. Cash flow projections are based on the business plans approved by the relevant operating companies covering a three-year period. Cash flows extrapolated beyond the three-year period are projected to increase based on long-term growth rates. Cash flow projections are discounted using each CGU\u2019s pre-tax discount rate. Annually the relevant operating companies prepare and approve three-year business plans, and the Board approved the Group three-year business plan in the fourth quarter of the year. Adjustments have been made to the final year of the business plan cash flows to incorporate the impacts of climate change that the Group can reliably estimate at the reporting date. However, given the long-term nature of the Group\u2019s sustainability commitments, there are other aspects of these commitments that cannot be reliably estimated and accordingly have been excluded from the value-in-use calculations (refer to note 4). The business plan cash flows used in the value-in-use calculations also reflect all restructuring of the business where relevant that has been approved by the Board and which can be executed by management under existing labour agreements. Key assumptions The value-in-use calculations for each CGU reflect the ongoing uncertainty of the future implications of COVID-19 and the wider economic and geopolitical environments, including updated projected cash flows for activity from 2023 through to the end of 2025. For each of the Group\u2019s CGUs the key assumptions used in the value-in-use calculations are as follows: 2022 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 5-13 5-10 0-10 4-12 23-25 ASKs as a proportion of 2019 1,2 90-105 92-107 113-123 102-127 n/a Long-term growth rate 1.7 1.5 1.4 1.6 1.7 Pre-tax discount rate 10.4 11.2 12.8 10.1 13.4 2021 Per cent British Airways Iberia Vueling Aer Lingus IAG Loyalty Operating margin 1 3-13 2-12 2-11 0-14 22-24 ASKs as a proportion of 2019 1,2 75-103 77-100 97-119 84-115 n/a Long-term growth rate 1.9 1.7 1.6 1.7 1.6 Pre-tax discount rate 11.8 11.4 11.1 10.1 12.0 1 ASKs as a proportion of 2019 and operating margin are both stated as the weighted average derived from the multi-scenario discounted cash flow model. 2 In prior periods the Group applied the average ASK growth per annum as a key assumption. Given the impact of COVID-19, the Group has presented ASKs as a proportion of the level of ASKs achieved in 2019, prior to the application of the terminal value calculation. Jet fuel price ($ per MT) Within 12 months 1-2 years 2-3 years 3 years and thereafter 2022 867 809 780 780 2021 690 673 659 659 Forecast ASKs reflect the range of ASKs as a percentage of the 2019 actual ASKs over the forecast period, based on planned network growth and taking into account management\u2019s expectation of the market. The long-term growth rate is calculated for each CGU, considering a number of data points: (i) industry publications; (ii) forecast weighted average exposure in each primary market using gross domestic product (GDP); and (iii) internal analysis regarding the long-term changes in consumer preferences and the effects on demand from the increased costs to the Group of climate change. The calculation of the long- term growth rate utilises a Base Case and a Downside Case growth rate, which is then weighted on the same basis as the cash flows detailed above of 70 per cent to the Base Case and 30 per cent to the Downside Case. The terminal value cash flows and long-term growth rate incorporate the impacts of climate change insofar as they can be determined (note 4). The airlines\u2019 network plans are reviewed annually as part of the three-year business plan preparation and reflect management\u2019s plans in response to specific market risk or opportunity. Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and underlying risks of its primary market. The discount rate calculation is based on the circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital (WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from the expected return on investment by airline investors and the cost of debt is derived from both market data and industry gearing levels derived from comparable companies. CGU-specific risk is incorporated by applying individual beta factors which are evaluated annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows. Jet fuel price assumptions are derived from forward price curves in the fourth quarter of each year and sourced externally. The cash flow forecasts reflect these price increases after taking into consideration the level of fuel derivatives and their associated prices that the Group has in place. As detailed above, the Group adjusts the final year of the three-year business plans to incorporate the medium-term impacts of climate change from the Group\u2019s Flightpath Net Zero climate strategy. These adjustments include the following key assumptions: (i) a 10 per cent level of SAF consumption out of the overall fuel mix with an assumed price of \u20ac2,275 per metric tonne; (ii) a kerosene tax of \u20ac325 per metric tonne on all intra-EU flights; (iii) for costs of carbon, prices of \u20ac130, \u20ac130, \u20ac175 and \u20ac25 for EU ETS allowances, Swiss ETS allowances, UK ETS allowances and CORSIA allowances, respectively, per tonne of CO 2 equivalents emitted; and (iv) the removal of all free ETS and CORSIA allowances. Summary of results At December 31, 2022 management reviewed the recoverable amount of each of the CGUs and concluded the recoverable amounts exceeded the carrying values. Reasonable possible changes in key assumptions, both individually and in combination, have been considered for each CGU, where applicable, which include reducing the operating margin by 2 percentage points in each year, ASKs by 5 percentage points in each year, long-term growth rates in the terminal value calculation to zero, increasing pre-tax discount rates by 2.5 percentage points, changing the weighting of the Base Case and the Downside Case to be 100 per cent weighted towards the Downside Case and increasing the fuel price (both jet fuel and SAF) by 45 per cent with no assumed cost recovery. Given the inherent uncertainty associated with the impact of climate change, these sensitivities represent a reasonably possible greater impact of climate change on the CGUs than that included in the impairment models. For the British Airways, Iberia, Vueling and Aer Lingus CGUs, while the recoverable amounts are estimated to exceed the carrying amounts by \u20ac15,432 million, \u20ac3,213 million, \u20ac1,606 million and \u20ac1,407 million, respectively, the recoverable amounts would be below the carrying amounts when applying reasonable possible changes, over the forecast period, in assumptions in each of the following scenarios: \u2022 British Airways: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 22 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Iberia: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 20 per cent; and (ii) if the fuel price had been 27 per cent higher without cost recovery; \u2022 Vueling: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 15 per cent; and (ii) if the fuel price had been 20 per cent higher without cost recovery; and \u2022 Aer Lingus: (i) if ASKs had been five per cent lower combined with a fuel price increase without cost recovery of 7 per cent; and (ii) if the fuel price had been 14 per cent higher without cost recovery. For the remainder of the reasonably possible changes in key assumptions applied to the British Airways, Iberia, Vueling and Aer Lingus CGUs and for all the reasonably possible changes in key assumptions applied to the IAG Loyalty CGU, no impairment arises. ", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-621": { "value": "18 Investments a Investments in subsidiaries The Group\u2019s subsidiaries at December 31, 2022 are listed in the Group investments section. All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly do not differ from the proportion of ordinary shares held. There have been no significant changes in ownership interests of subsidiaries during the year. The total non-controlling interest at December 31, 2022 is \u20ac6 million (2021: \u20ac6 million). b Investments in associates and joint ventures The share of assets, liabilities, revenue and profit of the Group\u2019s associates and joint ventures, which are included in the Group\u2019s financial statements, are as follows: \u20ac million 2022 2021 Total assets 148 115 Total liabilities (104) (85) Revenue 89 64 Profit for the year 5 2 The detail of the movement in Investment in associates and joint ventures is shown as follows: \u20ac million 2022 2021 At beginning of year 40 29 Additions \u2013 9 Share of retained profits 5 2 Dividends received (2) (1) Exchange movements \u2013 1 43 40 At December 31, 2022 there are no restrictions on the ability of associates or joint ventures to transfer funds to the parent and there are no related contingent liabilities. At both December 31, 2022 and December 31, 2021 the investment in Sociedad Conjunta para la Emisi\u00f3n y Gesti\u00f3n de Medios de Pago EFC, S.A. exceeded 50 per cent ownership by the Group (50.5 per cent). The entity is treated as a joint venture as decisions regarding its strategy and operations require the unanimous consent of the parties who share control, including IAG. ", "dimensions": { "concept": "iag:DisclosureOfInvestments", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-685": { "value": "a Investments in subsidiaries The Group\u2019s subsidiaries at December 31, 2022 are listed in the Group investments section. All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly do not differ from the proportion of ordinary shares held. There have been no significant changes in ownership interests of subsidiaries during the year. The total non-controlling interest at December 31, 2022 is \u20ac6 million (2021: \u20ac6 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-684": { "value": "b Investments in associates and joint ventures The share of assets, liabilities, revenue and profit of the Group\u2019s associates and joint ventures, which are included in the Group\u2019s financial statements, are as follows: \u20ac million 2022 2021 Total assets 148 115 Total liabilities (104) (85) Revenue 89 64 Profit for the year 5 2 The detail of the movement in Investment in associates and joint ventures is shown as follows: \u20ac million 2022 2021 At beginning of year 40 29 Additions \u2013 9 Share of retained profits 5 2 Dividends received (2) (1) Exchange movements \u2013 1 43 40 At December 31, 2022 there are no restrictions on the ability of associates or joint ventures to transfer funds to the parent and there are no related contingent liabilities. At both December 31, 2022 and December 31, 2021 the investment in Sociedad Conjunta para la Emisi\u00f3n y Gesti\u00f3n de Medios de Pago EFC, S.A. exceeded 50 per cent ownership by the Group (50.5 per cent). The entity is treated as a joint venture as decisions regarding its strategy and operations require the unanimous consent of the parties who share control, including IAG. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-674": { "value": "b Investments in associates and joint ventures The share of assets, liabilities, revenue and profit of the Group\u2019s associates and joint ventures, which are included in the Group\u2019s financial statements, are as follows: \u20ac million 2022 2021 Total assets 148 115 Total liabilities (104) (85) Revenue 89 64 Profit for the year 5 2 The detail of the movement in Investment in associates and joint ventures is shown as follows: \u20ac million 2022 2021 At beginning of year 40 29 Additions \u2013 9 Share of retained profits 5 2 Dividends received (2) (1) Exchange movements \u2013 1 43 40 At December 31, 2022 there are no restrictions on the ability of associates or joint ventures to transfer funds to the parent and there are no related contingent liabilities. At both December 31, 2022 and December 31, 2021 the investment in Sociedad Conjunta para la Emisi\u00f3n y Gesti\u00f3n de Medios de Pago EFC, S.A. exceeded 50 per cent ownership by the Group (50.5 per cent). The entity is treated as a joint venture as decisions regarding its strategy and operations require the unanimous consent of the parties who share control, including IAG. ", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-649": { "value": "b Investments in associates and joint ventures The share of assets, liabilities, revenue and profit of the Group\u2019s associates and joint ventures, which are included in the Group\u2019s financial statements, are as follows: \u20ac million 2022 2021 Total assets 148 115 Total liabilities (104) (85) Revenue 89 64 Profit for the year 5 2 The detail of the movement in Investment in associates and joint ventures is shown as follows: \u20ac million 2022 2021 At beginning of year 40 29 Additions \u2013 9 Share of retained profits 5 2 Dividends received (2) (1) Exchange movements \u2013 1 43 40 At December 31, 2022 there are no restrictions on the ability of associates or joint ventures to transfer funds to the parent and there are no related contingent liabilities. At both December 31, 2022 and December 31, 2021 the investment in Sociedad Conjunta para la Emisi\u00f3n y Gesti\u00f3n de Medios de Pago EFC, S.A. exceeded 50 per cent ownership by the Group (50.5 per cent). The entity is treated as a joint venture as decisions regarding its strategy and operations require the unanimous consent of the parties who share control, including IAG. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-622": { "value": "19 Other equity investments Other equity investments include the following: \u20ac million 2022 2021 Unlisted securities 55 31 55 31 The charge relating to Other equity investments was \u20ac3 million (2021: \u20acnil). Investment in Air Europa Holdings On June 15, 2022, the Group entered into a financing arrangement with Globalia Corporaci\u00f3n Empresarial, S,A, (\u2018Globalia\u2019), whereby, the Group provided a \u20ac100 million seven-year unsecured loan, which was convertible for a period of two years from inception into a fixed number of the shares of Air Europa Holdings, S.L. (\u2018Air Europa Holdings\u2019). The loan was accounted for at fair value through the Income statement and recorded as an Other non-current financial asset. In determining the fair value of the financing arrangement, the Group utilised the income approach, whereby, the financing arrangement was valued using observable market data by which to determine an interest rate that a market participant would require to provide a loan with the same tenor and amount. This interest rate was then used to discount back the existing contractual cash flows to derive the fair value. On August 16, 2022, the Group exercised its exchange option with Globalia and converted the Other non-current financial asset into an Other equity investment. Immediately prior to exercising the exchange option, the fair value of the Other non-current financial asset was \u20ac65 million, representing a decrease from inception of \u20ac35 million, which has been recorded within Net change in fair value of financial instruments in the Income statement (see note 9c). The Group determined the fair value of the investment in Air Europa Holdings using both the market approach and the income approach, whereby the Group used both observable market data and unobservable inputs. The fair value was determined on the stand-alone basis of Air Europa Holdings without consideration of potential synergies that could be obtained if the Group were able to obtain control over the operations of Air Europa Holdings. The results of these valuation approaches resulted in a fair value of \u20ac22 million, representing a difference of \u20ac43 million from the fair value of the Other non-current financial asset prior to exercising the option. This loss, which derives from the de- recognition of the loan to Globalia prior to the recognition of the investment in Air Europa Holdings, was recorded within Net change in fair value of financial instruments in the Income statement (see note 9c). At December 31, 2022, the fair value of the investment in Air Europa Holdings was \u20ac24 million, representing an increase of \u20ac2 million since August 16, 2022, which has been recorded within Other comprehensive income. ", "dimensions": { "concept": "iag:DisclosureOfOtherEquityInvestments", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-686": { "value": "20 Trade and other receivables \u20ac million 2022 2021 Amounts falling due within one year Trade receivables 1,444 850 Provision for expected credit loss (114) (115) Net trade receivables 1,330 735 Prepayments and accrued income 870 764 Other non-trade receivables 356 196 Other current receivables 1,226 960 Amounts falling due after one year Prepayments and accrued income 337 248 Other non-trade receivables 25 2 Other receivables due after one year 362 250 Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). The credit risk exposure on the Group's trade receivables is set out below: December 31, 2022 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 719 509 91 25 100 Expected credit loss rate 0.3% 0.1% 1.1% 44.0% 100.0% Provision for expected credit loss 2 \u2013 1 11 100 December 31, 2021 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 498 132 94 10 116 Expected credit loss rate 0.2% 0.1% 1.1% 20.0% 95.7% Provision for expected credit loss 1 \u2013 1 2 111 ", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-675": { "value": "20 Trade and other receivables \u20ac million 2022 2021 Amounts falling due within one year Trade receivables 1,444 850 Provision for expected credit loss (114) (115) Net trade receivables 1,330 735 Prepayments and accrued income 870 764 Other non-trade receivables 356 196 Other current receivables 1,226 960 Amounts falling due after one year Prepayments and accrued income 337 248 Other non-trade receivables 25 2 Other receivables due after one year 362 250 Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). The credit risk exposure on the Group's trade receivables is set out below: December 31, 2022 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 719 509 91 25 100 Expected credit loss rate 0.3% 0.1% 1.1% 44.0% 100.0% Provision for expected credit loss 2 \u2013 1 11 100 December 31, 2021 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 498 132 94 10 116 Expected credit loss rate 0.2% 0.1% 1.1% 20.0% 95.7% Provision for expected credit loss 1 \u2013 1 2 111 ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-623": { "value": "20 Trade and other receivables \u20ac million 2022 2021 Amounts falling due within one year Trade receivables 1,444 850 Provision for expected credit loss (114) (115) Net trade receivables 1,330 735 Prepayments and accrued income 870 764 Other non-trade receivables 356 196 Other current receivables 1,226 960 Amounts falling due after one year Prepayments and accrued income 337 248 Other non-trade receivables 25 2 Other receivables due after one year 362 250 Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). The credit risk exposure on the Group's trade receivables is set out below: December 31, 2022 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 719 509 91 25 100 Expected credit loss rate 0.3% 0.1% 1.1% 44.0% 100.0% Provision for expected credit loss 2 \u2013 1 11 100 December 31, 2021 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 498 132 94 10 116 Expected credit loss rate 0.2% 0.1% 1.1% 20.0% 95.7% Provision for expected credit loss 1 \u2013 1 2 111 ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-650": { "value": "Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). Movements in the provision for expected credit loss were as follows: \u20ac million 2022 2021 At beginning of year 115 125 Provided during the year 10 8 Released during the year (1) (11) Receivables written off during the year (9) (10) Exchange movements (1) 3 114 115 Trade receivables are generally non-interest-bearing and on 30 days terms (2021: 30 days). The credit risk exposure on the Group's trade receivables is set out below: December 31, 2022 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 719 509 91 25 100 Expected credit loss rate 0.3% 0.1% 1.1% 44.0% 100.0% Provision for expected credit loss 2 \u2013 1 11 100 December 31, 2021 \u20ac million Current <30 days 30-180 days 180-365 days > 365 days Trade receivables 498 132 94 10 116 Expected credit loss rate 0.2% 0.1% 1.1% 20.0% 95.7% Provision for expected credit loss 1 \u2013 1 2 111 ", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-624": { "value": "21 Cash, cash equivalents and other current interest-bearing deposits \u20ac million 2022 2021 Cash at bank and in hand 3,286 2,569 Short-term deposits maturing within three months 5,910 5,323 Cash and cash equivalents 9,196 7,892 Current interest-bearing deposits maturing after three months 403 51 Cash, cash equivalents and other interest-bearing deposits 9,599 7,943 Cash at bank is primarily held in AAA money market funds and bank deposits. Short-term deposits are for periods up to three months and earn interest based on the floating deposit rates. At December 31, 2022 the Group had no outstanding bank overdrafts (2021: \u20acnil). Current interest-bearing deposits have maturities in excess of three months and typically within 12 months of the reporting date and earn interest based on the market rates available at the time the deposit was made. At December 31, 2022 Aer Lingus held \u20ac33 million of restricted cash (2021: \u20ac35 million) within interest-bearing deposits maturing after more than three months to be used for employee-related obligations. a Net debt Movements in net debt were as follows: \u20ac million Balance at January 1, 2022 Cash flows Exchange movements New leases and modifications Other items Balance at December 31, 2022 Bank, other loans and asset financed liabilities 9,973 386 103 \u2013 (97) 10,365 Lease liabilities 9,637 (1,455) 415 1,017 5 9,619 Cash and cash equivalents (7,892) (1,316) 12 \u2013 \u2013 (9,196) Current interest-bearing deposits (51) (351) (1) \u2013 \u2013 (403) 11,667 (2,736) 529 1,017 (92) 10,385 \u20ac million Balance at January 1, 2021 Cash flows Exchange movements New leases and modifications Other items Balance at December 31, 2021 Bank, other loans and asset financed liabilities 5,655 4,033 261 \u2013 24 9,973 Lease liabilities 10,024 (1,481) 559 518 17 9,637 Cash and cash equivalents (5,774) (1,913) (205) \u2013 \u2013 (7,892) Current interest-bearing deposits (143) 91 1 \u2013 \u2013 (51) 9,762 730 616 518 41 11,667 ", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-651": { "value": "
At December 31, 2022 Aer Lingus held \u20ac33 million of restricted cash (2021: \u20ac35 million) within interest-bearing deposits maturing after
more than three months to be used for employee-related obligations.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-625": { "value": "22 Trade and other payables \u20ac million 2022 2021 Trade creditors 1 2,969 2,068 Other creditors 1,244 898 Other taxation and social security 228 176 Accruals and deferred income 768 570 5,209 3,712 1 Trade creditors includes \u20ac48 million (2021: \u20ac89 million) due to suppliers that have signed up to supply chain financing programmes offered by a number of partner financial institutions. Under these programmes either or both: (i) the suppliers can elect on an invoice-by-invoice basis to receive a discounted early payment from the partner financial institutions rather than being paid in line with the agreed payment terms; and/or (ii) the Group elects on an invoice-by- invoice basis for the partner financial institution to pay the supplier in line with the agreed payment terms and the Group enters into payment terms with the partner financial institution of up to 150 days with interest incurred at 2.5 per cent. The Group assesses the arrangement against indicators to assess if liabilities which suppliers have transferred to the partner financial institutions under the supplier financing programmes continue to meet the definition of trade creditors or should be classified as borrowings. The cash flows arising from such arrangements are reported within cash flows from operating activities or within cash flows from financing activities, in the Consolidated cash flow statement, depending on whether the associated liabilities meet the definition of trade creditors or as borrowings. At December 31, 2022 these liabilities met the criteria of Trade creditors and are excluded from the Net debt table in note 21a. Average payment days to suppliers \u2013 Spanish Group companies Days 2022 2021 Average payment days for payment to suppliers 34 34 Ratio of transactions paid 33 32 Ratio of transactions outstanding for payment 53 78 \u20ac million 2022 2021 Total payments made 6,676 3,945 Total payments outstanding 264 147 Information on invoices paid in a period shorter than the maximum period established in the late payment regulations \u2013 Spanish Group companies 2022 2021 Total payments made (\u20ac million) 5,111 2,623 Percentage share of total payments to suppliers 77% 71% Number of invoices paid (thousand) 110 63 Percentage share of total number of invoices paid 48% 48% ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-626": { "value": "23 Deferred revenue on ticket sales \u20ac million Customer loyalty programmes Sales in advance of carriage Total Balance at January 1, 2022 2,820 3,732 6,552 Cash received from customers 1 \u2013 21,000 21,000 Revenue recognised in the Income statement 2, 3 (780) (19,708) (20,488) Changes in estimates (21) \u2013 (21) Financing charge recognised in the Income statement 21 \u2013 21 Loyalty points issued to customers 4 662 82 744 Exchange movements (72) (92) (164) Balance at December 31, 2022 5, 6 2,630 5,014 7,644 Analysis: Current 2,304 5,014 7,318 Non-current 326 \u2013 326 2,630 5,014 7,644 \u20ac million Customer loyalty programmes Sales in advance of carriage Total Balance at January 1, 2021 2,725 2,405 5,130 Cash received from customers 1 \u2013 7,689 7,689 Revenue recognised in the Income statement 2, 3 (524) (6,518) (7,042) Financing charge recognised in the Income statement 37 \u2013 37 Loyalty points issued to customers 4 407 40 447 Exchange movements 175 116 291 Balance at December 31, 2021 5, 6 2,820 3,732 6,552 Analysis: Current 2,429 3,732 6,161 Non-current 391 \u2013 391 2,820 3,732 6,552 1 Cash received from customers is net of refunds. 2 Where the Group acts as an agent in the provision of redemption products and services to customers through loyalty programmes, or in the provision of interline flights to passengers, revenue is recognised in the Income statement net of the related costs. 3 Included within revenue recognised in the Income statement during 2022 is an amount of \u20ac2,183 million previously held as deferred revenue at January 1, 2022 (recognised during 2021 and previously held as deferred revenue at January 1, 2021: \u20ac780 million). 4 Included within loyalty points issued to customers at December 31, 2022 is an amount of \u20ac82 million (December 31, 2021: \u20ac40 million) classified within Sales in advance of carriage representing the cash component of the consideration paid by customers, where such consideration comprises both cash and the redemption of Avios. 5 Included within Deferred revenue on ticket sales at December 31, 2022 is an amount of \u20ac911 million (December 31, 2021: \u20ac1,400 million) relating to unredeemed vouchers (including associated taxes). 6 In the year to December 31, 2022, the Group recognised \u20ac266 million (2021: \u20ac154 million) within Other revenue related to performance obligations associated with brand and marketing services recognised on the issuance of Avios for both air and non-air partners. The unsatisfied performance obligation under the Group\u2019s customer loyalty programmes that is classified as non-current was \u20ac326 million at December 31, 2022. Of this amount, \u20ac317 million is expected to be recognised as revenue in 1 to 5 years from the reporting date and \u20ac9 million thereafter. Deferred revenue relating to customer loyalty programmes consists primarily of revenue allocated to performance obligations associated with Avios. Avios are issued by the Group's airlines through their loyalty programmes, or are sold to third parties such as credit card providers, who issue them as part of their loyalty programme. While Avios do not have an expiry date and can be redeemed at any time in the future, a customer\u2019s membership account is closed if there is a period of 36 months of inactivity in terms of both issuances and redemptions. Revenue may therefore be recognised at any time in the future. Deferred revenue in respect of sales in advance of carriage consists of revenue allocated to airline tickets to be used for future travel. Typically these tickets expire within 12 months after the planned travel date, if they are not used within that time period, however, with the significant disruption caused by the COVID-19 pandemic during 2020 and 2021, the Group extended the expiry period up to 24 months after the planned travel date, depending on the operating company. During the course of 2022 with the disruption caused by the COVID-19 pandemic significantly reduced, flexible fare tickets now typically expire within 12 months after the planned travel date. In addition, the significant disruption caused by the COVID-19 pandemic led to a number of flight cancellations during both 2020 and 2021, which entitled the customer to either a refund or the issuance of a voucher for future redemption. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-627": { "value": "24 Other long-term liabilities \u20ac million 2022 2021 Non-current trade creditors 147 121 Accruals and deferred income 53 87 200 208", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-628": { "value": "25 Long-term borrowings a Total borrowings 2022 2021 \u20ac million Current Non-current Total Current Non-current Total Bank and other loans 822 5,724 6,546 761 6,724 7,485 Asset financed liabilities 255 3,564 3,819 171 2,244 2,415 Lease liabilities 1,766 7,853 9,619 1,521 8,116 9,637 Other financing liabilities 1 \u2013 \u2013 \u2013 73 \u2013 73 Interest-bearing long-term borrowings 2,843 17,141 19,984 2,526 17,084 19,610 1 Other financing liabilities recognised in 2021 included sale and repurchase agreements with regard to emission allowances and represent the amount the Group repurchased during 2022. Long-term borrowings of the Group amounting to \u20ac3,962 million (December 31, 2021: \u20ac2,434 million) are secured on owned fleet assets with a net book value of \u20ac3,931 million (December 31, 2021: \u20ac2,938 million). Asset financed liabilities are all secured on the associated aircraft or other property, plant and equipment. b Bank and other loans \u20ac million 2022 2021 Floating rate pound sterling term loan guaranteed by UK Export Finance (UKEF) 1 2,315 2,358 Floating rate Instituto de Cr\u00e9dito Oficial (ICO) guaranteed loans 2 1,070 1,095 \u20ac700 million fixed rate 3.75 per cent unsecured bond 2029 3 717 710 \u20ac825 million fixed rate 1.125 per cent convertible bond 2028 4 605 757 \u20ac500 million fixed rate 2.75 per cent unsecured bond 2025 3 509 508 \u20ac500 million fixed rate 0.50 per cent bond 2023 5 501 499 \u20ac500 million fixed rate 1.50 per cent bond 2027 5 499 498 Floating rate euro mortgage loans secured on aircraft 6 143 171 Fixed rate unsecured US dollar mortgage loan 7 71 85 Fixed rate unsecured bonds 8 56 138 Ireland Strategic Investment Fund (ISIF) facility 9 50 149 Fixed rate unsecured euro loans with the Spanish State (Department of Industry) 10 10 15 \u20ac500 million fixed rate 0.625 per cent convertible bond 2022 11 \u2013 491 Fixed rate Chinese yuan mortgage loans secured on aircraft 12 \u2013 11 6,546 7,485 Less: current instalments due on bank and other loans (822) (761) 5,724 6,724 1 On February 22, 2021, British Airways entered into a floating rate five-year term loan Export Development Guarantee Facility of \u20ac2.3 billion (\u00a32.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. On November 1, 2021, British Airways entered into a further 5 year term loan Export Development Guarantee Facility of \u20ac1.1 billion (\u00a31.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The further facility had not been drawn as at December 31, 2022. The loan contains a number of non-financial covenants to protect the position of the banks involved, including restrictions on the upstreaming of cash to the rest of the IAG companies. 2 On April 30, 2020, Iberia and Vueling entered into floating rate syndicated financing agreements of \u20ac750 million and \u20ac260 million respectively. The loans are repayable from 2023 to 2026. The ICO in Spain guarantees 70 per cent of the value of loans. The loans contain a number of non-financial covenants to protect the position of the banks involved, including restrictions on the upstreaming of cash to the rest of the IAG companies. 3 On March 25, 2021, the Group issued two tranches of senior unsecured bonds for an aggregate principal amount of \u20ac1.2 billion, \u20ac500 million due March 25, 2025 and \u20ac700 million due March 25, 2029. The bonds bear a fixed rate of interest of 2.75 per cent and 3.75 per cent per annum, payable in arrears, respectively. The bonds were issued at 100 per cent of their principal amount, respectively, and, unless previously redeemed or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on their respective maturity dates. 4 A senior unsecured bond convertible into ordinary shares of IAG was issued by the Group on May 11, 2021; \u20ac825 million fixed rate 1.125 per cent raising net proceeds of \u20ac818 million and due in 2028. The Group holds an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The bond contains dividend protection and a total of 244,850,715 options at inception and at December 31, 2022 and 2021 to convert into ordinary shares of IAG. The Group also holds an option to redeem the convertible bond, in full or in part, in cash in the event that bondholders exercise their right to convert the bond into ordinary shares of IAG. See further details below. 5 In July 2019, the Group issued two tranches of senior unsecured bonds for an aggregate principal amount of \u20ac1 billion, \u20ac500 million due July 4, 2023 and \u20ac500 million due July 4, 2027. The bonds bear a fixed rate of interest of 0.5 per cent and 1.5 per cent per annum annually payable in arrears, respectively. The bonds were issued at 99.417 per cent and 98.803 per cent of their principal amount, respectively, and, unless previously redeemed or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on their respective maturity dates. 6 Floating rate euro mortgage loans are secured on specific aircraft assets of the Group and bear interest of between 2.1 and 3.6 per cent. The loans are repayable between 2024 and 2027. 7 Fixed rate unsecured US dollar mortgage loan bearing interest between 1.38 to 2.86 per cent. The loan is repayable between 2023 and 2026. 8 Total of \u20ac200 million fixed rate unsecured bonds between 3.75 to 4.93 per cent coupon repayable between 2023 and 2027. 9 On December 23, 2020, Aer Lingus entered into a floating rate financing agreement with the Ireland Strategic Investment Fund (ISIF) for \u20ac75 million. On March 27, 2021, Aer Lingus entered into a further floating rate financing agreement with the ISIF for an additional \u20ac75 million. On March 4, 2022, Aer Lingus entered into a financing arrangement with ISIF, which subsequently extinguished the existing \u20ac150 million of facilities and replaced them with a \u20ac350 million facility that matures in March 2025. On December 13, 2022, Aer Lingus early repaid \u20ac100 million of the ISIF facility, with the \u20ac100 million being available to draw again over the tenor of the facility. The facility is secured on specific landing rights. At December 31, 2022, \u20ac300 million of this facility remained undrawn. 10 Fixed rate unsecured euro loans with the Spanish State (Department of Industry) bear nil interest and are repayable between 2023 and 2028. 11 Senior unsecured bond convertible into ordinary shares of IAG was issued by the Group in November 2015; \u20ac500 million fixed rate 0.625 per cent raising net proceeds of \u20ac494 million and due in 2022. The Group held an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The Group redeemed the bond at maturity in November 2022 with no conversion into ordinary shares. 12 Fixed rate Chinese yuan mortgage loans, secured on specific aircraft assets of the Group were repaid in the fourth quarter of 2022. In addition, on March 23, 2021, the Group entered into a three-year US dollar secured Revolving Credit Facility accessible by British Airways, Iberia and Aer Lingus. On August 23, 2022, the Group extended the term of the Revolving Credit Facility by an additional 12 months through to March 2025. The amount available under the facility is $1.755 billion. As at December 31, 2022 no amounts had been drawn under the facility (2021: nil). While the Group does not forecast drawing down on the Revolving Credit Facility, should it do so, the resultant debt would be secured against specific landing rights and aircraft in the respective operating companies. Details of the 2028 convertible bond The \u20ac825 million convertible bond issued in 2021 provides bondholders with dividend protection and includes a total of 244,850,715 options at inception and at December 31, 2022 to convert into ordinary shares of IAG. The Group holds an option to redeem the convertible bond at its principal amount, together with accrued interest, no earlier than two years prior to the final maturity date. The Group also holds an option to redeem the convertible bond, in full or in part, in cash in the event that bondholders exercise their right to convert the bond into ordinary shares of IAG. The convertible bond is recorded at its fair value, which at December 31, 2022 was \u20ac605 million (2021: \u20ac756 million), representing a decrease of \u20ac151 million since January 1, 2022. Of this decrease, the charge recorded in Other comprehensive income arising from credit risk of the convertible bonds was \u20ac8 million and a credit recorded within Finance costs in the Income statement attributable to changes in market conditions of \u20ac159 million. Transactions with unconsolidated entities On April 12, 2022, the Group entered into an asset-financing structure, under which five aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the Iberia Pass Through Certificates, Series 2022-1, commonly referred to as Enhanced Equipment Trust Certificates (EETCs). In doing so the Group recognised \u20ac680 million of Asset financed liabilities. On October 21, 2022, the Group entered into an asset-financing structure, under which four aircraft were financed. These transactions mature between 2032 and 2036. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2022-1. In doing so the Group recognised \u20ac159 million of Asset financed liabilities. In July 2021, the Group entered into an asset-financing structure, under which seven aircraft were financed. These transactions mature between 2031 and 2035. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2021-1. In doing so the Group recognised \u20ac204 million of Asset financed liabilities. In the fourth quarter of 2020, the Group entered into an asset-financing structure, under which nine aircraft were financed. These transactions mature between 2028 and 2032. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2020-1. In doing so the Group recognised \u20ac472 million of Asset financed liabilities. In the third quarter of 2019, the Group entered into an asset-financing structure, under which eight aircraft were financed, with the transactions maturing between 2029 and 2034. This arrangement was transacted through an unconsolidated structured entity, which in turn issued the British Airways Pass Through Certificates, Series 2019-1. In doing so the Group recognised \u20ac725 million of Asset financed liabilities. As at December 31, 2022, Asset financed liabilities include cumulative amounts of \u20ac2,983 million (2021: \u20ac1,489 million) and the associated assets recorded within Property, plant and equipment include cumulative amounts of \u20ac3,400 million (2021: \u20ac3,029 million) associ ated with transactions with unconsolidated structured entities having issued EETCs.
c Reconciliation of movements of liabilities to cash flows arising from financing activities
\u20ac million
Bank, other
loans and
asset
financed
liabilities
Lease
liabilities
Derivatives
to mitigate
volatility in
financial
liabilities Total
Balance at January 1, 2022 9,973 9,637 (136) 19,474
Proceeds from borrowings 1,436 \u2013 \u2013 1,436
Repayment of borrowings (1,050) \u2013 \u2013 (1,050)
Repayment of lease liabilities \u2013 (1,455) \u2013 (1,455)
Settlement of derivative financial instruments
1
\u2013 \u2013 1,029 1,029
Total changes from financing cash flows 386 (1,455) 1,029 (40)
Interest paid (334) (422) \u2013 (756)
Interest expense 377 464 \u2013 841
New leases and lease modifications \u2013 1,017 \u2013 1,017
Fair value movements (151) \u2013 (990) (1,141)
Other non-cash movements 11 (37) \u2013 (26)
Exchange movements 103 415 26 544
Balance at December 31, 2022
10,365 9,619 (71) 19,913
\u20ac million
Bank, other
loans and
asset
financed
liabilities
Lease
liabilities
Derivatives
to mitigate
volatility in
financial
liabilities Total
Balance at January 1, 2021 5,655 10,024 429 16,108
Proceeds from borrowings 4,817 \u2013 \u2013 4,817
Repayment of borrowings (784) \u2013 \u2013 (784)
Repayment of lease liabilities \u2013 (1,481) \u2013 (1,481)
Settlement of derivative financial instruments
1
\u2013 \u2013 (268) (268)
Total changes from financing cash flows 4,033 (1,481) (268) 2,284
Interest paid (212) (367) (26) (605)
Interest expense 307 393 \u2013 700
New leases and lease modifications \u2013 518 \u2013 518
Fair value movements (69) \u2013 (286) (355)
Other non-cash movements (2) (9) 15 4
Exchange movements 261 559 \u2013 820
Balance at December 31, 2021 9,973 9,637 (136) 19,474
1 Gain of \u20ac1,036 million (2021: loss of \u20ac268 million) relating to derivatives not designated in hedge relationships and reported within Net cash flows from
financing activities in the Cash flow statement, and a loss of \u20ac7 million (2021: \u20acnil) relating to interest rate derivatives designated in hedge relationships and
reported within Net cash flows from operating activities.
d Total loans, asset financed liabilities, other financing liabilities and lease liabilities Million 2022 2021 Loans Bank: US dollar $75 $98 Euro \u20ac1,273 \u20ac1,430 Pound sterling \u00a32,026 \u00a32,003 Chinese yuan - CNY 78 \u20ac3,659 \u20ac3,883 Fixed rate bonds: Euro \u20ac2,887 \u20ac3,602 \u20ac2,887 \u20ac3,602 Asset financed liabilities US dollar $3,285 $2,192 Euro \u20ac542 \u20ac408 Japanese yen \u00a525,748 \u00a58,226 \u20ac3,819 \u20ac2,415 Other financing liabilities Euro - \u20ac73 - \u20ac73 Lease liabilities US dollar $7,621 $7,709 Euro \u20ac1,239 \u20ac1,547 Japanese yen \u00a571,994 \u00a575,450 Pound sterling \u00a3620 \u00a3569 \u20ac9,619 \u20ac9,637 Total interest-bearing borrowings \u20ac19,984 \u20ac19,610 ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-652": { "value": "a Total borrowings 2022 2021 \u20ac million Current Non-current Total Current Non-current Total Bank and other loans 822 5,724 6,546 761 6,724 7,485 Asset financed liabilities 255 3,564 3,819 171 2,244 2,415 Lease liabilities 1,766 7,853 9,619 1,521 8,116 9,637 Other financing liabilities 1 \u2013 \u2013 \u2013 73 \u2013 73 Interest-bearing long-term borrowings 2,843 17,141 19,984 2,526 17,084 19,610 1 Other financing liabilities recognised in 2021 included sale and repurchase agreements with regard to emission allowances and represent the amount the Group repurchased during 2022. Long-term borrowings of the Group amounting to \u20ac3,962 million (December 31, 2021: \u20ac2,434 million) are secured on owned fleet assets with a net book value of \u20ac3,931 million (December 31, 2021: \u20ac2,938 million). Asset financed liabilities are all secured on the associated aircraft or other property, plant and equipment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-629": { "value": "26 Provisions \u20ac million Restoration and handback provisions Restructuring provisions Employee leaving indemnities and other employee related provisions Legal claims and contractual disputes provisions ETS provisions 1 Other provisions 1 Total Net book value January 1, 2022 1 1,832 274 720 90 9 74 2,999 Provisions recorded during the year 596 14 74 47 134 31 896 Reclassifications (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Utilised during the year (167) (81) (32) (2) (10) (31) (323) Release of unused amounts (42) (12) (24) (45) \u2013 (14) (137) Unwinding of discount 38 \u2013 5 \u2013 \u2013 \u2013 43 Remeasurements 27 \u2013 (69) \u2013 \u2013 \u2013 (42) Exchange differences 131 (1) (1) (1) (1) \u2013 127 Net book value December 31, 2022 2,400 194 673 89 132 60 3,548 Analysis: Current 508 112 70 66 132 8 896 Non-current 1,892 82 603 23 \u2013 52 2,652 2,400 194 673 89 132 60 3,548 1 During 2022 the Group has separated the ETS provision from Other provisions. This change resulted in an amount of \u20ac9 million recorded within ETS provisions at January 1, 2022. There was no net change in total provisions. Restoration and handback provisions The provision for restoration and handback costs is maintained to meet the contractual maintenance and return conditions on aircraft held under lease. The provision also includes an amount relating to leased land and buildings where restoration costs are contractually required at the end of the lease. Such costs are capitalised within ROU assets. The provision is long-term in nature, typically covering the leased asset term, which for aircraft is up to 12 years. Included within the release of unused restoration and handback provisions is an amount of \u20ac7 million relating to the reversal of contractual lease provisions, which represent the estimation of the cost to fulfil the handback conditions associated with the leased aircraft that had been permanently stood down and impaired during the year to December 31, 2020, which have subsequently been stood back up with a resultant impairment reversal during the year to December 31, 2022. The provisions are determined by discounting the future cash flows using pre-tax risk free rates specific to the tenor of the provision and the currency in which it arises. The unwinding of the discounting of the provisions is recorded as a finance cost in the Income statement (refer to note 9a). Remeasurements arising from changes in estimates relating to the effects of both discounting and inflation are recorded in the Income statement to the extent they relate to avoidable provisions or recorded as an adjustment to the right of use asset (see note 14) for those unavoidable provisions. Where amounts are finalised and the uncertainty relating to these provisions removed, the associated liability is reclassified to either current or non-current Other creditors, dependent on the expecting timing of settlement. Restructuring provisions The restructuring provision includes provisions for voluntary redundancies including the collective redundancy programme for Iberia's Transformation Plan implemented prior to 2022, which provides for payments to affected employees until they reach the statutory retirement age. The amount provided for has been determined by an actuarial valuation made by independent actuaries, and was based on the same assumptions as those made to determine the provisions for obligations to flight crew below, with the exception of the discount rate, which in this case was 3.2 per cent. The payments related to this provision will continue over the next 7 years. At December 31, 2022, \u20ac185 million of this provision related to collective redundancy programmes (2021: \u20ac270 million). Employee leaving indemnities and other employee related provisions This provision includes employees leaving indemnities relating to staff under various contractual arrangements. The Group recognises a provision relating to flight crew (both pilots and cabin crew) who the Group expects to still be in employment by the age of 60, at which point the individuals will have the option of continuing full time employment, being placed on reserve and retaining their employment relationship until reaching the statutory retirement age (referred to as \u2018active\u2019), or alternatively taking early retirement (referred to as \u2018inactive\u2019). The Group is required to remunerate these employees until they reach the statutory retirement age. In determining the provision to be recognised for the proportion of employees that will elect to be inactive, the Group estimates a number of financial assumptions, including, but not limited to: (i) medium to long-term salary growth and inflation; (ii) the discount rate to apply; (iii) the rate of public social security growth; (iv) mortality rates; and (vi) staff turnover. The provision was re-assessed at December 31, 2022 with the use of independent actuaries using the projected unit credit method, based on a discount rate consistent with the iBoxx index of 3.72 per cent for active employees and 3.50 per cent for inactive employees (2021: iBoxx index of 0.91 per cent and 0.00 per cent, respectively), the PERM/F-2000P mortality tables, and assuming contractual salary increases of up to 6.1 per cent in 2023 and 2.0 per cent in 2024 and then 2.0 per cent per annum thereafter derived from increases in the Consumer Price Index (CPI). At December 31, 2022, there were a total of 4,827 flight crew (December 31, 2021: 4,533) eligible for making such elections when they reach the age of 60. At December 31, 2022, there were 426 employees having reached the age of 60 who had elected to become inactive (December 31, 2021: 333). In addition, at December 31, 2022 the average length of employment of the eligible flight crew was 18 years (December 31, 2021: 20 years). This is mainly a long-term provision. Remeasurements in the valuation of this provision are recorded in Other comprehensive income. The amount relating to this provision was \u20ac611 million at December 31, 2022 (2021: \u20ac644 million). Legal claims and contractual disputes provisions Legal claims and contractual disputes provisions include: \u2022 amounts for multi-party claims from groups of employees on a number of matters related to their employment, including claims for additional holiday pay and for age discrimination; \u2022 amounts related to ongoing contractual disputes arising from the Group\u2019s operations; and \u2022 amounts related to investigations by a number of competition authorities in connection with alleged anti-competitive activity concerning the Group\u2019s passenger and cargo businesses. The final amount required to settle the remaining claims and fines is subject to uncertainty. ETS provisions ETS provisions relate to the Emissions Trading Scheme for CO 2 equivalent emitted on flights within the EU, Switzerland and the United Kingdom and due to be settled in the year subsequent to the reporting date. See note 4 for further information. ", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-653": { "value": "Restoration and handback provisions The provision for restoration and handback costs is maintained to meet the contractual maintenance and return conditions on aircraft held under lease. The provision also includes an amount relating to leased land and buildings where restoration costs are contractually required at the end of the lease. Such costs are capitalised within ROU assets. The provision is long-term in nature, typically covering the leased asset term, which for aircraft is up to 12 years. Included within the release of unused restoration and handback provisions is an amount of \u20ac7 million relating to the reversal of contractual lease provisions, which represent the estimation of the cost to fulfil the handback conditions associated with the leased aircraft that had been permanently stood down and impaired during the year to December 31, 2020, which have subsequently been stood back up with a resultant impairment reversal during the year to December 31, 2022. The provisions are determined by discounting the future cash flows using pre-tax risk free rates specific to the tenor of the provision and the currency in which it arises. The unwinding of the discounting of the provisions is recorded as a finance cost in the Income statement (refer to note 9a). Remeasurements arising from changes in estimates relating to the effects of both discounting and inflation are recorded in the Income statement to the extent they relate to avoidable provisions or recorded as an adjustment to the right of use asset (see note 14) for those unavoidable provisions. Where amounts are finalised and the uncertainty relating to these provisions removed, the associated liability is reclassified to either current or non-current Other creditors, dependent on the expecting timing of settlement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-630": { "value": "27 Financial risk management objectives and policies The Group is exposed to a variety of financial risks: market risk (including fuel price risk, foreign currency risk and interest rate risk), credit risk and liquidity risk. The principal impacts of these on the financial statements are discussed below: a Fuel price risk The Group is exposed to fuel price risk. In order to mitigate such risk, under the Group\u2019s fuel price risk management strategy a variety of over the counter derivative instruments are entered into. The Group strategy is to hedge a proportion of fuel consumption up to two years within the approved hedging profile. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the fuel price, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on fuel derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of th years to December 31, 2022 and 2021. 2022 2021 Increase/(decrease) in fuel price per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Increase/(decrease) in fuel price per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 45 \u2013 1,402 30 \u2013 834 (45) \u2013 (1,200) (30) \u2013 (520) 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. During 2022, following a substantial recovery in the global price of crude oil and jet fuel, which continues to be impacted by geopolitical events in Ukraine, the fair value of such net asset derivative instruments was \u20ac87 million at December 31, 2022, representing a decrease of \u20ac201 million since January 1, 2022. b Foreign currency risk The Group is exposed to foreign currency risk on revenue, purchases and borrowings that are denominated in a currency other than the functional currency of the Group (the euro). The currencies in which these transactions are denominated are primarily US dollar and pound sterling. The Group has a number of strategies to hedge foreign currency risk including hedging a proportion of its foreign currency sales and purchases for up to three years. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the US dollar, pound sterling and Japanese yen exchange rates, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on interest-bearing liabilities, lease liabilities and derivatives (both those designated in hedge relationships and those not designated in hedge relationships) denominated in foreign currencies at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US dollar rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in pound sterling rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in Japanese yen rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 20 904 1,299 20 (20) 241 20 (58) (70) (20) (922) (1,161) (20) 18 (241) (20) 58 70 2021 10 255 523 10 (10) 134 10 (17) (41) (10) (260) (481) (10) 10 (134) (10) 17 41 1 The sensitivity analysis on equity, excludes the sensitivity amounts recognised in the result before tax. At December 31, 2022, the fair value of foreign currency net asset derivative instruments was \u20ac108 million, representing a decrease of \u20ac77 million since January 1, 2022. These comprise both derivatives designated in hedge relationships and those derivatives that are not designated into a hedge relationship at inception. Those derivatives not designated in a hedge relationship on inception have their mark-to- market movements recorded directly in the Income statement and recognised within Net currency retranslation (charges)/credits. c Interest rate risk The Group is exposed to changes in interest rates on debt and on cash deposits. In order to mitigate the interest rate risk, the Group\u2019s policies allow a variety of over the counter derivative instruments to be entered into. The following table demonstrates the sensitivity of the Group\u2019s interest rate exposure to a reasonable possible change in the US dollar, euro and sterling interest rates, based on expectations regarding forward rate movements, on the result before tax and equity 1 . The sensitivity analysis has been performed on interest rate derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in euro interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in sterling interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 150 \u2013 6 150 5 17 150 (35) \u2013 (150) \u2013 (7) (150) (4) (17) (150) 35 \u2013 2021 50 \u2013 \u2013 50 3 10 50 (2) \u2013 (50) \u2013 \u2013 (50) (3) (9) (50) 2 \u2013 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. For details regarding the Group\u2019s management of interest rate benchmark reform, refer to note 27i. d Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company and by only entering into transactions with counterparties with a very low credit risk. At each period end, the Group assesses the effect of counterparties\u2019 and the Group\u2019s own credit risk on the fair value of derivatives and any ineffectiveness arising is immediately recognised in the Income statement within Other non-operating expenses. e Counterparty risk The Group is exposed to the non-performance by its counterparties in respect of financial assets receivable. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company. The underlying exposures are monitored on a daily basis and the overall exposure limit by counterparty is periodically reviewed by using available market information. The financial assets recognised in the financial statements, net of impairment losses (if any), represent the Group's maximum exposure to credit risk, without taking into account any guarantees in place or other credit enhancements. At December 31, 2022 the Group\u2019s credit risk position, allocated by region, in respect of treasury managed cash and derivatives was as follows: Mark-to-market of treasury controlled financial instruments allocated by geography Region 2022 2021 United Kingdom 51% 44% Spain 1% \u2013 Ireland 20% 18% Rest of eurozone 27% 34% Rest of world 1% 4% f Liquidity risk The Group invests cash in interest-bearing accounts, time deposits and money market funds, choosing instruments with appropriate maturities or liquidity to retain sufficient headroom to readily generate cash inflows required to manage liquidity risk. The Group has also committed revolving credit facilities. At December 31, 2022 the Group had undrawn overdraft facilities of \u20ac53 million (2021: \u20ac53 million). The Group held the following undrawn general and committed aircraft financing facilities: 2022 Million Currency \u20ac equivalent General facilities 1 Euro facilities expiring between January and March 2023 \u20ac87 87 US dollar facility expiring November 2023 $50 47 Euro facility expiring March 2025 \u20ac300 300 US dollar facility expiring March 2025 $1,755 1,654 Pound sterling facility expiring November 2025 \u00a31,000 1,143 3,231 Committed aircraft facilities US dollar facilities expiring between February and September 2023 2 $386 364 US dollar facility expiring April 2023 2 $273 257 US dollar facilities expiring between October 2023 and March 2024 3 $525 495 1,116 2021 Million Currency \u20ac equivalent General facilities 1 Euro facilities expiring between January and July 2022 \u20ac27 27 Euro facilities expiring March 2023 \u20ac60 60 US dollar facility expiring May 2022 $50 44 US dollar facility expiring March 2024 $1,755 1,556 Pound sterling facility expiring November 2025 \u00a31,000 1,177 2,864 Committed aircraft facilities US dollar facility expiring September 2022 2 $635 563 US dollar facilities expiring March 2024 3 $635 563 1,126 1 The general facilities can be drawn at any time at the discretion of the Group subject to the provision of up to three days\u2019 notice of the intended utilisation, depending on the facility. 2 The aircraft facilities maturing in 2023 are available for specific committed aircraft deliveries. 3 The aircraft facilities maturing between October 2023 and March 2024 (2021: maturing in March 2024) are available for specific committed aircraft deliveries and require the Group to give three months\u2019 notice to the counterparty of its intention to utilise the facilities.
The following table analyses the Group\u2019s (outflows) and inflows in respect of financial liabilities and derivative financial instruments into
relevant maturity groupings based on the remaining period at December 31 to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows and include interest.
\u20ac million
Within 6
months
6-12
months
1-2
years
2-5
years
More than 5
years
Total
2022
Interest-bearing loans and borrowings:
Asset financing liabilities (196) (190) (374) (1,081) (2,823) (4,664)
Lease liabilities (955) (1,050) (2,120) (3,374) (5,295)
(12,794)
Fixed rate borrowings (64) (523) (78) (1,242) (757) (2,664)
Floating rate borrowings (227) (146) (455) (3,191) \u2013 (4,019)
Trade and other payables (5,209) \u2013 (200) \u2013 \u2013 (5,409)
Derivative financial instruments (assets):
Interest rate derivatives 42 9 12 9 \u2013 72
Foreign exchange contracts 245 195 46 \u2013 \u2013 486
Fuel derivatives 122 62 13 \u2013 \u2013 197
Derivative financial instruments (liabilities):
Interest rate derivatives (4) (1) (1) (3) \u2013 (9)
Foreign exchange contracts (185) (121) (68) \u2013 \u2013 (374)
Fuel derivatives (42) (59) (10) \u2013 \u2013 (111)
December 31, 2022 (6,473) (1,824) (3,235) (8,882) (8,875) (29,289)
\u20ac million
Within 6
months
6-12
months
1-2
years
2-5
years
More than 5
years
Total
2021
Interest-bearing loans and borrowings:
Asset financing liabilities (122) (116) (230) (678) (1,714) (2,860)
Lease liabilities (920) (854) (1,814) (3,839) (5,524) (12,951)
Fixed rate borrowings (151) (529) (578) (690) (2,094) (4,042)
Floating rate borrowings (129) (285) (428) (3,368) (16) (4,226)
Other financing liabilities (73) \u2013 \u2013 \u2013 \u2013 (73)
Trade and other payables (3,712) \u2013 (208) \u2013 \u2013 (3,920)
Derivative financial instruments (assets):
Interest rate derivatives \u2013 1 2 3 \u2013 6
Foreign exchange contracts 227 52 46 1 \u2013 326
Fuel derivatives 157 129 48 \u2013 \u2013 334
Derivative financial instruments (liabilities):
Interest rate derivatives (12) (10) (7) (3) \u2013 (32)
Foreign exchange contracts (67) (38) (33) (6) \u2013 (144)
Fuel derivatives (14) (13) (18) \u2013 \u2013 (45)
December 31, 2021 (4,816) (1,663) (3,220) (8,580) (9,348) (27,627)
g Offsetting financial assets and liabilities The Group enters into derivative transactions under ISDA (International Swaps and Derivatives Association) documentation. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding are aggregated into a single net amount that is payable by one party to the other. The following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements. December 31, 2022 \u20ac million Gross value of financial instruments Gross amounts set off in the Balance sheet 1 Net amounts of financial instruments in the Balance sheet Related amounts not offset in the Balance sheet 1 Net amount Financial assets Derivative financial assets 760 (34) 726 (5) 721 Financial liabilities Derivative financial liabilities 505 (34) 471 5 476 1 The Group has pledged cash and cash equivalents as collateral against certain of its derivative financial liabilities. As December 31, 2022, the Group recognised \u20acnil of collateral (2021: \u20acnil) offset in the balance sheet and \u20ac5 million (2021: \u20ac30 million) not offset in the Balance sheet. December 31, 2021 \u20ac million Gross value of financial instruments Gross amounts set off in the Balance sheet Net amounts of financial instruments in the Balance sheet Related amounts not offset in the Balance sheet Net amount Financial assets Derivative financial assets 628 (8) 620 (30) 590 Financial liabilities Derivative financial liabilities 181 (8) 173 30 203 h Capital risk management The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern, to maintain an optimal capital structure, to reduce the cost of capital and to provide returns to shareholders. The Group monitors capital on the basis of the net debt to EBITDA before exceptional items ratio. For the year to December 31, 2022, the net debt to EBITDA before exceptional items was 3.1 times (2021: minus 11.5 times). The definition and calculation for this performance measure is included in the Alternative performance measures section. Further detail on liquidity and capital resources and capital risk management is disclosed in the going concern section in note 2. i Managing interest rate benchmark reform and associated risks Overview A reform of major interest rate benchmarks is being undertaken globally, including the replacement of certain interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). The Group has exposures to IBORs on its financial instruments that are expected to mature subsequent to December 31, 2022, and as such will be replaced as part of these market-wide initiatives. The Group anticipates that IBOR reform will impact its risk management and hedge accounting. During 2020 the Group established an IBOR transition working group and project plan, led by Group Treasury. This project has and continues to consider the required changes to systems, processes, risk management and valuation models, as well as managing any accounting and tax implications. During the course of 2022, the Group, and the counterparties to the financial instruments, have transitioned the majority of such instruments to an alternative benchmark rate and in order to enable such transitions, changes to systems, processes and models have been implemented. Those financial instruments that have not transitioned at December 31, 2022 relate to those with a US dollar LIBOR component, which is not expected to convert to an alternative risk-free rate until mid-2023, subject to further consultation. Reforms to the Euro Interbank Offered Rate (EURIBOR) methodology to enable it to meet the criteria of a risk-free rate were completed in 2019. As such the Group expects to continue to utilise financial instruments with a EURIBOR component without transitioning to an alternative benchmark rate. Derivative and non-derivative financial instruments and hedge accounting While the Group has transitioned a number of its derivative and non-derivative financial instruments to an alternative benchmark rate, certain interest rate swap derivative financial instruments and non-derivative financial instruments continue to have their floating legs indexed to US dollar LIBOR. For derivative financial instruments there is no uncertainty associated with IBOR reform as at December 31, 2022, as such instruments either mature prior to the date of withdrawal of the US dollar LIBOR, or where maturity is subsequent to the date of withdrawal of the US dollar LIBOR, the final pricing date for such instruments is prior to the date of withdrawal. Accordingly, the Group does not intend to transition such instruments to an alternative benchmark and these derivatives continue to be recognised as hedging instruments in hedge relationships, with the hedged item being those non-derivative financial instruments indexed to US dollar LIBOR. Non-derivative financial instruments predominantly relate to those lease liabilities with a US dollar LIBOR component. The Group has such leases with a limited number of counterparties for which the Group expects to transition to an alternative benchmark by June 30, 2023. The table below provides an overview of the IBOR-related exposures as at December 31, 2022. Non-derivative financial instruments are presented on the basis of their carrying values, while derivative financial instruments are presented on the basis of their nominal amounts. \u20ac million Non- derivative financial instruments \u2013 carrying value Derivative financial instruments \u2013 nominal amount US dollar LIBOR 461 305", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-654": { "value": "a Fuel price risk The Group is exposed to fuel price risk. In order to mitigate such risk, under the Group\u2019s fuel price risk management strategy a variety of over the counter derivative instruments are entered into. The Group strategy is to hedge a proportion of fuel consumption up to two years within the approved hedging profile. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the fuel price, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on fuel derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of th e years to December 31, 2022 and 2021. 2022 2021 Increase/(decrease) in fuel price per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Increase/(decrease) in fuel price per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 45 \u2013 1,402 30 \u2013 834 (45) \u2013 (1,200) (30) \u2013 (520) 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. During 2022, following a substantial recovery in the global price of crude oil and jet fuel, which continues to be impacted by geopolitical events in Ukraine, the fair value of such net asset derivative instruments was \u20ac87 million at December 31, 2022, representing a decrease of \u20ac201 million since January 1, 2022. b Foreign currency risk The Group is exposed to foreign currency risk on revenue, purchases and borrowings that are denominated in a currency other than the functional currency of the Group (the euro). The currencies in which these transactions are denominated are primarily US dollar and pound sterling. The Group has a number of strategies to hedge foreign currency risk including hedging a proportion of its foreign currency sales and purchases for up to three years. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the US dollar, pound sterling and Japanese yen exchange rates, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on interest-bearing liabilities, lease liabilities and derivatives (both those designated in hedge relationships and those not designated in hedge relationships) denominated in foreign currencies at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US dollar rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in pound sterling rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in Japanese yen rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 20 904 1,299 20 (20) 241 20 (58) (70) (20) (922) (1,161) (20) 18 (241) (20) 58 70 2021 10 255 523 10 (10) 134 10 (17) (41) (10) (260) (481) (10) 10 (134) (10) 17 41 1 The sensitivity analysis on equity, excludes the sensitivity amounts recognised in the result before tax. At December 31, 2022, the fair value of foreign currency net asset derivative instruments was \u20ac108 million, representing a decrease of \u20ac77 million since January 1, 2022. These comprise both derivatives designated in hedge relationships and those derivatives that are not designated into a hedge relationship at inception. Those derivatives not designated in a hedge relationship on inception have their mark-to- market movements recorded directly in the Income statement and recognised within Net currency retranslation (charges)/credits. c Interest rate risk The Group is exposed to changes in interest rates on debt and on cash deposits. In order to mitigate the interest rate risk, the Group\u2019s policies allow a variety of over the counter derivative instruments to be entered into. The following table demonstrates the sensitivity of the Group\u2019s interest rate exposure to a reasonable possible change in the US dollar, euro and sterling interest rates, based on expectations regarding forward rate movements, on the result before tax and equity 1 . The sensitivity analysis has been performed on interest rate derivatives (both those designated in hedge relationships and those not designated in hedge relationships) at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in euro interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in sterling interest rate Basis points Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 150 \u2013 6 150 5 17 150 (35) \u2013 (150) \u2013 (7) (150) (4) (17) (150) 35 \u2013 2021 50 \u2013 \u2013 50 3 10 50 (2) \u2013 (50) \u2013 \u2013 (50) (3) (9) (50) 2 \u2013 1 The sensitivity analysis on equity excludes the sensitivity amounts recognised in the result before tax. For details regarding the Group\u2019s management of interest rate benchmark reform, refer to note 27i. ", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-676": { "value": "b Foreign currency risk The Group is exposed to foreign currency risk on revenue, purchases and borrowings that are denominated in a currency other than the functional currency of the Group (the euro). The currencies in which these transactions are denominated are primarily US dollar and pound sterling. The Group has a number of strategies to hedge foreign currency risk including hedging a proportion of its foreign currency sales and purchases for up to three years. The following table demonstrates the sensitivity of the Group\u2019s principal foreign exchange exposure to a reasonable possible change in the US dollar, pound sterling and Japanese yen exchange rates, based on current market volatility, with all other variables held constant on the result before tax and equity 1 . The sensitivity analysis has been performed on interest-bearing liabilities, lease liabilities and derivatives (both those designated in hedge relationships and those not designated in hedge relationships) denominated in foreign currencies at the reporting date only and is not reflective of the impact had the sensitised rates been applied through the duration of the years to December 31, 2022 and 2021. Strengthening/ (weakening) in US dollar rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in pound sterling rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million Strengthening/ (weakening) in Japanese yen rate per cent Effect on result before tax \u20ac million Effect on equity \u20ac million 2022 20 904 1,299 20 (20) 241 20 (58) (70) (20) (922) (1,161) (20) 18 (241) (20) 58 70 2021 10 255 523 10 (10) 134 10 (17) (41) (10) (260) (481) (10) 10 (134) (10) 17 41 1 The sensitivity analysis on equity, excludes the sensitivity amounts recognised in the result before tax. At December 31, 2022, the fair value of foreign currency net asset derivative instruments was \u20ac108 million, representing a decrease of \u20ac77 million since January 1, 2022. These comprise both derivatives designated in hedge relationships and those derivatives that are not designated into a hedge relationship at inception. Those derivatives not designated in a hedge relationship on inception have their mark-to- market movements recorded directly in the Income statement and recognised within Net currency retranslation (charges)/credits. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-655": { "value": "d Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company and by only entering into transactions with counterparties with a very low credit risk. At each period end, the Group assesses the effect of counterparties\u2019 and the Group\u2019s own credit risk on the fair value of derivatives and any ineffectiveness arising is immediately recognised in the Income statement within Other non-operating expenses. d Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Group has policies and procedures to monitor the risk by assigning limits to each counterparty by underlying exposure and by operating company and by only entering into transactions with counterparties with a very low credit risk. At each period end, the Group assesses the effect of counterparties\u2019 and the Group\u2019s own credit risk on the fair value of derivatives and any ineffectiveness arising is immediately recognised in the Income statement within Other non-operating expenses. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-656": { "value": "f Liquidity risk The Group invests cash in interest-bearing accounts, time deposits and money market funds, choosing instruments with appropriate maturities or liquidity to retain sufficient headroom to readily generate cash inflows required to manage liquidity risk. The Group has also committed revolving credit facilities. At December 31, 2022 the Group had undrawn overdraft facilities of \u20ac53 million (2021: \u20ac53 million). The Group held the following undrawn general and committed aircraft financing facilities: 2022 Million Currency \u20ac equivalent General facilities 1 Euro facilities expiring between January and March 2023 \u20ac87 87 US dollar facility expiring November 2023 $50 47 Euro facility expiring March 2025 \u20ac300 300 US dollar facility expiring March 2025 $1,755 1,654 Pound sterling facility expiring November 2025 \u00a31,000 1,143 3,231 Committed aircraft facilities US dollar facilities expiring between February and September 2023 2 $386 364 US dollar facility expiring April 2023 2 $273 257 US dollar facilities expiring between October 2023 and March 2024 3 $525 495 1,116 2021 Million Currency \u20ac equivalent General facilities 1 Euro facilities expiring between January and July 2022 \u20ac27 27 Euro facilities expiring March 2023 \u20ac60 60 US dollar facility expiring May 2022 $50 44 US dollar facility expiring March 2024 $1,755 1,556 Pound sterling facility expiring November 2025 \u00a31,000 1,177 2,864 Committed aircraft facilities US dollar facility expiring September 2022 2 $635 563 US dollar facilities expiring March 2024 3 $635 563 1,126 1 The general facilities can be drawn at any time at the discretion of the Group subject to the provision of up to three days\u2019 notice of the intended utilisation, depending on the facility. 2 The aircraft facilities maturing in 2023 are available for specific committed aircraft deliveries. 3 The aircraft facilities maturing between October 2023 and March 2024 (2021: maturing in March 2024) are available for specific committed aircraft deliveries and require the Group to give three months\u2019 notice to the counterparty of its intention to utilise the facilities. The following table analyses the Group\u2019s (outflows) and inflows in respect of financial liabilities and derivative financial instruments into relevant maturity groupings based on the remaining period at December 31 to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and include interest. \u20ac million Within 6 months 6-12 months 1-2 years 2-5 years More than 5 years Total 2022 Interest-bearing loans and borrowings: Asset financing liabilities (196) (190) (374) (1,081) (2,823) (4,664) Lease liabilities (955) (1,050) (2,120) (3,374) (5,295) (12,794) Fixed rate borrowings (64) (523) (78) (1,242) (757) (2,664) Floating rate borrowings (227) (146) (455) (3,191) \u2013 (4,019) Trade and other payables (5,209) \u2013 (200) \u2013 \u2013 (5,409) Derivative financial instruments (assets): Interest rate derivatives 42 9 12 9 \u2013 72 Foreign exchange contracts 245 195 46 \u2013 \u2013 486 Fuel derivatives 122 62 13 \u2013 \u2013 197 Derivative financial instruments (liabilities): Interest rate derivatives (4) (1) (1) (3) \u2013 (9) Foreign exchange contracts (185) (121) (68) \u2013 \u2013 (374) Fuel derivatives (42) (59) (10) \u2013 \u2013 (111) December 31, 2022 (6,473) (1,824) (3,235) (8,882) (8,875) (29,289) \u20ac million Within 6 months 6-12 months 1-2 years 2-5 years More than 5 years Total 2021 Interest-bearing loans and borrowings: Asset financing liabilities (122) (116) (230) (678) (1,714) (2,860) Lease liabilities (920) (854) (1,814) (3,839) (5,524) (12,951) Fixed rate borrowings (151) (529) (578) (690) (2,094) (4,042) Floating rate borrowings (129) (285) (428) (3,368) (16) (4,226) Other financing liabilities (73) \u2013 \u2013 \u2013 \u2013 (73) Trade and other payables (3,712) \u2013 (208) \u2013 \u2013 (3,920) Derivative financial instruments (assets): Interest rate derivatives \u2013 1 2 3 \u2013 6 Foreign exchange contracts 227 52 46 1 \u2013 326 Fuel derivatives 157 129 48 \u2013 \u2013 334 Derivative financial instruments (liabilities): Interest rate derivatives (12) (10) (7) (3) \u2013 (32) Foreign exchange contracts (67) (38) (33) (6) \u2013 (144) Fuel derivatives (14) (13) (18) \u2013 \u2013 (45) December 31, 2021 (4,816) (1,663) (3,220) (8,580) (9,348) (27,627) ", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-658": { "value": "g Offsetting financial assets and liabilities The Group enters into derivative transactions under ISDA (International Swaps and Derivatives Association) documentation. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding are aggregated into a single net amount that is payable by one party to the other. The following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements. December 31, 2022 \u20ac million Gross value of financial instruments Gross amounts set off in the Balance sheet 1 Net amounts of financial instruments in the Balance sheet Related amounts not offset in the Balance sheet 1 Net amount Financial assets Derivative financial assets 760 (34) 726 (5) 721 Financial liabilities Derivative financial liabilities 505 (34) 471 5 476 1 The Group has pledged cash and cash equivalents as collateral against certain of its derivative financial liabilities. As December 31, 2022, the Group recognised \u20acnil of collateral (2021: \u20acnil) offset in the balance sheet and \u20ac5 million (2021: \u20ac30 million) not offset in the Balance sheet. December 31, 2021 \u20ac million Gross value of financial instruments Gross amounts set off in the Balance sheet Net amounts of financial instruments in the Balance sheet Related amounts not offset in the Balance sheet Net amount Financial assets Derivative financial assets 628 (8) 620 (30) 590 Financial liabilities Derivative financial liabilities 181 (8) 173 30 203 ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-657": { "value": "h Capital risk management The Group\u2019s objectives when managing capital are to safeguard the Group\u2019s ability to continue as a going concern, to maintain an optimal capital structure, to reduce the cost of capital and to provide returns to shareholders. The Group monitors capital on the basis of the net debt to EBITDA before exceptional items ratio. For the year to December 31, 2022, the net debt to EBITDA before exceptional items was 3.1 times (2021: minus 11.5 times). The definition and calculation for this performance measure is included in the Alternative performance measures section. Further detail on liquidity and capital resources and capital risk management is disclosed in the going concern section in note 2. ", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-631": { "value": "28 Financial instruments a Financial assets and liabilities by category The detail of the Group\u2019s \ufb01nancial instruments at December 31, 2022 and December 31, 2021 by nature and classi\ufb01cation for measurement purposes is as follows: December 31, 2022 Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 55 \u2013 \u2013 55 Derivative financial instruments \u2013 \u2013 81 \u2013 81 Other non-current assets 180 \u2013 \u2013 182 362 Current assets Trade receivables 1,330 \u2013 \u2013 \u2013 1,330 Other current assets 308 \u2013 \u2013 918 1,226 Derivative financial instruments \u2013 \u2013 645 \u2013 645 Other current interest-bearing deposits 403 \u2013 \u2013 \u2013 403 Cash and cash equivalents 9,196 \u2013 \u2013 \u2013 9,196 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 7,853 \u2013 \u2013 \u2013 7,853 Interest-bearing long-term borrowings 8,692 \u2013 596 \u2013 9,288 Derivative financial instruments \u2013 \u2013 84 \u2013 84 Other long-term liabilities 131 \u2013 \u2013 69 200 Current liabilities Lease liabilities 1,766 \u2013 \u2013 \u2013 1,766 Current portion of long-term borrowings 1,068 \u2013 9 \u2013 1,077 Trade and other payables 4,898 \u2013 \u2013 311 5,209 Derivative financial instruments \u2013 \u2013 387 \u2013 387
December 31, 2021
Financial liabilities
\u20ac million Amortised cost
Fair value
through Other
comprehensive
income
Fair value through
Income statement
Non-financial
liabilities
Total
carrying amount by
balance sheet item
Non-current liabilities
Lease liabilities 8,116 \u2013 \u2013 \u2013 8,116
Interest-bearing long-term borrowings 8,220 \u2013 748 \u2013 8,968
Derivative financial instruments \u2013 \u2013 47 \u2013 47
Other long-term liabilities 132 \u2013 \u2013 76 208
Current liabilities
Lease liabilities 1,521 \u2013 \u2013 \u2013 1,521
Current portion of long-term borrowings 996 \u2013 9 \u2013 1,005
Trade and other payables 3,506 \u2013 \u2013 206 3,712
Derivative financial instruments \u2013 \u2013 126 \u2013 126
b Fair value of financial assets and financial liabilities
The fair values of the Group\u2019s financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in
determining the fair values and using the following methods and assumptions:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are
readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arm\u2019s length basis. Level 1 methodologies (market values at the balance
sheet date) were used to determine the fair value of listed asset investments classified as equity investments and listed interest-bearing
borrowings. The fair value of financial liabilities and financial assets incorporates own credit risk and counterparty credit risk, respectively.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The
fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates.
Derivative instruments are measured based on the market value of instruments with similar terms and conditions using forward pricing
models, which include forward exchange rates, forward interest rates, forward fuel curves and corresponding volatility surface data at the
reporting date. The fair value of derivative financial assets and liabilities are determined as follows, incorporating adjustments for own credit
risk and counterparty credit risk:
\u2022 commodity reference contracts including swaps and options transactions, referenced to (i) CIF NWE cargoes jet fuel; (ii) ICE Gasoil; (iii)
ICE Brent; (iv) ICE Gasoil Brent crack; (v) Jet Differential and (vi) Jet fuel Brent crack - the mark-to-market valuation prices are
determined by reference to current forward curve and standard option pricing valuation models, values are discounted to the reporting
date based on the corresponding interest rate;
\u2022 currency forward and option contracts \u2013 by reference to current forward prices and standard option pricing valuation models, values are
discounted to the reporting date based on the corresponding interest rate; and
\u2022 interest rate swap contracts \u2013 by discounting the future cash flows of the swap contracts at market interest rate valued with the
current forward curve.
The fair value of the Group\u2019s interest-bearing borrowings including leases is determined by discounting the remaining contractual cash
flows at the relevant market interest rates at the balance sheet date. The fair value of the Group\u2019s interest-bearing borrowings is adjusted
for own credit risk.
Financial assets
\u20ac million Amortised cost
Fair value
through Other
comprehensive
income
Fair value through
Income statement Non-financial assets
Total
carrying amount by
balance sheet item
Non-current assets
Other equity investments \u2013 31 \u2013 \u2013 31
Derivative financial instruments
\u2013 \u2013 77 \u2013 77
Other non-current assets
126 10 \u2013 114 250
Current assets
Trade receivables
735 \u2013 \u2013 \u2013 735
Other current assets
363 \u2013 \u2013 597 960
Derivative financial instruments
\u2013 \u2013 543 \u2013 543
Other current interest-bearing deposits
51 \u2013 \u2013 \u2013 51
Cash and cash equivalents
7,892 \u2013 \u2013 \u2013 7,892
Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2022 are as follows: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 55 55 55 Other non-current financial assets \u2013 20 \u2013 20 31 Derivative financial assets: Interest rate swaps 1 \u2013 66 \u2013 66 66 Foreign exchange contracts 1 \u2013 467 \u2013 467 467 Fuel derivatives 1 \u2013 193 \u2013 193 193 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,925 \u2013 2,925 3,819 Fixed rate borrowings 2,538 72 \u2013 2,610 2,967 Floating rate borrowings \u2013 3,419 \u2013 3,419 3,579 Derivative financial liabilities: Interest rate derivatives 2 \u2013 6 \u2013 6 6 Foreign exchange contracts 2 \u2013 386 \u2013 386 386 Fuel derivatives 2 \u2013 79 \u2013 79 79 1 Current portion of derivative financial assets is \u20ac645 million. 2 Current portion of derivative financial liabilities is \u20ac387 million. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2021 are set out below: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 31 31 31 Derivative financial assets: Interest rate swaps 1 \u2013 5 \u2013 5 5 Foreign exchange contracts 1 \u2013 314 \u2013 314 314 Fuel derivatives 1 \u2013 301 \u2013 301 301 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,583 \u2013 2,583 2,415 Fixed rate borrowings 3,492 265 \u2013 3,757 3,863 Floating rate borrowings \u2013 3,622 \u2013 3,622 3,622 Other financing liabilities \u2013 73 \u2013 73 73 Derivative financial liabilities: Interest rate derivatives 2 \u2013 31 \u2013 31 31 Foreign exchange contracts 2 \u2013 129 \u2013 129 129 Fuel derivatives 2 \u2013 13 \u2013 13 13 1 Current portion of derivative financial assets is \u20ac543 million. 2 Current portion of derivative financial liabilities is \u20ac126 million. On June 15, 2022, the Group entered into a financing arrangement with Globalia, which was classified as a Level 2 financial asset. On August 16, 2022, the Group exercised the conversion option within the financing arrangement leading to the de-recognition of the Level 2 financial asset and the recognition of an Other equity investment in Air Europa Holdings, which was recorded as an addition to a Level 3 financial asset. Refer to note 19 for further details. There have been no other transfers between levels of the fair value hierarchy during the year. Financial assets, other equity instruments, financial liabilities and derivative financial assets and liabilities are all measured at fair value in the consolidated financial statements. Interest-bearing borrowings, with the exception of the \u20ac825 million convertible bond due 2028 which is measured at fair value, are measured at amortised cost. c Level 3 financial assets reconciliation The following table summarises key movements in Level 3 financial assets: \u20ac million 2022 2021 Opening balance for the year 31 29 Addition of Air Europa Holdings 22 \u2013 Additions - other 2 2 Losses recognised in Income statement (2) \u2013 Gains recognised in Other comprehensive income 2 \u2013 Closing balance for the year 55 31 For details regarding the valuation of Air Europa Holdings, refer to note 19. d Hedges Cash flow hedges At December 31, 2022 the Group\u2019s principal risk management activities that were hedging future forecast transactions were: \u2022 foreign exchange contracts, hedging foreign currency exchange risk on cash inflows and certain operational payments. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement, where the hedged item is recorded directly in the Income statement, to the same caption as the underlying hedged item is classified; (ii) recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability, are recorded to the Balance sheet to the same caption as the hedged item is recognised; and (iii) recognised in equity and transferred to the Income statement, where the hedged item is a financial asset or liability, at the same time as the financial asset or liability is recorded in the Income statement. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement when the future transaction is no longer expected to occur and recorded in the relevant Income statement caption to which the hedged item is classified; \u2022 forward crude, gas oil and jet kerosene derivative contracts, hedging price risk on fuel expenditure. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement within Fuel, oil costs and emissions charges to match against the related fuel cash outflow, where the underlying hedged item does not give rise to the recognition of fuel inventory; and (ii) recognised in equity and transferred to the Balance sheet within Inventory, where the underlying hedged item is fuel inventory. Gains and losses recorded within Inventory are recognised in the Income statement when the underlying fuel inventory is consumed, within Fuel, oil costs and emission charges. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement within Fuel, oil costs and emissions charges when the future transaction is no longer expected to occur; \u2022 interest rate contracts, hedging interest rate risk on floating rate debt and certain operational payments. Remeasurement gains and losses on the derivatives are recognised in equity and transferred to the Income statement within Interest expense; and \u2022 future loan repayments denominated in foreign currency are designated in a hedge relationship hedging foreign exchange fluctuations on revenue cash inflows. Remeasurement gains and losses on the associated loans are recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability when the loan repayments are made (generally in instalments over the life of the loan). The amounts included in equity are summarised below: (Gains)/losses in respect of cash flow hedges included within equity \u20ac million 2022 2021 Loan repayments to hedge future revenue 87 98 Foreign exchange contracts to hedge future revenue and expenditure 1 (178) 25 Crude, gas oil and jet kerosene derivative contracts 1 (127) (276) Derivatives used to hedge interest rates 1 (46) 58 Instruments for which hedge accounting no longer applies 1, 2 213 247 (51) 152 Related deferred tax charge/(credit) 20 (24) Total amount included within equity (31) 128 1 The carrying value of derivative instruments recognised in assets and liabilities is analysed in parts a and b above. 2 Relates to previously terminated hedge relationships for which the underlying forecast transactions remain expected to occur. The notional amounts of significant financial instruments used as cash flow hedging instruments are set out below, with the prior period presentation amended to reflect the current presentation: Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2022 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.23 1.05 to 1.45 3,582 1,355 \u2013 \u2013 4,937 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.08 0.91 to 1.26 2,578 1,318 \u2013 \u2013 3,896 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.00 to 1.42 371 406 458 14 1,249 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 718 416 to 2,200 2,935 331 \u2013 \u2013 3,266 Interest rate contracts to hedge future interest expenditure 3 1.04 (0.03) to 3.13 2,360 504 238 9 3,111 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.4 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2021 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.31 1.15 to 1.45 2,606 1,030 42 \u2013 3,678 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.18 1.08 to 1.32 1,632 735 26 \u2013 2,393 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.08 to 1.42 396 334 543 166 1,439 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 649 395 to 737 2,386 826 \u2013 \u2013 3,212 Interest rate contracts to hedge future interest expenditure 3 1.40 (0.03) to 3.13 3,099 1,080 738 60 4,977 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.8 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. Amounts recognised in the Income statement For the year to December 31, 2021 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 4 39 43 (178) (24) Crude, gas oil and jet kerosene derivative contracts (1) 73 88 160 (737) \u2013 Derivatives used to hedge interest rates \u2013 \u2013 (29) (29) 21 \u2013 Loan repayments to hedge future revenue \u2013 \u2013 (15) (15) (120) \u2013 Instruments for which hedge accounting no longer applies \u2013 \u2013 (54) (54) \u2013 \u2013 (1) 77 29 105 (1,014) (24) Related deferred tax (24) 166 3 Total movements recorded in the cash flow hedge reserve 81 (848) (21) 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. The losses associated with the discontinuance of hedge accounting recognised in the Income statement and the subsequent fair value movements of those derivative instruments recorded in the Income statement through to the earlier of the reporting date and the maturity date of the derivative are set out below: \u20ac million 2022 2021 Gains associated with the discontinuance of hedge accounting recognised in the Income statement (29) (77) Fair value movements subsequently recorded in the Income statement \u2013 (82) Total effect of discontinuance of hedge accounting in the Income statement (29) (159) The Group has no significant fair value hedges at December 31, 2022 and 2021. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-677": { "value": "28 Financial instruments a Financial assets and liabilities by category The detail of the Group\u2019s \ufb01nancial instruments at December 31, 2022 and December 31, 2021 by nature and classi\ufb01cation for measurement purposes is as follows: December 31, 2022 Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 55 \u2013 \u2013 55 Derivative financial instruments \u2013 \u2013 81 \u2013 81 Other non-current assets 180 \u2013 \u2013 182 362 Current assets Trade receivables 1,330 \u2013 \u2013 \u2013 1,330 Other current assets 308 \u2013 \u2013 918 1,226 Derivative financial instruments \u2013 \u2013 645 \u2013 645 Other current interest-bearing deposits 403 \u2013 \u2013 \u2013 403 Cash and cash equivalents 9,196 \u2013 \u2013 \u2013 9,196 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 7,853 \u2013 \u2013 \u2013 7,853 Interest-bearing long-term borrowings 8,692 \u2013 596 \u2013 9,288 Derivative financial instruments \u2013 \u2013 84 \u2013 84 Other long-term liabilities 131 \u2013 \u2013 69 200 Current liabilities Lease liabilities 1,766 \u2013 \u2013 \u2013 1,766 Current portion of long-term borrowings 1,068 \u2013 9 \u2013 1,077 Trade and other payables 4,898 \u2013 \u2013 311 5,209 Derivative financial instruments \u2013 \u2013 387 \u2013 387 December 31, 2021 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 8,116 \u2013 \u2013 \u2013 8,116 Interest-bearing long-term borrowings 8,220 \u2013 748 \u2013 8,968 Derivative financial instruments \u2013 \u2013 47 \u2013 47 Other long-term liabilities 132 \u2013 \u2013 76 208 Current liabilities Lease liabilities 1,521 \u2013 \u2013 \u2013 1,521 Current portion of long-term borrowings 996 \u2013 9 \u2013 1,005 Trade and other payables 3,506 \u2013 \u2013 206 3,712 Derivative financial instruments \u2013 \u2013 126 \u2013 126 b Fair value of financial assets and financial liabilities The fair values of the Group\u2019s financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in determining the fair values and using the following methods and assumptions: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. Level 1 methodologies (market values at the balance sheet date) were used to determine the fair value of listed asset investments classified as equity investments and listed interest-bearing borrowings. The fair value of financial liabilities and financial assets incorporates own credit risk and counterparty credit risk, respectively. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. Derivative instruments are measured based on the market value of instruments with similar terms and conditions using forward pricing models, which include forward exchange rates, forward interest rates, forward fuel curves and corresponding volatility surface data at the reporting date. The fair value of derivative financial assets and liabilities are determined as follows, incorporating adjustments for own credit risk and counterparty credit risk: \u2022 commodity reference contracts including swaps and options transactions, referenced to (i) CIF NWE cargoes jet fuel; (ii) ICE Gasoil; (iii) ICE Brent; (iv) ICE Gasoil Brent crack; (v) Jet Differential and (vi) Jet fuel Brent crack - the mark-to-market valuation prices are determined by reference to current forward curve and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; \u2022 currency forward and option contracts \u2013 by reference to current forward prices and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; and \u2022 interest rate swap contracts \u2013 by discounting the future cash flows of the swap contracts at market interest rate valued with the current forward curve. The fair value of the Group\u2019s interest-bearing borrowings including leases is determined by discounting the remaining contractual cash flows at the relevant market interest rates at the balance sheet date. The fair value of the Group\u2019s interest-bearing borrowings is adjusted for own credit risk. Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 31 \u2013 \u2013 31 Derivative financial instruments \u2013 \u2013 77 \u2013 77 Other non-current assets 126 10 \u2013 114 250 Current assets Trade receivables 735 \u2013 \u2013 \u2013 735 Other current assets 363 \u2013 \u2013 597 960 Derivative financial instruments \u2013 \u2013 543 \u2013 543 Other current interest-bearing deposits 51 \u2013 \u2013 \u2013 51 Cash and cash equivalents 7,892 \u2013 \u2013 \u2013 7,892 Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2022 are as follows: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 55 55 55 Other non-current financial assets \u2013 20 \u2013 20 31 Derivative financial assets: Interest rate swaps 1 \u2013 66 \u2013 66 66 Foreign exchange contracts 1 \u2013 467 \u2013 467 467 Fuel derivatives 1 \u2013 193 \u2013 193 193 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,925 \u2013 2,925 3,819 Fixed rate borrowings 2,538 72 \u2013 2,610 2,967 Floating rate borrowings \u2013 3,419 \u2013 3,419 3,579 Derivative financial liabilities: Interest rate derivatives 2 \u2013 6 \u2013 6 6 Foreign exchange contracts 2 \u2013 386 \u2013 386 386 Fuel derivatives 2 \u2013 79 \u2013 79 79 1 Current portion of derivative financial assets is \u20ac645 million. 2 Current portion of derivative financial liabilities is \u20ac387 million. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2021 are set out below: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 31 31 31 Derivative financial assets: Interest rate swaps 1 \u2013 5 \u2013 5 5 Foreign exchange contracts 1 \u2013 314 \u2013 314 314 Fuel derivatives 1 \u2013 301 \u2013 301 301 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,583 \u2013 2,583 2,415 Fixed rate borrowings 3,492 265 \u2013 3,757 3,863 Floating rate borrowings \u2013 3,622 \u2013 3,622 3,622 Other financing liabilities \u2013 73 \u2013 73 73 Derivative financial liabilities: Interest rate derivatives 2 \u2013 31 \u2013 31 31 Foreign exchange contracts 2 \u2013 129 \u2013 129 129 Fuel derivatives 2 \u2013 13 \u2013 13 13 1 Current portion of derivative financial assets is \u20ac543 million. 2 Current portion of derivative financial liabilities is \u20ac126 million. On June 15, 2022, the Group entered into a financing arrangement with Globalia, which was classified as a Level 2 financial asset. On August 16, 2022, the Group exercised the conversion option within the financing arrangement leading to the de-recognition of the Level 2 financial asset and the recognition of an Other equity investment in Air Europa Holdings, which was recorded as an addition to a Level 3 financial asset. Refer to note 19 for further details. There have been no other transfers between levels of the fair value hierarchy during the year. Financial assets, other equity instruments, financial liabilities and derivative financial assets and liabilities are all measured at fair value in the consolidated financial statements. Interest-bearing borrowings, with the exception of the \u20ac825 million convertible bond due 2028 which is measured at fair value, are measured at amortised cost. c Level 3 financial assets reconciliation The following table summarises key movements in Level 3 financial assets: \u20ac million 2022 2021 Opening balance for the year 31 29 Addition of Air Europa Holdings 22 \u2013 Additions - other 2 2 Losses recognised in Income statement (2) \u2013 Gains recognised in Other comprehensive income 2 \u2013 Closing balance for the year 55 31 For details regarding the valuation of Air Europa Holdings, refer to note 19. d Hedges Cash flow hedges At December 31, 2022 the Group\u2019s principal risk management activities that were hedging future forecast transactions were: \u2022 foreign exchange contracts, hedging foreign currency exchange risk on cash inflows and certain operational payments. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement, where the hedged item is recorded directly in the Income statement, to the same caption as the underlying hedged item is classified; (ii) recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability, are recorded to the Balance sheet to the same caption as the hedged item is recognised; and (iii) recognised in equity and transferred to the Income statement, where the hedged item is a financial asset or liability, at the same time as the financial asset or liability is recorded in the Income statement. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement when the future transaction is no longer expected to occur and recorded in the relevant Income statement caption to which the hedged item is classified; \u2022 forward crude, gas oil and jet kerosene derivative contracts, hedging price risk on fuel expenditure. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement within Fuel, oil costs and emissions charges to match against the related fuel cash outflow, where the underlying hedged item does not give rise to the recognition of fuel inventory; and (ii) recognised in equity and transferred to the Balance sheet within Inventory, where the underlying hedged item is fuel inventory. Gains and losses recorded within Inventory are recognised in the Income statement when the underlying fuel inventory is consumed, within Fuel, oil costs and emission charges. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement within Fuel, oil costs and emissions charges when the future transaction is no longer expected to occur; \u2022 interest rate contracts, hedging interest rate risk on floating rate debt and certain operational payments. Remeasurement gains and losses on the derivatives are recognised in equity and transferred to the Income statement within Interest expense; and \u2022 future loan repayments denominated in foreign currency are designated in a hedge relationship hedging foreign exchange fluctuations on revenue cash inflows. Remeasurement gains and losses on the associated loans are recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability when the loan repayments are made (generally in instalments over the life of the loan). The amounts included in equity are summarised below: (Gains)/losses in respect of cash flow hedges included within equity \u20ac million 2022 2021 Loan repayments to hedge future revenue 87 98 Foreign exchange contracts to hedge future revenue and expenditure 1 (178) 25 Crude, gas oil and jet kerosene derivative contracts 1 (127) (276) Derivatives used to hedge interest rates 1 (46) 58 Instruments for which hedge accounting no longer applies 1, 2 213 247 (51) 152 Related deferred tax charge/(credit) 20 (24) Total amount included within equity (31) 128 1 The carrying value of derivative instruments recognised in assets and liabilities is analysed in parts a and b above. 2 Relates to previously terminated hedge relationships for which the underlying forecast transactions remain expected to occur. The notional amounts of significant financial instruments used as cash flow hedging instruments are set out below, with the prior period presentation amended to reflect the current presentation: Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2022 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.23 1.05 to 1.45 3,582 1,355 \u2013 \u2013 4,937 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.08 0.91 to 1.26 2,578 1,318 \u2013 \u2013 3,896 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.00 to 1.42 371 406 458 14 1,249 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 718 416 to 2,200 2,935 331 \u2013 \u2013 3,266 Interest rate contracts to hedge future interest expenditure 3 1.04 (0.03) to 3.13 2,360 504 238 9 3,111 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.4 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2021 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.31 1.15 to 1.45 2,606 1,030 42 \u2013 3,678 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.18 1.08 to 1.32 1,632 735 26 \u2013 2,393 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.08 to 1.42 396 334 543 166 1,439 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 649 395 to 737 2,386 826 \u2013 \u2013 3,212 Interest rate contracts to hedge future interest expenditure 3 1.40 (0.03) to 3.13 3,099 1,080 738 60 4,977 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.8 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. Amounts recognised in the Income statement For the year to December 31, 2021 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 4 39 43 (178) (24) Crude, gas oil and jet kerosene derivative contracts (1) 73 88 160 (737) \u2013 Derivatives used to hedge interest rates \u2013 \u2013 (29) (29) 21 \u2013 Loan repayments to hedge future revenue \u2013 \u2013 (15) (15) (120) \u2013 Instruments for which hedge accounting no longer applies \u2013 \u2013 (54) (54) \u2013 \u2013 (1) 77 29 105 (1,014) (24) Related deferred tax (24) 166 3 Total movements recorded in the cash flow hedge reserve 81 (848) (21) 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. The losses associated with the discontinuance of hedge accounting recognised in the Income statement and the subsequent fair value movements of those derivative instruments recorded in the Income statement through to the earlier of the reporting date and the maturity date of the derivative are set out below: \u20ac million 2022 2021 Gains associated with the discontinuance of hedge accounting recognised in the Income statement (29) (77) Fair value movements subsequently recorded in the Income statement \u2013 (82) Total effect of discontinuance of hedge accounting in the Income statement (29) (159) The Group has no significant fair value hedges at December 31, 2022 and 2021. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-659": { "value": "a Financial assets and liabilities by category The detail of the Group\u2019s \ufb01nancial instruments at December 31, 2022 and December 31, 2021 by nature and classi\ufb01cation for measurement purposes is as follows: December 31, 2022 Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 55 \u2013 \u2013 55 Derivative financial instruments \u2013 \u2013 81 \u2013 81 Other non-current assets 180 \u2013 \u2013 182 362 Current assets Trade receivables 1,330 \u2013 \u2013 \u2013 1,330 Other current assets 308 \u2013 \u2013 918 1,226 Derivative financial instruments \u2013 \u2013 645 \u2013 645 Other current interest-bearing deposits 403 \u2013 \u2013 \u2013 403 Cash and cash equivalents 9,196 \u2013 \u2013 \u2013 9,196 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 7,853 \u2013 \u2013 \u2013 7,853 Interest-bearing long-term borrowings 8,692 \u2013 596 \u2013 9,288 Derivative financial instruments \u2013 \u2013 84 \u2013 84 Other long-term liabilities 131 \u2013 \u2013 69 200 Current liabilities Lease liabilities 1,766 \u2013 \u2013 \u2013 1,766 Current portion of long-term borrowings 1,068 \u2013 9 \u2013 1,077 Trade and other payables 4,898 \u2013 \u2013 311 5,209 Derivative financial instruments \u2013 \u2013 387 \u2013 387 December 31, 2021 Financial liabilities \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial liabilities Total carrying amount by balance sheet item Non-current liabilities Lease liabilities 8,116 \u2013 \u2013 \u2013 8,116 Interest-bearing long-term borrowings 8,220 \u2013 748 \u2013 8,968 Derivative financial instruments \u2013 \u2013 47 \u2013 47 Other long-term liabilities 132 \u2013 \u2013 76 208 Current liabilities Lease liabilities 1,521 \u2013 \u2013 \u2013 1,521 Current portion of long-term borrowings 996 \u2013 9 \u2013 1,005 Trade and other payables 3,506 \u2013 \u2013 206 3,712 Derivative financial instruments \u2013 \u2013 126 \u2013 126 Financial assets \u20ac million Amortised cost Fair value through Other comprehensive income Fair value through Income statement Non-financial assets Total carrying amount by balance sheet item Non-current assets Other equity investments \u2013 31 \u2013 \u2013 31 Derivative financial instruments \u2013 \u2013 77 \u2013 77 Other non-current assets 126 10 \u2013 114 250 Current assets Trade receivables 735 \u2013 \u2013 \u2013 735 Other current assets 363 \u2013 \u2013 597 960 Derivative financial instruments \u2013 \u2013 543 \u2013 543 Other current interest-bearing deposits 51 \u2013 \u2013 \u2013 51 Cash and cash equivalents 7,892 \u2013 \u2013 \u2013 7,892 ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-687": { "value": "b Fair value of financial assets and financial liabilities The fair values of the Group\u2019s financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in determining the fair values and using the following methods and assumptions: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. Level 1 methodologies (market values at the balance sheet date) were used to determine the fair value of listed asset investments classified as equity investments and listed interest-bearing borrowings. The fair value of financial liabilities and financial assets incorporates own credit risk and counterparty credit risk, respectively. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. Derivative instruments are measured based on the market value of instruments with similar terms and conditions using forward pricing models, which include forward exchange rates, forward interest rates, forward fuel curves and corresponding volatility surface data at the reporting date. The fair value of derivative financial assets and liabilities are determined as follows, incorporating adjustments for own credit risk and counterparty credit risk: \u2022 commodity reference contracts including swaps and options transactions, referenced to (i) CIF NWE cargoes jet fuel; (ii) ICE Gasoil; (iii) ICE Brent; (iv) ICE Gasoil Brent crack; (v) Jet Differential and (vi) Jet fuel Brent crack - the mark-to-market valuation prices are determined by reference to current forward curve and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; \u2022 currency forward and option contracts \u2013 by reference to current forward prices and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; and \u2022 interest rate swap contracts \u2013 by discounting the future cash flows of the swap contracts at market interest rate valued with the current forward curve. The fair value of the Group\u2019s interest-bearing borrowings including leases is determined by discounting the remaining contractual cash flows at the relevant market interest rates at the balance sheet date. The fair value of the Group\u2019s interest-bearing borrowings is adjusted for own credit risk. Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2022 are as follows: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 55 55 55 Other non-current financial assets \u2013 20 \u2013 20 31 Derivative financial assets: Interest rate swaps 1 \u2013 66 \u2013 66 66 Foreign exchange contracts 1 \u2013 467 \u2013 467 467 Fuel derivatives 1 \u2013 193 \u2013 193 193 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,925 \u2013 2,925 3,819 Fixed rate borrowings 2,538 72 \u2013 2,610 2,967 Floating rate borrowings \u2013 3,419 \u2013 3,419 3,579 Derivative financial liabilities: Interest rate derivatives 2 \u2013 6 \u2013 6 6 Foreign exchange contracts 2 \u2013 386 \u2013 386 386 Fuel derivatives 2 \u2013 79 \u2013 79 79 1 Current portion of derivative financial assets is \u20ac645 million. 2 Current portion of derivative financial liabilities is \u20ac387 million. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2021 are set out below: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 31 31 31 Derivative financial assets: Interest rate swaps 1 \u2013 5 \u2013 5 5 Foreign exchange contracts 1 \u2013 314 \u2013 314 314 Fuel derivatives 1 \u2013 301 \u2013 301 301 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,583 \u2013 2,583 2,415 Fixed rate borrowings 3,492 265 \u2013 3,757 3,863 Floating rate borrowings \u2013 3,622 \u2013 3,622 3,622 Other financing liabilities \u2013 73 \u2013 73 73 Derivative financial liabilities: Interest rate derivatives 2 \u2013 31 \u2013 31 31 Foreign exchange contracts 2 \u2013 129 \u2013 129 129 Fuel derivatives 2 \u2013 13 \u2013 13 13 1 Current portion of derivative financial assets is \u20ac543 million. 2 Current portion of derivative financial liabilities is \u20ac126 million. On June 15, 2022, the Group entered into a financing arrangement with Globalia, which was classified as a Level 2 financial asset. On August 16, 2022, the Group exercised the conversion option within the financing arrangement leading to the de-recognition of the Level 2 financial asset and the recognition of an Other equity investment in Air Europa Holdings, which was recorded as an addition to a Level 3 financial asset. Refer to note 19 for further details. There have been no other transfers between levels of the fair value hierarchy during the year. Financial assets, other equity instruments, financial liabilities and derivative financial assets and liabilities are all measured at fair value in the consolidated financial statements. Interest-bearing borrowings, with the exception of the \u20ac825 million convertible bond due 2028 which is measured at fair value, are measured at amortised cost. c Level 3 financial assets reconciliation The following table summarises key movements in Level 3 financial assets: \u20ac million 2022 2021 Opening balance for the year 31 29 Addition of Air Europa Holdings 22 \u2013 Additions - other 2 2 Losses recognised in Income statement (2) \u2013 Gains recognised in Other comprehensive income 2 \u2013 Closing balance for the year 55 31 For details regarding the valuation of Air Europa Holdings, refer to note 19. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-708": { "value": "b Fair value of financial assets and financial liabilities The fair values of the Group\u2019s financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in determining the fair values and using the following methods and assumptions: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. Level 1 methodologies (market values at the balance sheet date) were used to determine the fair value of listed asset investments classified as equity investments and listed interest-bearing borrowings. The fair value of financial liabilities and financial assets incorporates own credit risk and counterparty credit risk, respectively. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. Derivative instruments are measured based on the market value of instruments with similar terms and conditions using forward pricing models, which include forward exchange rates, forward interest rates, forward fuel curves and corresponding volatility surface data at the reporting date. The fair value of derivative financial assets and liabilities are determined as follows, incorporating adjustments for own credit risk and counterparty credit risk: \u2022 commodity reference contracts including swaps and options transactions, referenced to (i) CIF NWE cargoes jet fuel; (ii) ICE Gasoil; (iii) ICE Brent; (iv) ICE Gasoil Brent crack; (v) Jet Differential and (vi) Jet fuel Brent crack - the mark-to-market valuation prices are determined by reference to current forward curve and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; \u2022 currency forward and option contracts \u2013 by reference to current forward prices and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; and \u2022 interest rate swap contracts \u2013 by discounting the future cash flows of the swap contracts at market interest rate valued with the current forward curve. The fair value of the Group\u2019s interest-bearing borrowings including leases is determined by discounting the remaining contractual cash flows at the relevant market interest rates at the balance sheet date. The fair value of the Group\u2019s interest-bearing borrowings is adjusted for own credit risk. Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-660": { "value": "b Fair value of financial assets and financial liabilities The fair values of the Group\u2019s financial instruments are disclosed in hierarchy levels depending on the nature of the inputs used in determining the fair values and using the following methods and assumptions: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s length basis. Level 1 methodologies (market values at the balance sheet date) were used to determine the fair value of listed asset investments classified as equity investments and listed interest-bearing borrowings. The fair value of financial liabilities and financial assets incorporates own credit risk and counterparty credit risk, respectively. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of financial instruments that are not traded in an active market is determined by valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. Derivative instruments are measured based on the market value of instruments with similar terms and conditions using forward pricing models, which include forward exchange rates, forward interest rates, forward fuel curves and corresponding volatility surface data at the reporting date. The fair value of derivative financial assets and liabilities are determined as follows, incorporating adjustments for own credit risk and counterparty credit risk: \u2022 commodity reference contracts including swaps and options transactions, referenced to (i) CIF NWE cargoes jet fuel; (ii) ICE Gasoil; (iii) ICE Brent; (iv) ICE Gasoil Brent crack; (v) Jet Differential and (vi) Jet fuel Brent crack - the mark-to-market valuation prices are determined by reference to current forward curve and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; \u2022 currency forward and option contracts \u2013 by reference to current forward prices and standard option pricing valuation models, values are discounted to the reporting date based on the corresponding interest rate; and \u2022 interest rate swap contracts \u2013 by discounting the future cash flows of the swap contracts at market interest rate valued with the current forward curve. The fair value of the Group\u2019s interest-bearing borrowings including leases is determined by discounting the remaining contractual cash flows at the relevant market interest rates at the balance sheet date. The fair value of the Group\u2019s interest-bearing borrowings is adjusted for own credit risk. Level 3: Inputs for the asset or liability that are not based on observable market data. The principal method of such valuation is performed using a valuation model that considers the present value of the dividend cash flows expected to be generated by the associated assets. For the methodology in the determination of the fair value of the investment in Air Europa Holdings, refer to note 19. The fair value of cash and cash equivalents, other current interest-bearing deposits, trade receivables, other current assets and trade and other payables approximate their carrying value largely due to the short-term maturities of these instruments. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2022 are as follows: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 55 55 55 Other non-current financial assets \u2013 20 \u2013 20 31 Derivative financial assets: Interest rate swaps 1 \u2013 66 \u2013 66 66 Foreign exchange contracts 1 \u2013 467 \u2013 467 467 Fuel derivatives 1 \u2013 193 \u2013 193 193 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,925 \u2013 2,925 3,819 Fixed rate borrowings 2,538 72 \u2013 2,610 2,967 Floating rate borrowings \u2013 3,419 \u2013 3,419 3,579 Derivative financial liabilities: Interest rate derivatives 2 \u2013 6 \u2013 6 6 Foreign exchange contracts 2 \u2013 386 \u2013 386 386 Fuel derivatives 2 \u2013 79 \u2013 79 79 1 Current portion of derivative financial assets is \u20ac645 million. 2 Current portion of derivative financial liabilities is \u20ac387 million. The carrying amounts and fair values of the Group\u2019s financial assets and liabilities at December 31, 2021 are set out below: Fair value Carrying value \u20ac million Level 1 Level 2 Level 3 Total Total Financial assets Other equity investments \u2013 \u2013 31 31 31 Derivative financial assets: Interest rate swaps 1 \u2013 5 \u2013 5 5 Foreign exchange contracts 1 \u2013 314 \u2013 314 314 Fuel derivatives 1 \u2013 301 \u2013 301 301 Financial liabilities Interest-bearing loans and borrowings: Asset financed liabilities \u2013 2,583 \u2013 2,583 2,415 Fixed rate borrowings 3,492 265 \u2013 3,757 3,863 Floating rate borrowings \u2013 3,622 \u2013 3,622 3,622 Other financing liabilities \u2013 73 \u2013 73 73 Derivative financial liabilities: Interest rate derivatives 2 \u2013 31 \u2013 31 31 Foreign exchange contracts 2 \u2013 129 \u2013 129 129 Fuel derivatives 2 \u2013 13 \u2013 13 13 1 Current portion of derivative financial assets is \u20ac543 million. 2 Current portion of derivative financial liabilities is \u20ac126 million. On June 15, 2022, the Group entered into a financing arrangement with Globalia, which was classified as a Level 2 financial asset. On August 16, 2022, the Group exercised the conversion option within the financing arrangement leading to the de-recognition of the Level 2 financial asset and the recognition of an Other equity investment in Air Europa Holdings, which was recorded as an addition to a Level 3 financial asset. Refer to note 19 for further details. There have been no other transfers between levels of the fair value hierarchy during the year. Financial assets, other equity instruments, financial liabilities and derivative financial assets and liabilities are all measured at fair value in the consolidated financial statements. Interest-bearing borrowings, with the exception of the \u20ac825 million convertible bond due 2028 which is measured at fair value, are measured at amortised cost. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-661": { "value": "d Hedges Cash flow hedges At December 31, 2022 the Group\u2019s principal risk management activities that were hedging future forecast transactions were: \u2022 foreign exchange contracts, hedging foreign currency exchange risk on cash inflows and certain operational payments. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement, where the hedged item is recorded directly in the Income statement, to the same caption as the underlying hedged item is classified; (ii) recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability, are recorded to the Balance sheet to the same caption as the hedged item is recognised; and (iii) recognised in equity and transferred to the Income statement, where the hedged item is a financial asset or liability, at the same time as the financial asset or liability is recorded in the Income statement. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement when the future transaction is no longer expected to occur and recorded in the relevant Income statement caption to which the hedged item is classified; \u2022 forward crude, gas oil and jet kerosene derivative contracts, hedging price risk on fuel expenditure. Remeasurement gains and losses on the derivatives are (i) recognised in equity and transferred to the Income statement within Fuel, oil costs and emissions charges to match against the related fuel cash outflow, where the underlying hedged item does not give rise to the recognition of fuel inventory; and (ii) recognised in equity and transferred to the Balance sheet within Inventory, where the underlying hedged item is fuel inventory. Gains and losses recorded within Inventory are recognised in the Income statement when the underlying fuel inventory is consumed, within Fuel, oil costs and emission charges. Reclassification gains and losses on derivatives, arising from the discontinuance of hedge accounting, are recognised in the Income statement within Fuel, oil costs and emissions charges when the future transaction is no longer expected to occur; \u2022 interest rate contracts, hedging interest rate risk on floating rate debt and certain operational payments. Remeasurement gains and losses on the derivatives are recognised in equity and transferred to the Income statement within Interest expense; and \u2022 future loan repayments denominated in foreign currency are designated in a hedge relationship hedging foreign exchange fluctuations on revenue cash inflows. Remeasurement gains and losses on the associated loans are recognised in equity and transferred to the Balance sheet, where the hedged item is a non-financial asset or liability when the loan repayments are made (generally in instalments over the life of the loan). The amounts included in equity are summarised below: (Gains)/losses in respect of cash flow hedges included within equity \u20ac million 2022 2021 Loan repayments to hedge future revenue 87 98 Foreign exchange contracts to hedge future revenue and expenditure 1 (178) 25 Crude, gas oil and jet kerosene derivative contracts 1 (127) (276) Derivatives used to hedge interest rates 1 (46) 58 Instruments for which hedge accounting no longer applies 1, 2 213 247 (51) 152 Related deferred tax charge/(credit) 20 (24) Total amount included within equity (31) 128 1 The carrying value of derivative instruments recognised in assets and liabilities is analysed in parts a and b above. 2 Relates to previously terminated hedge relationships for which the underlying forecast transactions remain expected to occur. The notional amounts of significant financial instruments used as cash flow hedging instruments are set out below, with the prior period presentation amended to reflect the current presentation: Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2022 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.23 1.05 to 1.45 3,582 1,355 \u2013 \u2013 4,937 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.08 0.91 to 1.26 2,578 1,318 \u2013 \u2013 3,896 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.00 to 1.42 371 406 458 14 1,249 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 718 416 to 2,200 2,935 331 \u2013 \u2013 3,266 Interest rate contracts to hedge future interest expenditure 3 1.04 (0.03) to 3.13 2,360 504 238 9 3,111 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.4 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Notional principal amounts (\u20ac million) Average hedge rate Hedge range Within 1 year 1-2 years 2-5 years 5+ years Total December 31, 2021 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to pound sterling 1 1.31 1.15 to 1.45 2,606 1,030 42 \u2013 3,678 Foreign exchange contracts to hedge future revenue and expenditure from US dollars to euros 1 1.18 1.08 to 1.32 1,632 735 26 \u2013 2,393 Foreign exchange contracts to hedge future revenue and expenditure from euros to pound sterling 1 1.23 1.08 to 1.42 396 334 543 166 1,439 Fuel commodity price contracts to hedge future US dollar fuel expenditure 2 649 395 to 737 2,386 826 \u2013 \u2013 3,212 Interest rate contracts to hedge future interest expenditure 3 1.40 (0.03) to 3.13 3,099 1,080 738 60 4,977 1 Expenditure includes both operating and capital expenditure. 2 Notional amounts of fuel commodity price hedging instruments represent 5.8 million metric tonnes of jet fuel equivalent and the hedge range is expressed as the US dollar price per metric tonne, which for those products typically priced in barrels, has been determined using a conversion factor of 7.88. 3 The hedge range for interest rate contracts is expressed as a percentage. Amounts recognised in the Income statement For the year to December 31, 2022 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 29 228 257 (525) 43 Crude, gas oil and jet kerosene derivative contracts 19 \u2013 1,299 1,318 (1,249) 66 Derivatives used to hedge interest rates \u2013 \u2013 (12) (12) (95) \u2013 Loan repayments to hedge future revenue \u2013 \u2013 \u2013 \u2013 (1) (7) Instruments for which hedge accounting no longer applies \u2013 \u2013 \u2013 \u2013 \u2013 (27) 19 29 1,515 1,563 (1,870) 75 Related deferred tax (330) 398 (1) Total movements recorded in the cash flow hedge reserve 1,233 (1,472) 74 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. Amounts recognised in the Income statement For the year to December 31, 2021 (\u20ac million) Ineffectiveness 1 Discontinuance of hedge accounting Recycling to the Income Statement Total recognised movements Fair value movements recognised in Other comprehensive income 2 Amounts reclassified to the Balance sheet Foreign exchange contracts to hedge future revenue and expenditure \u2013 4 39 43 (178) (24) Crude, gas oil and jet kerosene derivative contracts (1) 73 88 160 (737) \u2013 Derivatives used to hedge interest rates \u2013 \u2013 (29) (29) 21 \u2013 Loan repayments to hedge future revenue \u2013 \u2013 (15) (15) (120) \u2013 Instruments for which hedge accounting no longer applies \u2013 \u2013 (54) (54) \u2013 \u2013 (1) 77 29 105 (1,014) (24) Related deferred tax (24) 166 3 Total movements recorded in the cash flow hedge reserve 81 (848) (21) 1 Ineffectiveness recognised in the Income statement is presented as Realised and Unrealised gains and losses on derivatives not qualifying for hedge accounting within non-operating items. 2 Amounts recognised in Other comprehensive income represent gains and losses on the hedging instrument. The losses associated with the discontinuance of hedge accounting recognised in the Income statement and the subsequent fair value movements of those derivative instruments recorded in the Income statement through to the earlier of the reporting date and the maturity date of the derivative are set out below: \u20ac million 2022 2021 Gains associated with the discontinuance of hedge accounting recognised in the Income statement (29) (77) Fair value movements subsequently recorded in the Income statement \u2013 (82) Total effect of discontinuance of hedge accounting in the Income statement (29) (159) The Group has no significant fair value hedges at December 31, 2022 and 2021.", "dimensions": { "concept": "ifrs-full:DisclosureOfDetailedInformationAboutHedgesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-662": { "value": "29 Share capital, share premium and treasury shares Allotted, called up and fully paid Number of shares '000s Ordinary share capital \u20ac million Share premium \u20ac million December 31, 2021: Ordinary shares of \u20ac0.10 each 4,971,476 497 7,770 December 31, 2022: Ordinary shares of \u20ac0.10 each 4,971,476 497 7,770 a Treasury shares The treasury shares balance consists of shares held directly by the Group. During the year to December 31, 2022, the Group purchased 15.0 million shares at a weighted average share price of \u20ac1.51 per share totalling \u20ac23 million, which are held as Treasury shares. A total of 8.1 million shares (2021: 5.4 million) were issued to employees during the year as a result of vesting of employee share schemes. At December 31, 2022 the Group held 17.1 million shares (2021: 10.2 million) which represented 0.34 per cent (2021: 0.20 per cent) of the issued share capital of the Company. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-632": { "value": "29 Share capital, share premium and treasury shares Allotted, called up and fully paid Number of shares '000s Ordinary share capital \u20ac million Share premium \u20ac million December 31, 2021: Ordinary shares of \u20ac0.10 each 4,971,476 497 7,770 December 31, 2022: Ordinary shares of \u20ac0.10 each 4,971,476 497 7,770 a Treasury shares The treasury shares balance consists of shares held directly by the Group. During the year to December 31, 2022, the Group purchased 15.0 million shares at a weighted average share price of \u20ac1.51 per share totalling \u20ac23 million, which are held as Treasury shares. A total of 8.1 million shares (2021: 5.4 million) were issued to employees during the year as a result of vesting of employee share schemes. At December 31, 2022 the Group held 17.1 million shares (2021: 10.2 million) which represented 0.34 per cent (2021: 0.20 per cent) of the issued share capital of the Company.
31 Other reserves and non-controlling interests
For the year to December 31, 2022
Other reserves
\u20ac million
Unrealised
gains and
losses
1
Cost of
hedging
reserve
2
Currency
translation
3
Equity
portion of
convertible
bond
4
Merger
reserve
5
Capital
reserves
6
Total other
reserves
Non-
controlling
interest
January 1, 2022 (94) 24 (65) 62 (2,467) 867 (1,673) 6
Other comprehensive income for the
year
Cash flow hedges reclassified and
reported in net profit:
Fuel and oil costs (1,115) \u2013 \u2013 \u2013 \u2013 \u2013 (1,115) \u2013
Currency differences (90) \u2013 \u2013 \u2013 \u2013 \u2013
(90) \u2013
Finance costs 10 \u2013 \u2013 \u2013 \u2013 \u2013 10 \u2013
Discontinuance of hedge accounting (22) \u2013 \u2013 \u2013 \u2013 \u2013 (22) \u2013
Ineffectiveness recognised in other
non-operating costs
(16) \u2013 \u2013 \u2013 \u2013 \u2013
(16) \u2013
Net change in fair value of cash flow
hedges 1,472 \u2013 \u2013 \u2013 \u2013 \u2013 1,472 \u2013
Net change in fair value of other equity
investments 2 \u2013 \u2013 \u2013 \u2013 \u2013
2 \u2013
Net change in fair value of cost of
hedging
\u2013 (115) \u2013 \u2013 \u2013 \u2013 (115) \u2013
Cost of hedging reclassified and
reported in net profit \u2013 38 \u2013 \u2013 \u2013 \u2013 38 \u2013
Fair value movements on liabilities
attributable to credit risk changes (6) \u2013 \u2013 \u2013 \u2013 \u2013
(6) \u2013
Currency translation differences \u2013 \u2013 (53) \u2013 \u2013 \u2013 (53) \u2013
Hedges reclassified and reported in
property, plant and equipment
(51) (14) \u2013 \u2013 \u2013 \u2013
(65) \u2013
Hedges reclassified and reported in sales
in advance of carriage 35 1 \u2013 \u2013 \u2013 \u2013 36 \u2013
Hedges reclassified and reported in
inventory (58) \u2013 \u2013 \u2013 \u2013 \u2013 (58) \u2013
Redemption of convertible bond \u2013 \u2013 \u2013 (62) \u2013 \u2013
(62) \u2013
December 31, 2022 67 (66) (118) \u2013 (2,467) 867 (1,717) 6
Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Redeemed capital reserve 6 Total other reserves Non- controlling interest January 1, 2021 (867) 38 (53) 62 (2,467) 867 (2,420) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net loss: Passenger revenue 18 \u2013 \u2013 \u2013 \u2013 \u2013 18 \u2013 Fuel and oil costs (45) \u2013 \u2013 \u2013 \u2013 \u2013 (45) \u2013 Currency differences (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) \u2013 Finance costs 23 \u2013 \u2013 \u2013 \u2013 \u2013 23 \u2013 Discontinuance of hedge accounting (62) \u2013 \u2013 \u2013 \u2013 \u2013 (62) \u2013 Net change in fair value of cash flow hedges 848 \u2013 \u2013 \u2013 \u2013 \u2013 848 \u2013 Net change in fair value of cost of hedging \u2013 10 \u2013 \u2013 \u2013 \u2013 10 \u2013 Cost of hedging reclassified and reported in net profit \u2013 (12) \u2013 \u2013 \u2013 \u2013 (12) \u2013 Fair value movements on liabilities attributable to credit risk changes (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Currency translation differences \u2013 \u2013 (12) \u2013 \u2013 \u2013 (12) \u2013 Hedges reclassified and reported in property, plant and equipment 21 (12) \u2013 \u2013 \u2013 \u2013 9 \u2013 December 31, 2021 (94) 24 (65) 62 (2,467) 867 (1,673) 6 1 The unrealised gains and losses reserve records fair value changes on equity investments and the portion of the amounts on hedging instruments in cash flow hedges that are determined to be effective hedges. The amounts at December 31, 2022 that relate to the fair value changes on equity instruments and to the cash flow hedge reserve were \u20ac11 million credit and \u20ac56 million credit, respectively. 2 The cost of hedging reserve records, amongst others, changes on the time value of options. 3 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and investments accounted for under the equity method into the Group\u2019s reporting currency of euros. The movement through this reserve is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate. 4 At December 31, 2021 the equity portion of convertible bond reserve represented the equity portion of the \u20ac500 million fixed rate 0.625 per cent convertible bond that matured in 2022. During 2022 the Group redeemed the \u20ac500 million convertible bond with no conversion into ordinary shares. On redemption, an amount of \u20ac62 million was transferred to Retained earnings. 5 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves). 6 Capital reserves include a Redeemed capital reserve of \u20ac70 million (2021: \u20ac70 million) associated with the decrease in share capital relating to cancelled shares and a Share capital reduction reserve of \u20ac797 million (2021: \u20ac797 million) associated with a reduction in the nominal value of the Company\u2019s share capital (note 29). ", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-678": { "value": "a Treasury shares The treasury shares balance consists of shares held directly by the Group. During the year to December 31, 2022, the Group purchased 15.0 million shares at a weighted average share price of \u20ac1.51 per share totalling \u20ac23 million, which are held as Treasury shares. A total of 8.1 million shares (2021: 5.4 million) were issued to employees during the year as a result of vesting of employee share schemes. At December 31, 2022 the Group held 17.1 million shares (2021: 10.2 million) which represented 0.34 per cent (2021: 0.20 per cent) of the issued share capital of the Company. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-633": { "value": "30 Share-based payments The Group operates share-based payment schemes as part of the total remuneration package provided to employees. These schemes comprise both share option schemes where employees acquire shares at an option price and share award plans whereby shares are issued to employees at no cost, subject to the achievement by the Group of specified performance targets. a IAG Performance Share Plan The IAG Performance Share Plan (PSP) is granted to senior executives and managers of the Group who are most directly involved in shaping and delivering business success over the medium to long term. Since 2015, awards have been made as nil-cost options, with a two- year holding period following the three-year performance period, before options can be exercised. All awards since 2015 have three independent performance measures with equal weighting: Total Shareholder Return (TSR) relative to the STOXX Europe 600 Travel and Leisure Index (for 2020 awards) or MSCI European Transportation Index (for prior to 2020 awards), earnings per share, and Return on Invested Capital. b IAG Restricted Share Plan During 2021, the Group revised its approach to long-term incentives, replacing the existing PSP with a Restricted Share Plan (RSP) proposal under the new Executive Share Plan approved by shareholders in June 2021. The RSP was introduced to increase the alignment of both interests and outcomes between the Group\u2019s senior management and shareholders through the build-up and maintenance of senior management shareholdings and an increased focus on the long-term, sustainable performance of the Group. Awards have been made as nil-cost options, with a two-year holding period following the three-year performance period, before options vest. There are no performance measures associated with the awards, although approval at the end of the vesting period will be at the discretion of the Remuneration Committee, considering the Group\u2019s overall performance, including financial and non-financial performance measures over the course of the vesting period, as well as any material risk or regulatory failures identified. c IAG Full Potential Incentive Plan During 2021, the Group launched the new Full Potential Incentive Plan (FPIP), which is granted to key individuals involved in the delivery of a series of transformation projects that will enable the Group to deliver business success over the medium to long term. The awards have been made as nil-cost options, vesting in 2025 and dependent on stretch performance targets for 2024 and the approval of the Board. d IAG Incentive Award Deferral Plan The IAG Incentive Award Deferral Plan (IADP) is granted to qualifying employees based on performance and service tests. It will be awarded when an incentive award is triggered subject to the employee remaining in employment with the Group for three years after the grant date. The relevant population will receive 50 per cent of their incentive award up front in cash, and the remaining 50 per cent in shares after three years through the IADP. e Share-based payment schemes summary Outstanding at January 1, 2022 Granted number Lapsed number Vested number Outstanding at December 31, 2022 Exercisable December 31, 2022 \u2018000s \u2018000s \u2018000s \u2018000s \u2018000s \u2018000s Performance Share Plan 24,706 \u2013 5,273 3,094 16,339 3,683 Restricted Share Plan 16,198 26,796 1,911 749 40,334 \u2013 Full Potential Incentive Plan 27,879 2,386 2,560 \u2013 27,705 \u2013 Incentive Award Deferral Plan 5,359 111 96 2,963 2,411 \u2013 74,142 29,293 9,840 6,806 86,789 3,683 The weighted average share price at the date of exercise of options exercised during the year to December 31, 2022 was \u00a31.35 (2021: \u00a31.78). The Group recognised a share-based payment charge of \u20ac39 million for the year to December 31, 2022 (2021: \u20ac23 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-688": { "value": "31 Other reserves and non-controlling interests For the year to December 31, 2022 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Capital reserves 6 Total other reserves Non- controlling interest January 1, 2022 (94) 24 (65) 62 (2,467) 867 (1,673) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net profit: Fuel and oil costs (1,115) \u2013 \u2013 \u2013 \u2013 \u2013 (1,115) \u2013 Currency differences (90) \u2013 \u2013 \u2013 \u2013 \u2013 (90) \u2013 Finance costs 10 \u2013 \u2013 \u2013 \u2013 \u2013 10 \u2013 Discontinuance of hedge accounting (22) \u2013 \u2013 \u2013 \u2013 \u2013 (22) \u2013 Ineffectiveness recognised in other non-operating costs (16) \u2013 \u2013 \u2013 \u2013 \u2013 (16) \u2013 Net change in fair value of cash flow hedges 1,472 \u2013 \u2013 \u2013 \u2013 \u2013 1,472 \u2013 Net change in fair value of other equity investments 2 \u2013 \u2013 \u2013 \u2013 \u2013 2 \u2013 Net change in fair value of cost of hedging \u2013 (115) \u2013 \u2013 \u2013 \u2013 (115) \u2013 Cost of hedging reclassified and reported in net profit \u2013 38 \u2013 \u2013 \u2013 \u2013 38 \u2013 Fair value movements on liabilities attributable to credit risk changes (6) \u2013 \u2013 \u2013 \u2013 \u2013 (6) \u2013 Currency translation differences \u2013 \u2013 (53) \u2013 \u2013 \u2013 (53) \u2013 Hedges reclassified and reported in property, plant and equipment (51) (14) \u2013 \u2013 \u2013 \u2013 (65) \u2013 Hedges reclassified and reported in sales in advance of carriage 35 1 \u2013 \u2013 \u2013 \u2013 36 \u2013 Hedges reclassified and reported in inventory (58) \u2013 \u2013 \u2013 \u2013 \u2013 (58) \u2013 Redemption of convertible bond \u2013 \u2013 \u2013 (62) \u2013 \u2013 (62) \u2013 December 31, 2022 67 (66) (118) \u2013 (2,467) 867 (1,717) 6 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Redeemed capital reserve 6 Total other reserves Non- controlling interest January 1, 2021 (867) 38 (53) 62 (2,467) 867 (2,420) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net loss: Passenger revenue 18 \u2013 \u2013 \u2013 \u2013 \u2013 18 \u2013 Fuel and oil costs (45) \u2013 \u2013 \u2013 \u2013 \u2013 (45) \u2013 Currency differences (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) \u2013 Finance costs 23 \u2013 \u2013 \u2013 \u2013 \u2013 23 \u2013 Discontinuance of hedge accounting (62) \u2013 \u2013 \u2013 \u2013 \u2013 (62) \u2013 Net change in fair value of cash flow hedges 848 \u2013 \u2013 \u2013 \u2013 \u2013 848 \u2013 Net change in fair value of cost of hedging \u2013 10 \u2013 \u2013 \u2013 \u2013 10 \u2013 Cost of hedging reclassified and reported in net profit \u2013 (12) \u2013 \u2013 \u2013 \u2013 (12) \u2013 Fair value movements on liabilities attributable to credit risk changes (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Currency translation differences \u2013 \u2013 (12) \u2013 \u2013 \u2013 (12) \u2013 Hedges reclassified and reported in property, plant and equipment 21 (12) \u2013 \u2013 \u2013 \u2013 9 \u2013 December 31, 2021 (94) 24 (65) 62 (2,467) 867 (1,673) 6 1 The unrealised gains and losses reserve records fair value changes on equity investments and the portion of the amounts on hedging instruments in cash flow hedges that are determined to be effective hedges. The amounts at December 31, 2022 that relate to the fair value changes on equity instruments and to the cash flow hedge reserve were \u20ac11 million credit and \u20ac56 million credit, respectively. 2 The cost of hedging reserve records, amongst others, changes on the time value of options. 3 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and investments accounted for under the equity method into the Group\u2019s reporting currency of euros. The movement through this reserve is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate. 4 At December 31, 2021 the equity portion of convertible bond reserve represented the equity portion of the \u20ac500 million fixed rate 0.625 per cent convertible bond that matured in 2022. During 2022 the Group redeemed the \u20ac500 million convertible bond with no conversion into ordinary shares. On redemption, an amount of \u20ac62 million was transferred to Retained earnings. 5 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves). 6 Capital reserves include a Redeemed capital reserve of \u20ac70 million (2021: \u20ac70 million) associated with the decrease in share capital relating to cancelled shares and a Share capital reduction reserve of \u20ac797 million (2021: \u20ac797 million) associated with a reduction in the nominal value of the Company\u2019s share capital (note 29). ", "dimensions": { "concept": "ifrs-full:DisclosureOfNetAssetValueAttributableToUnitholdersExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-679": { "value": "31 Other reserves and non-controlling interests For the year to December 31, 2022 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Capital reserves 6 Total other reserves Non- controlling interest January 1, 2022 (94) 24 (65) 62 (2,467) 867 (1,673) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net profit: Fuel and oil costs (1,115) \u2013 \u2013 \u2013 \u2013 \u2013 (1,115) \u2013 Currency differences (90) \u2013 \u2013 \u2013 \u2013 \u2013 (90) \u2013 Finance costs 10 \u2013 \u2013 \u2013 \u2013 \u2013 10 \u2013 Discontinuance of hedge accounting (22) \u2013 \u2013 \u2013 \u2013 \u2013 (22) \u2013 Ineffectiveness recognised in other non-operating costs (16) \u2013 \u2013 \u2013 \u2013 \u2013 (16) \u2013 Net change in fair value of cash flow hedges 1,472 \u2013 \u2013 \u2013 \u2013 \u2013 1,472 \u2013 Net change in fair value of other equity investments 2 \u2013 \u2013 \u2013 \u2013 \u2013 2 \u2013 Net change in fair value of cost of hedging \u2013 (115) \u2013 \u2013 \u2013 \u2013 (115) \u2013 Cost of hedging reclassified and reported in net profit \u2013 38 \u2013 \u2013 \u2013 \u2013 38 \u2013 Fair value movements on liabilities attributable to credit risk changes (6) \u2013 \u2013 \u2013 \u2013 \u2013 (6) \u2013 Currency translation differences \u2013 \u2013 (53) \u2013 \u2013 \u2013 (53) \u2013 Hedges reclassified and reported in property, plant and equipment (51) (14) \u2013 \u2013 \u2013 \u2013 (65) \u2013 Hedges reclassified and reported in sales in advance of carriage 35 1 \u2013 \u2013 \u2013 \u2013 36 \u2013 Hedges reclassified and reported in inventory (58) \u2013 \u2013 \u2013 \u2013 \u2013 (58) \u2013 Redemption of convertible bond \u2013 \u2013 \u2013 (62) \u2013 \u2013 (62) \u2013 December 31, 2022 67 (66) (118) \u2013 (2,467) 867 (1,717) 6 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Redeemed capital reserve 6 Total other reserves Non- controlling interest January 1, 2021 (867) 38 (53) 62 (2,467) 867 (2,420) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net loss: Passenger revenue 18 \u2013 \u2013 \u2013 \u2013 \u2013 18 \u2013 Fuel and oil costs (45) \u2013 \u2013 \u2013 \u2013 \u2013 (45) \u2013 Currency differences (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) \u2013 Finance costs 23 \u2013 \u2013 \u2013 \u2013 \u2013 23 \u2013 Discontinuance of hedge accounting (62) \u2013 \u2013 \u2013 \u2013 \u2013 (62) \u2013 Net change in fair value of cash flow hedges 848 \u2013 \u2013 \u2013 \u2013 \u2013 848 \u2013 Net change in fair value of cost of hedging \u2013 10 \u2013 \u2013 \u2013 \u2013 10 \u2013 Cost of hedging reclassified and reported in net profit \u2013 (12) \u2013 \u2013 \u2013 \u2013 (12) \u2013 Fair value movements on liabilities attributable to credit risk changes (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Currency translation differences \u2013 \u2013 (12) \u2013 \u2013 \u2013 (12) \u2013 Hedges reclassified and reported in property, plant and equipment 21 (12) \u2013 \u2013 \u2013 \u2013 9 \u2013 December 31, 2021 (94) 24 (65) 62 (2,467) 867 (1,673) 6 1 The unrealised gains and losses reserve records fair value changes on equity investments and the portion of the amounts on hedging instruments in cash flow hedges that are determined to be effective hedges. The amounts at December 31, 2022 that relate to the fair value changes on equity instruments and to the cash flow hedge reserve were \u20ac11 million credit and \u20ac56 million credit, respectively. 2 The cost of hedging reserve records, amongst others, changes on the time value of options. 3 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and investments accounted for under the equity method into the Group\u2019s reporting currency of euros. The movement through this reserve is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate. 4 At December 31, 2021 the equity portion of convertible bond reserve represented the equity portion of the \u20ac500 million fixed rate 0.625 per cent convertible bond that matured in 2022. During 2022 the Group redeemed the \u20ac500 million convertible bond with no conversion into ordinary shares. On redemption, an amount of \u20ac62 million was transferred to Retained earnings. 5 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves). 6 Capital reserves include a Redeemed capital reserve of \u20ac70 million (2021: \u20ac70 million) associated with the decrease in share capital relating to cancelled shares and a Share capital reduction reserve of \u20ac797 million (2021: \u20ac797 million) associated with a reduction in the nominal value of the Company\u2019s share capital (note 29). ", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-663": { "value": "31 Other reserves and non-controlling interests For the year to December 31, 2022 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Capital reserves 6 Total other reserves Non- controlling interest January 1, 2022 (94) 24 (65) 62 (2,467) 867 (1,673) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net profit: Fuel and oil costs (1,115) \u2013 \u2013 \u2013 \u2013 \u2013 (1,115) \u2013 Currency differences (90) \u2013 \u2013 \u2013 \u2013 \u2013 (90) \u2013 Finance costs 10 \u2013 \u2013 \u2013 \u2013 \u2013 10 \u2013 Discontinuance of hedge accounting (22) \u2013 \u2013 \u2013 \u2013 \u2013 (22) \u2013 Ineffectiveness recognised in other non-operating costs (16) \u2013 \u2013 \u2013 \u2013 \u2013 (16) \u2013 Net change in fair value of cash flow hedges 1,472 \u2013 \u2013 \u2013 \u2013 \u2013 1,472 \u2013 Net change in fair value of other equity investments 2 \u2013 \u2013 \u2013 \u2013 \u2013 2 \u2013 Net change in fair value of cost of hedging \u2013 (115) \u2013 \u2013 \u2013 \u2013 (115) \u2013 Cost of hedging reclassified and reported in net profit \u2013 38 \u2013 \u2013 \u2013 \u2013 38 \u2013 Fair value movements on liabilities attributable to credit risk changes (6) \u2013 \u2013 \u2013 \u2013 \u2013 (6) \u2013 Currency translation differences \u2013 \u2013 (53) \u2013 \u2013 \u2013 (53) \u2013 Hedges reclassified and reported in property, plant and equipment (51) (14) \u2013 \u2013 \u2013 \u2013 (65) \u2013 Hedges reclassified and reported in sales in advance of carriage 35 1 \u2013 \u2013 \u2013 \u2013 36 \u2013 Hedges reclassified and reported in inventory (58) \u2013 \u2013 \u2013 \u2013 \u2013 (58) \u2013 Redemption of convertible bond \u2013 \u2013 \u2013 (62) \u2013 \u2013 (62) \u2013 December 31, 2022 67 (66) (118) \u2013 (2,467) 867 (1,717) 6 Other reserves \u20ac million Unrealised gains and losses 1 Cost of hedging reserve 2 Currency translation 3 Equity portion of convertible bond 4 Merger reserve 5 Redeemed capital reserve 6 Total other reserves Non- controlling interest January 1, 2021 (867) 38 (53) 62 (2,467) 867 (2,420) 6 Other comprehensive income for the year Cash flow hedges reclassified and reported in net loss: Passenger revenue 18 \u2013 \u2013 \u2013 \u2013 \u2013 18 \u2013 Fuel and oil costs (45) \u2013 \u2013 \u2013 \u2013 \u2013 (45) \u2013 Currency differences (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) \u2013 Finance costs 23 \u2013 \u2013 \u2013 \u2013 \u2013 23 \u2013 Discontinuance of hedge accounting (62) \u2013 \u2013 \u2013 \u2013 \u2013 (62) \u2013 Net change in fair value of cash flow hedges 848 \u2013 \u2013 \u2013 \u2013 \u2013 848 \u2013 Net change in fair value of cost of hedging \u2013 10 \u2013 \u2013 \u2013 \u2013 10 \u2013 Cost of hedging reclassified and reported in net profit \u2013 (12) \u2013 \u2013 \u2013 \u2013 (12) \u2013 Fair value movements on liabilities attributable to credit risk changes (15) \u2013 \u2013 \u2013 \u2013 \u2013 (15) Currency translation differences \u2013 \u2013 (12) \u2013 \u2013 \u2013 (12) \u2013 Hedges reclassified and reported in property, plant and equipment 21 (12) \u2013 \u2013 \u2013 \u2013 9 \u2013 December 31, 2021 (94) 24 (65) 62 (2,467) 867 (1,673) 6 1 The unrealised gains and losses reserve records fair value changes on equity investments and the portion of the amounts on hedging instruments in cash flow hedges that are determined to be effective hedges. The amounts at December 31, 2022 that relate to the fair value changes on equity instruments and to the cash flow hedge reserve were \u20ac11 million credit and \u20ac56 million credit, respectively. 2 The cost of hedging reserve records, amongst others, changes on the time value of options. 3 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and investments accounted for under the equity method into the Group\u2019s reporting currency of euros. The movement through this reserve is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate. 4 At December 31, 2021 the equity portion of convertible bond reserve represented the equity portion of the \u20ac500 million fixed rate 0.625 per cent convertible bond that matured in 2022. During 2022 the Group redeemed the \u20ac500 million convertible bond with no conversion into ordinary shares. On redemption, an amount of \u20ac62 million was transferred to Retained earnings. 5 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves). 6 Capital reserves include a Redeemed capital reserve of \u20ac70 million (2021: \u20ac70 million) associated with the decrease in share capital relating to cancelled shares and a Share capital reduction reserve of \u20ac797 million (2021: \u20ac797 million) associated with a reduction in the nominal value of the Company\u2019s share capital (note 29). ", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-634": { "value": "32 Employee benefit obligations The Group operates a variety of post-employment benefit arrangements, covering both defined contribution and defined benefit schemes. The Group also has a scheme for flight crew who meet certain conditions and therefore have the option of being placed on reserve and retaining their employment relationship until reaching the statutory retirement age, or taking early retirement (note 26). Defined contribution schemes The Group operates a number of defined contribution schemes for its employees. Costs recognised in respect of defined contribution pension plans in Spain, UK and Ireland for the year to December 31, 2022 were \u20ac251 million (2021: \u20ac200 million). Defined benefit schemes The principal funded defined benefit pension schemes within the Group are the Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS), both of which are in the UK and are closed to new members. APS has been closed to new members since 1984, but remains open to future accrual. The benefits provided under APS are based on final average pensionable pay and, for the majority of members, are subject to inflationary increases in payment. NAPS has been closed to new members since 2003 and closed to future accrual since 2018. Following closure, members\u2019 deferred pensions are increased annually by inflation up to five per cent per annum (measured using the Government\u2019s annual Pension Increase (Review) Orders, which since 2011 have been based on CPI). APS and NAPS are governed by separate Trustee Boards. Although APS and NAPS have separate Trustee Boards, certain aspects of the business of the two schemes are common. APS and NAPS have developed certain joint working groups that are attended by the Trustee Board members of each scheme although each Trustee Board reaches its decisions independently. There are sub committees which are separately responsible for the governance, operation and investments of each scheme. British Airways Pension Trustees Limited holds the assets of both schemes on behalf of their respective Trustees. Triennially, the Trustees of APS and NAPS undertake actuarial valuations, which are subsequently agreed with British Airways to determine the cash contributions and any deficit payment plans through to the next valuation date, as well as ensuring that the schemes have sufficient funds available to meet future benefit payments to members. These actuarial valuations are prepared using the principles set out in UK Pension legislation. This differs from the IAS 19 \u2018Employee benefits\u2019 valuation, which is used for deriving the Income statement and Balance sheet positions and uses a best-estimate approach overall. The different purpose and principles lead to different assumptions being used, and therefore a different estimate for the liabilities and funding levels. During 2022, the triennial valuations, as at March 31, 2021, were finalised for APS and NAPS which resulted in a technical surplus of \u20ac343 million (\u00a3295 million) for APS and a technical deficit of \u20ac1,887 million (\u00a31,650 million) for NAPS. The actuarial valuations performed for APS and NAPS are different to the valuation performed as at December 31, 2022 under IAS 19 \u2018Employee Benefits\u2019 mainly due to timing differences of the measurement dates and to the specific scheme assumptions in the actuarial valuation performed as at March 31, 2021 compared with IAS 19 requirements used in the accounting valuation assumptions as at the reporting date. The triennial actuarial valuation of neither APS and NAPS is updated outside of the triennial valuations, making comparability between the scheme liabilities applying the principles set out in the UK Pension legislation and the requirements of IAS 19 not possible. The principal difference relates to the discount rate applied, which under the triennial actuarial valuation, aligns with a prudent estimate of the future investment returns on the assets of the respective schemes, whereas, under IAS 19, the rates are based on high quality corporate bond yields, regardless of how the assets are invested. The triennial valuation as at March 31, 2021 for NAPS supersedes the previous agreements reached in 2020 and 2021 between British Airways and the Trustee of NAPS relating to the deferral of deficit contributions. The deferred deficit contributions have been incorporated into the deficit payment plan agreed as part of the triennial valuation as at March 31, 2021. As part of the triennial valuation as at March 31, 2021 for NAPS, British Airways has agreed to provide certain property assets as security, which will remain in place until September 30, 2028. Other plans British Airways also operates post-retirement schemes in a number of jurisdictions outside of the UK. The principal scheme is the British Airways Plc Pension Plan (USA) based in the United States and referred to as the \u2018US Plan\u2019. The US Plan is considered to be a defined benefit scheme and is closed to new members and to future accrual. The majority of British Airways\u2019 other plans are fully funded, but there are also a number of unfunded plans, for which the Group meets the benefit payment obligations as they fall due. In addition, Aer Lingus operates certain defined benefit plans, both funded and unfunded. Risk associated with the defined benefit schemes The defined benefit schemes expose the Group to a range of risks, with the following being the most significant: \u2022 asset volatility risk - the scheme obligations are calculated using a discount rate set with reference to high quality corporate bond yields. If scheme assets underperform this yield, this will reduce the surplus / increase the deficit, depending on the scheme. Certain of the schemes hold a significant proportion of equities, which are expected to outperform corporate bonds in the long term while creating volatility and risk in the short term; \u2022 longevity risk \u2013 the majority of the scheme obligations are to provide benefits over the life of the scheme members. An increase in life expectancy will result in a corresponding increase in the defined benefit obligation; \u2022 interest rate risk - a decrease in interest rates will increase plan liabilities, although this will be partially offset by an increase in the value of certain of the scheme assets; \u2022 inflation risk \u2013 a significant proportion of the scheme obligations are linked to inflation, such that any increase in inflation will cause an increase in the obligations. While certain of the scheme assets are indexed to inflation, any expected increase in the scheme assets from inflation would be disproportionately lower than the increase in the scheme obligations; and \u2022 currency risk \u2013 a number of scheme assets are denominated in currencies other than the pound sterling. Weakening of those currencies, or strengthening of the pound sterling, in the long term, will have the effect of reducing the value of scheme assets. a Cash payments and funding arrangements Cash payments in respect to pension obligations comprise normal employer contributions by the Group and deficit contributions based on the agreed deficit payment plan with NAPS. Total payments for the year to December 31, 2022 net of service costs made by the Group were \u20ac20 million (2021: \u20ac38 million) being the employer contributions of \u20ac22 million (2021: \u20ac41 million) less the current service cost of \u20ac2 million (2021: \u20ac3 million) (note 32b,c). Future funding arrangements Pension contributions for APS and NAPS were determined by actuarial valuations made at March 31, 2021, using assumptions and methodologies agreed between the Group and Trustee of each scheme. In total, the Group expects to pay \u20ac1 million in employer contributions to APS and NAPS in 2023. The following graph provides the undiscounted benefit payments to be made by the Trustees of APS and NAPS over the remaining expected duration of the schemes: Projected benefit payments from the reporting date (\u20ac million, unaudited) The amounts and timing of these projected benefit payments are subject to the aforementioned risks to the schemes. Deficit contributions At the date of the actuarial valuation, the actuarial deficit of NAPS amounted to \u20ac1,887 million. In order to address the deficit in the scheme, the Group has also committed to deficit contribution payments through to June 30, 2023, amounting to approximately \u20ac58 million per year, increasing by \u20ac58 million each year up to June 30, 2026 and subsequently capped at \u20ac257 million per year through to May 31, 2032. The deficit contribution plan includes an over-funding protection mechanism, based on the triennial valuation methodology for measuring the deficit, whereby deficit contributions are suspended if the funding position reaches 100 per cent, with a mechanism for contributions to resume if the contribution level subsequently falls below 100 per cent, or until such point as the scheme funding level reaches 100 per cent. During the year ended and as at December 31, 2022, given the funding level of the scheme, the NAPS funding position exceeded 100 per cent and accordingly deficit contributions were suspended. At December 31, 2022, the valuation of the funding level incorporates significant forward-looking assumptions, such that the Group currently does not expect to make further deficit contributions. Given the long-term nature of the NAPS scheme, these assumptions are subject to uncertainty and there can be no guarantee that deficit contributions will not resume in the future or that additional deficit contributions will not need to be incorporated into future triennial actuarial valuations. At December 31, 2022, had the over-funding protection mechanism not been applied, then the asset ceiling adjustment (as detailed in note 32c) would have been \u20ac661 million higher. At December 31, 2022, the Group is committed to the following undiscounted deficit payments, which are deductible for tax purposes at the statutory rate of tax: Projected benefit payments from the reporting date (\u20ac million, unaudited) The amounts and timing of these projected benefit payments are subject to the aforementioned risks to the schemes. Deficit contributions At the date of the actuarial valuation, the actuarial deficit of NAPS amounted to \u20ac1,887 million. In order to address the deficit in the scheme, the Group has also committed to deficit contribution payments through to June 30, 2023, amounting to approximately \u20ac58 million per year, increasing by \u20ac58 million each year up to June 30, 2026 and subsequently capped at \u20ac257 million per year through to May 31, 2032. The deficit contribution plan includes an over-funding protection mechanism, based on the triennial valuation methodology for measuring the deficit, whereby deficit contributions are suspended if the funding position reaches 100 per cent, with a mechanism for contributions to resume if the contribution level subsequently falls below 100 per cent, or until such point as the scheme funding level reaches 100 per cent. During the year ended and as at December 31, 2022, given the funding level of the scheme, the NAPS funding position exceeded 100 per cent and accordingly deficit contributions were suspended. At December 31, 2022, the valuation of the funding level incorporates significant forward-looking assumptions, such that the Group currently does not expect to make further deficit contributions. Given the long-term nature of the NAPS scheme, these assumptions are subject to uncertainty and there can be no guarantee that deficit contributions will not resume in the future or that additional deficit contributions will not need to be incorporated into future triennial actuarial valuations. At December 31, 2022, had the over-funding protection mechanism not been applied, then the asset ceiling adjustment (as detailed in note 32c) would have been \u20ac661 million higher. At December 31, 2022, the Group is committed to the following undiscounted deficit payments, which are deductible for tax purposes at the statutory rate of tax: \u20ac million NAPS 1 Other schemes Within 12 months \u2013 49 1-2 years \u2013 44 2-5 years \u2013 44 Greater than 5 years \u2013 \u2013 Total expected deficit payments \u2013 137 1 Committed deficit contributions for NAPS are stated after the effect of the over-funding protection mechanism. Deficit payments in respect of local arrangements outside of the UK have been determined in accordance with local practice. Under the triennial valuation of NAPS as at March 31, 2021, in the period up to December 31, 2023, no dividend payment is permitted from British Airways to IAG. In the period from January 1 to December 31, 2024, any dividends paid by British Airways will be matched by contributions to NAPS of 50 per cent of the value of dividends paid. In the period from January 1 to September 30, 2025, any dividend payment from British Airways to IAG that exceeds 50 per cent of the pre-exceptional profit after tax in each financial year will require additional payments to be made to NAPS if the scheme is not at least 100 per cent funded. All dividend restrictions cease from October 1, 2025, onwards. British Airways must maintain a minimum cash level of \u20ac1,829 million (\u00a31,600 million) as at the date of the declaration of any dividends as well as immediately following the payment of any dividends to IAG and the associated matching contributions to NAPS. The amount of any deficit contributions and dividend matching contributions in a single financial year is limited to \u20ac343 million (\u00a3300 million). b Employee benefit scheme amounts recognised in the financial statements i Amounts recognised on the Balance sheet 2022 \u20ac million APS NAPS Other Total Scheme assets at fair value 1 6,283 17,029 356 23,668 Present value of scheme liabilities 1 (6,052) (13,692) (548) (20,292) Net pension asset/(liability) 231 3,337 (192) 3,376 Effect of the asset ceiling 2 (80) (1,168) \u2013 (1,248) Other employee benefit obligations \u2013 \u2013 (11) (11) December 31, 2022 151 2,169 (203) 2,117 Represented by: Employee benefit asset 2,334 Employee benefit obligation (217) Net employee benefit asset 3 2,117 2021 \u20ac million APS NAPS Other Total Scheme assets at fair value 1 8,869 25,055 446 34,370 Present value of scheme liabilities 1 (8,333) (22,583) (706) (31,622) Net pension asset/(liability) 536 2,472 (260) 2,748 Effect of the asset ceiling 2 (186) (1,061) \u2013 (1,247) Other employee benefit obligations \u2013 \u2013 (11) (11) December 31, 2021 350 1,411 (271) 1,490 Represented by: Employee benefit asset 1,775 Employee benefit obligation (285) Net employee benefit obligation 3 1,490 1 Includes Additional Voluntary Contributions (AVCs), which the Trustees hold as assets to secure additional benefits on a defined contribution basis for those members who elect to make such AVCs. At December 31, 2022, such assets were \u20ac320 million (2021: \u20ac391 million) with a corresponding amount recorded in the scheme liabilities. 2 APS and NAPS have an accounting surplus under IAS 19, which would be available to the Group as a refund upon wind up of the scheme. This refund is restricted due to withholding taxes that would be payable by the Trustee arising on both the net pension asset and the future contractual minimum funding requirements. 3 The net deferred tax asset recognised on the net employee benefit asset (2021: asset) was \u20ac54 million at December 31, 2022 (2021: \u20ac62 million). The defined benefit obligation includes \u20ac21 million (2021: \u20ac25 million) arising from unfunded plans. ii Amounts recognised in the Income statement Pension costs charged to operating result are: \u20ac million 2022 2021 Defined benefit plans: Current service cost 2 3 Administrative expenses 19 29 21 32 Defined contribution plans 251 200 Pension costs recorded as employee costs 272 232 \u20ac million 2022 2021 Interest income on scheme assets (633) (432) Interest expense on scheme liabilities 584 425 Interest expense on asset ceiling 23 9 Net financing (credit)/charge relating to pensions (26) 2 iii Amounts recognised in the Statement of other comprehensive income \u20ac million 2022 2021 Return on plan assets excluding interest income 9,360 (2,495) Remeasurement of plan liabilities from changes in financial assumptions 1 (10,476) 95 Remeasurement of plan liabilities from changes in demographic assumptions 1 (202) (49) Remeasurement of experience losses 627 427 Remeasurement of the APS and NAPS asset ceilings 14 419 Exchange movements 6 (14) Pension remeasurements charged to Other comprehensive income (671) (1,617) Deferred tax arising on pension remeasurements 9 217 Pension remeasurements charged to Other comprehensive income, net of tax (662) (1,400) 1 The prior year figures include a reclassification between remeasurements of plan liabilities from changes in financial assumptions to remeasurement of plan liabilities from changes in demographic assumptions to align with the current year presentation. There is no change in the total pension remeasurements charged to Other comprehensive income. c Fair value of scheme assets i Investment strategies For both APS and NAPS, the Trustee has ultimate responsibility for decision making on investments matters, including the asset-liability matching strategy. The latter is a form of investing designed to match the movement in pension plan assets with the movement in the projected benefit obligation over time. The Trustees\u2019 investment committee adopts an annual business plan which sets out investment objectives and work required to support achievement of these objectives. The committee also deals with the monitoring of performance and activities, including work on developing the strategic benchmark to improve the risk return profile of the scheme where possible, as well as having a trigger-based dynamic governance process to be able to take advantage of opportunities as they arise. The investment committee reviews the existing investment restrictions, performance benchmarks and targets, as well as continuing to develop the de- risking and liability hedging portfolio. Both schemes use derivative instruments for investment purposes and to manage exposures to financial risks, such as interest rate, foreign exchange, longevity and liquidity risks arising in the normal course of business. Exposure to interest rate risk is managed through the use of Inflation-Linked Swap contracts. Foreign exchange forward contracts are entered into to mitigate the risk of currency fluctuations. Longevity risk is managed through the use of buy-in insurance contracts, asset swaps and longevity swaps. Along with existing contracts with Rothesay Life (as detailed in note 32c(iii)), APS is 90 per cent protected against all longevity risk and fully protected in relation to all pensions that were already being paid as at March 31, 2018. It is also more than 90 per cent protected against interest rates and inflation (on a Retail Price Index basis). The strategic benchmark for asset allocations differentiates between \u2018return seeking assets\u2019 and \u2018liability matching assets\u2019 depending on the maturity of each scheme. At December 31, 2022, the benchmark for NAPS was 31 per cent (2021: 37 per cent) in return seeking assets and 69 per cent (2021: 63 per cent) in liability matching investments. Bandwidths are set around these strategic benchmarks that allow for tactical asset allocation decisions, providing parameters for the investment committee and their investment managers to work within. APS no longer has a \u2018strategic benchmark\u2019 as instead, APS now runs off its liquidation portfolio to a liability matching portfolio of bonds and cash. The actual asset allocation for APS at December 31, 2022 was 1 per cent (2021: 1 per cent) in return seeking assets and 99 per cent (2021: 99 per cent) in liability matching investments. NAPS uses Liability Driven Investments (LDIs) to effectively hedge volatility in the scheme liabilities. This is achieved through direct bond holdings as opposed to the use of derivatives and as such leverage is low. Accordingly, as at December 31, 2022, NAPS has not been required to raise additional cash or liquidate existing assets in order to fund derivative positions. ii Movement in scheme assets A reconciliation of the opening and closing balances of the fair value of scheme assets is set out below: \u20ac million 2022 2021 January 1 34,370 31,185 Interest income 633 432 Administrative expenses (13) (21) Return on plan assets excluding interest income (9,360) 2,495 Employer contributions 1 22 41 Employee contributions 6 13 Benefits paid (1,301) (1,930) Exchange movements (689) 2,155 December 31 23,668 34,370 1 Includes employer contributions to APS of \u20ac1 million (2021: \u20ac1 million) and to NAPS of \u20acnil (2021: \u20acnil) of which deficit-funding payments represented \u20acnil for APS (2021: \u20acnil) and \u20acnil for NAPS (2021: \u20acnil). iii Composition of scheme assets Scheme assets held by the Group at December 31 comprise: 2022 \u20ac million APS NAPS Other Total 2021 Return seeking investments Listed equities \u2013 UK 8 125 6 139 224 Listed equities \u2013 Rest of world 1 883 163 1,047 4,441 Private equities 38 1,518 10 1,566 1,643 Properties 2 2,124 16 2,142 2,481 Alternative investments 41 1,837 3 1,881 1,925 90 6,487 198 6,775 10,714 Liability matching investments Government issued fixed bonds 790 4,390 99 5,279 10,681 Government issued index-linked bonds 860 7,225 8 8,093 8,511 Asset and longevity swaps 1 1,114 \u2013 \u2013 1,114 1,716 Insurance contract 1 3,356 \u2013 36 3,392 4,662 6,120 11,615 143 17,878 25,570 Other Cash and cash equivalents 117 563 4 684 1,139 Derivative financial instruments (47) (1,650) 9 (1,688) (3,135) Other investments 3 14 2 19 82 73 (1,073) 15 (985) (1,914) Total scheme assets 6,283 17,029 356 23,668 34,370 1 The prior year scheme asset balances split between Asset and longevity swaps and Insurance contracts have been updated to reflect the current year presentation. There is no change in total scheme assets. The fair values of the Group\u2019s scheme assets, which are not derived from quoted prices on active markets, are determined depending on the nature of the inputs used in determining the fair values (see note 28b for further details) and using the following methods and assumptions: \u2022 private equities are valued at fair value based on the most recent transaction price or third-party net asset, revenue or earnings-based valuations that generally result in the use of significant unobservable inputs. The dates of these valuations typically precede the reporting date and have been adjusted for any cash movements between the date of the valuation and the reporting date. Typically, the valuation approach and inputs for these investments are not updated through to the reporting date unless there are indications of significant market movements. \u2022 properties are valued based on an analysis of recent market transactions supported by market knowledge derived from third-party professional valuers that generally result in the use of significant unobservable inputs. \u2022 alternative investments fair values, which predominantly include holdings in investment and infrastructure funds are determined based on the most recent available valuations applying the Net Asset Value methodology and issued by fund administrators or investment managers and adjusted for any cash movements having occurred from the date of the valuation to the reporting date. The dates of these valuations typically precede the reporting date and have been adjusted for any cash movements between the date of the valuation and the reporting date. Typically, the valuation approach and inputs for these investments are not updated through to the reporting date unless there are indications of significant market movements. \u2022 other investments predominantly includes: interest receivable on bonds; dividends from listed and private equities that have been declared but not received at the balance sheet date; receivables from the sale of assets for which the proceeds have not been collected at the balance sheet date; and payables for the purchase of assets which have not been settled at the balance sheet date. \u2022 asset and longevity swaps - APS has a contract with Rothesay Life, entered into in 2010 and extended in 2013, which covers 25 per cent (2021: 25 per cent) of the pensioner liabilities for an agreed list of members. Under the contract, to reduce the risk of long-term longevity risk, Rothesay Life makes benefit payments monthly in respect of the agreed list of members in return for the contractual return receivable on a portfolio of assets (made up of quoted government debt) held by the scheme and the contractual payments made by APS to Rothesay Life on the longevity swaps. The Group holds the portfolio of assets at their fair value, with the government debt held at their quoted market price and the swaps accounted for at their estimated discounted future cash flows. During 2011, APS entered into a longevity swap with Rothesay Life, which covers an additional 21 per cent (2021: 21 per cent) of the pensioner liabilities for the same agreed list of members as the 2010 contract. Under the longevity swap, to reduce the risk of long-term longevity risk, APS makes a fixed payment to Rothesay Life each month reflecting the prevailing mortality assumptions at the inception of the contract, and Rothesay Life make a monthly payment to APS reflecting the actual monthly benefit payments to members. The cash flows are settled net each month. If pensioners live longer than expected at inception of the longevity swap, Rothesay Life will make payments to the scheme to offset the additional cost of paying pensioners and if pensioners do not live as long as expected, then the scheme will make payments to Rothesay Life. The Group holds the longevity swap at fair value, determined at the estimated discounted future cash flows. \u2022 insurance contract - During 2018 the Trustee of APS secured a buy-in contract with Legal & General. The buy-in contract covers all members in receipt of pensions from APS at March 31, 2018, excluding dependent children, receiving a pension at that date and members in receipt of equivalent pension only benefits, who were alive on October 1, 2018. Benefits coming into payment for retirements after March 31, 2018 are not covered. The contract covers benefits payable from October 1, 2018 onwards. The policy covers approximately 60 per cent of all benefits APS expects to pay out in future. iv Effect of the asset ceiling In measuring the valuation of the net defined benefit asset for each scheme, the Group limits such measurement to the lower of the surplus in each scheme and the respective asset ceiling. The asset ceiling represents the present value of the economic benefits available in the form of a refund or a reduction in future contributions after they are paid into the plan. The Group has determined that the recoverability of such surpluses, including minimum funding requirements, will be subject to withholding taxes in the UK, payable by the Trustee, of 35 per cent. The future committed NAPS deficit contributions, as detailed in note 32a, are treated as minimum funding requirements under IAS 19 and are not recognised as part of the scheme assets or liabilities. The Group has determined that upon the wind up of the scheme, that if the scheme is in surplus, including the incorporation of the minimum funding requirements, then the surplus will be available as a refund or a reduction in future contributions after they are paid into the scheme. The recovery of such amounts are subject to UK withholding tax payable by the Trustee. In measuring the recoverability of the surplus for each scheme, the Group limits such measurement to the lower of the surplus in each scheme and the respective asset ceiling. The asset ceiling represents the present value of the economic benefits available upon wind up of the scheme, less the application of withholding taxes in the UK, payable by the Trustee, at 35 per cent. A reconciliation of the effect of the asset ceiling used in calculating the IAS 19 irrecoverable surplus in APS and NAPS is set out below: \u20ac million 2022 2021 January 1 1,247 761 Interest expense 23 9 Remeasurements 14 419 Exchange movements (36) 58 December 31 1,248 1,247 d Present value of scheme liabilities i Movement in scheme liabilities A reconciliation of the opening and closing balances of the present value of the defined benefit obligations is set out below: \u20ac million 2022 2021 January 1 31,622 30,556 Current service cost 2 3 Interest expense 584 425 Remeasurements - financial assumptions 1, 2 (10,476) 95 Remeasurements - demographic assumptions 2 (202) (49) Remeasurements of experience losses 627 427 Benefits paid (1,301) (1,930) Employee contributions 6 13 Exchange movements (570) 2,082 December 31 20,292 31,622 1 Included in the remeasurements from financial assumptions is an amount of \u20ac10,299 million (2021: reduction of \u20ac1,866 million) that reduces the scheme liabilities relating to changes in the discount rates and \u20ac177 million (2021: increase of \u20ac1,961 million) that reduces the scheme liabilities relating to changes in inflation rates. 2 The prior year figures include a reclassification between remeasurements of plan liabilities from changes in financial assumptions to remeasurement of plan liabilities from changes in demographic assumptions to align with the current year presentation. There is no change in total scheme liabilities. ii Scheme liability assumptions The principal assumptions used for the purposes of the IAS 19 valuations were as follows: 2022 2021 Per cent per annum APS NAPS Other schemes 4 APS NAPS Other schemes 4 Discount rate 1 4.85 4.80 0.8-7.2 1.80 1.90 0.3-6.5 Rate of increase in pensionable pay 2 3.40 \u2013 2.0-6.0 3.55 \u2013 2.0-6.0 Rate of increase of pensions in payment 3 3.40 2.80 0.3-3.0 3.55 2.85 2.0-3.0 RPI rate of inflation 3.40 3.20 2.2-3.1 3.55 3.30 1.8-2.5 CPI rate of inflation 2.80 2.80 2.0-2.6 2.95 2.85 1.8-2.5 1 Discount rate is determined by reference to the yield on high quality corporate bonds of currency and term consistent with the scheme liabilities. 2 Rate of increase in pensionable pay, which reflects inflationary increases, is assumed to be in line with increases in RPI. 3 It has been assumed that the rate of increase of pensions in payment, which reflects inflationary increases, will be in line with CPI for NAPS and RPI for APS as at December 31, 2022. 4 The rate of increase in healthcare costs for schemes based in the United States is based on medical trend rates of 6.25 per cent grading down to 5.00 per cent over five years (2021: 6.00 per cent to 5.00 per cent over five years). The current longevities underlying the values of the scheme liabilities were as follows: Mortality assumptions 2022 2021 Life expectancy at age 60 for a: \u2022 male currently aged 60 27.9 28.1 \u2022 male currently aged 40 29.1 29.9 \u2022 female currently aged 60 29.3 29.5 \u2022 female currently aged 40 31.5 31.9 For APS, the base mortality tables are based on the Agreed Valuation Basis (AVB) as agreed between British Airways and the trustees of APS. For NAPS, the base mortality tables are based on the most recent model published by the UK actuarial profession\u2019s Continuous Mortality Investigation (CMI), being their 2021 model. These standard mortality tables, for both APS and NAPS, incorporate adjustments specific to the demographics of scheme members, including a long-term improvement parameter of 1.00 per cent per annum (2021: 1.25 per cent). Allowance has been made with regard to the long-term uncertainty arising from the effects of COVID-19. For schemes in the United States, mortality rates were based on the MP-2021 mortality tables incorporating adjustments for the long-term impact COVID-19 is expected to have on mortality. At December 31, 2022, the weighted-average duration of the defined benefit obligation was 10 years for APS (2021: 12 years) and 15 years for NAPS (2021: 19 years). The weighted average duration of the defined benefit obligations was 3 to 19 years for other schemes (2021: 11 to 23 years). The weighted average duration represents a single figure for the average number of years over which the employee benefit liability discounted cash flows is extinguished and is highly dependent on movements in the aforementioned discount rates, such that with an increase in the discount rates experienced in 2022, the weighted-average duration for both schemes has reduced. iii Sensitivity analysis Reasonably possible changes at the reporting date to significant valuation assumptions, holding other assumptions constant, would have affected the present value of scheme liabilities by the amounts shown: Increase in scheme liabilities \u20ac million APS NAPS Other schemes Discount rate (decrease of 50 basis points) 1 286 983 34 Future pension growth (increase of 50 basis points) 1 252 949 5 Future mortality rate (one year increase in life expectancy) 286 354 24 1 Sensitivities smaller than those disclosed can be approximately interpolated from those sensitivities above. Although the analysis does not take into account the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-664": { "value": "Defined contribution schemes The Group operates a number of defined contribution schemes for its employees. Costs recognised in respect of defined contribution pension plans in Spain, UK and Ireland for the year to December 31, 2022 were \u20ac251 million (2021: \u20ac200 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-665": { "value": "Defined benefit schemes The principal funded defined benefit pension schemes within the Group are the Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS), both of which are in the UK and are closed to new members. APS has been closed to new members since 1984, but remains open to future accrual. The benefits provided under APS are based on final average pensionable pay and, for the majority of members, are subject to inflationary increases in payment. NAPS has been closed to new members since 2003 and closed to future accrual since 2018. Following closure, members\u2019 deferred pensions are increased annually by inflation up to five per cent per annum (measured using the Government\u2019s annual Pension Increase (Review) Orders, which since 2011 have been based on CPI). APS and NAPS are governed by separate Trustee Boards. Although APS and NAPS have separate Trustee Boards, certain aspects of the business of the two schemes are common. APS and NAPS have developed certain joint working groups that are attended by the Trustee Board members of each scheme although each Trustee Board reaches its decisions independently. There are sub committees which are separately responsible for the governance, operation and investments of each scheme. British Airways Pension Trustees Limited holds the assets of both schemes on behalf of their respective Trustees. Triennially, the Trustees of APS and NAPS undertake actuarial valuations, which are subsequently agreed with British Airways to determine the cash contributions and any deficit payment plans through to the next valuation date, as well as ensuring that the schemes have sufficient funds available to meet future benefit payments to members. These actuarial valuations are prepared using the principles set out in UK Pension legislation. This differs from the IAS 19 \u2018Employee benefits\u2019 valuation, which is used for deriving the Income statement and Balance sheet positions and uses a best-estimate approach overall. The different purpose and principles lead to different assumptions being used, and therefore a different estimate for the liabilities and funding levels. During 2022, the triennial valuations, as at March 31, 2021, were finalised for APS and NAPS which resulted in a technical surplus of \u20ac343 million (\u00a3295 million) for APS and a technical deficit of \u20ac1,887 million (\u00a31,650 million) for NAPS. The actuarial valuations performed for APS and NAPS are different to the valuation performed as at December 31, 2022 under IAS 19 \u2018Employee Benefits\u2019 mainly due to timing differences of the measurement dates and to the specific scheme assumptions in the actuarial valuation performed as at March 31, 2021 compared with IAS 19 requirements used in the accounting valuation assumptions as at the reporting date. The triennial actuarial valuation of neither APS and NAPS is updated outside of the triennial valuations, making comparability between the scheme liabilities applying the principles set out in the UK Pension legislation and the requirements of IAS 19 not possible. The principal difference relates to the discount rate applied, which under the triennial actuarial valuation, aligns with a prudent estimate of the future investment returns on the assets of the respective schemes, whereas, under IAS 19, the rates are based on high quality corporate bond yields, regardless of how the assets are invested. The triennial valuation as at March 31, 2021 for NAPS supersedes the previous agreements reached in 2020 and 2021 between British Airways and the Trustee of NAPS relating to the deferral of deficit contributions. The deferred deficit contributions have been incorporated into the deficit payment plan agreed as part of the triennial valuation as at March 31, 2021. As part of the triennial valuation as at March 31, 2021 for NAPS, British Airways has agreed to provide certain property assets as security, which will remain in place until September 30, 2028. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-666": { "value": "i Investment strategies For both APS and NAPS, the Trustee has ultimate responsibility for decision making on investments matters, including the asset-liability matching strategy. The latter is a form of investing designed to match the movement in pension plan assets with the movement in the projected benefit obligation over time. The Trustees\u2019 investment committee adopts an annual business plan which sets out investment objectives and work required to support achievement of these objectives. The committee also deals with the monitoring of performance and activities, including work on developing the strategic benchmark to improve the risk return profile of the scheme where possible, as well as having a trigger-based dynamic governance process to be able to take advantage of opportunities as they arise. The investment committee reviews the existing investment restrictions, performance benchmarks and targets, as well as continuing to develop the de- risking and liability hedging portfolio. Both schemes use derivative instruments for investment purposes and to manage exposures to financial risks, such as interest rate, foreign exchange, longevity and liquidity risks arising in the normal course of business. Exposure to interest rate risk is managed through the use of Inflation-Linked Swap contracts. Foreign exchange forward contracts are entered into to mitigate the risk of currency fluctuations. Longevity risk is managed through the use of buy-in insurance contracts, asset swaps and longevity swaps. Along with existing contracts with Rothesay Life (as detailed in note 32c(iii)), APS is 90 per cent protected against all longevity risk and fully protected in relation to all pensions that were already being paid as at March 31, 2018. It is also more than 90 per cent protected against interest rates and inflation (on a Retail Price Index basis). The strategic benchmark for asset allocations differentiates between \u2018return seeking assets\u2019 and \u2018liability matching assets\u2019 depending on the maturity of each scheme. At December 31, 2022, the benchmark for NAPS was 31 per cent (2021: 37 per cent) in return seeking assets and 69 per cent (2021: 63 per cent) in liability matching investments. Bandwidths are set around these strategic benchmarks that allow for tactical asset allocation decisions, providing parameters for the investment committee and their investment managers to work within. APS no longer has a \u2018strategic benchmark\u2019 as instead, APS now runs off its liquidation portfolio to a liability matching portfolio of bonds and cash. The actual asset allocation for APS at December 31, 2022 was 1 per cent (2021: 1 per cent) in return seeking assets and 99 per cent (2021: 99 per cent) in liability matching investments. NAPS uses Liability Driven Investments (LDIs) to effectively hedge volatility in the scheme liabilities. This is achieved through direct bond holdings as opposed to the use of derivatives and as such leverage is low. Accordingly, as at December 31, 2022, NAPS has not been required to raise additional cash or liquidate existing assets in order to fund derivative positions. c Fair value of scheme assets i Investment strategies For both APS and NAPS, the Trustee has ultimate responsibility for decision making on investments matters, including the asset-liability matching strategy. The latter is a form of investing designed to match the movement in pension plan assets with the movement in the projected benefit obligation over time. The Trustees\u2019 investment committee adopts an annual business plan which sets out investment objectives and work required to support achievement of these objectives. The committee also deals with the monitoring of performance and activities, including work on developing the strategic benchmark to improve the risk return profile of the scheme where possible, as well as having a trigger-based dynamic governance process to be able to take advantage of opportunities as they arise. The investment committee reviews the existing investment restrictions, performance benchmarks and targets, as well as continuing to develop the de- risking and liability hedging portfolio. Both schemes use derivative instruments for investment purposes and to manage exposures to financial risks, such as interest rate, foreign exchange, longevity and liquidity risks arising in the normal course of business. Exposure to interest rate risk is managed through the use of Inflation-Linked Swap contracts. Foreign exchange forward contracts are entered into to mitigate the risk of currency fluctuations. Longevity risk is managed through the use of buy-in insurance contracts, asset swaps and longevity swaps. Along with existing contracts with Rothesay Life (as detailed in note 32c(iii)), APS is 90 per cent protected against all longevity risk and fully protected in relation to all pensions that were already being paid as at March 31, 2018. It is also more than 90 per cent protected against interest rates and inflation (on a Retail Price Index basis). The strategic benchmark for asset allocations differentiates between \u2018return seeking assets\u2019 and \u2018liability matching assets\u2019 depending on the maturity of each scheme. At December 31, 2022, the benchmark for NAPS was 31 per cent (2021: 37 per cent) in return seeking assets and 69 per cent (2021: 63 per cent) in liability matching investments. Bandwidths are set around these strategic benchmarks that allow for tactical asset allocation decisions, providing parameters for the investment committee and their investment managers to work within. APS no longer has a \u2018strategic benchmark\u2019 as instead, APS now runs off its liquidation portfolio to a liability matching portfolio of bonds and cash. The actual asset allocation for APS at December 31, 2022 was 1 per cent (2021: 1 per cent) in return seeking assets and 99 per cent (2021: 99 per cent) in liability matching investments. NAPS uses Liability Driven Investments (LDIs) to effectively hedge volatility in the scheme liabilities. This is achieved through direct bond holdings as opposed to the use of derivatives and as such leverage is low. Accordingly, as at December 31, 2022, NAPS has not been required to raise additional cash or liquidate existing assets in order to fund derivative positions. ii Movement in scheme assets A reconciliation of the opening and closing balances of the fair value of scheme assets is set out below: \u20ac million 2022 2021 January 1 34,370 31,185 Interest income 633 432 Administrative expenses (13) (21) Return on plan assets excluding interest income (9,360) 2,495 Employer contributions 1 22 41 Employee contributions 6 13 Benefits paid (1,301) (1,930) Exchange movements (689) 2,155 December 31 23,668 34,370 1 Includes employer contributions to APS of \u20ac1 million (2021: \u20ac1 million) and to NAPS of \u20acnil (2021: \u20acnil) of which deficit-funding payments represented \u20acnil for APS (2021: \u20acnil) and \u20acnil for NAPS (2021: \u20acnil). iii Composition of scheme assets Scheme assets held by the Group at December 31 comprise: 2022 \u20ac million APS NAPS Other Total 2021 Return seeking investments Listed equities \u2013 UK 8 125 6 139 224 Listed equities \u2013 Rest of world 1 883 163 1,047 4,441 Private equities 38 1,518 10 1,566 1,643 Properties 2 2,124 16 2,142 2,481 Alternative investments 41 1,837 3 1,881 1,925 90 6,487 198 6,775 10,714 Liability matching investments Government issued fixed bonds 790 4,390 99 5,279 10,681 Government issued index-linked bonds 860 7,225 8 8,093 8,511 Asset and longevity swaps 1 1,114 \u2013 \u2013 1,114 1,716 Insurance contract 1 3,356 \u2013 36 3,392 4,662 6,120 11,615 143 17,878 25,570 Other Cash and cash equivalents 117 563 4 684 1,139 Derivative financial instruments (47) (1,650) 9 (1,688) (3,135) Other investments 3 14 2 19 82 73 (1,073) 15 (985) (1,914) Total scheme assets 6,283 17,029 356 23,668 34,370 1 The prior year scheme asset balances split between Asset and longevity swaps and Insurance contracts have been updated to reflect the current year presentation. There is no change in total scheme assets. The fair values of the Group\u2019s scheme assets, which are not derived from quoted prices on active markets, are determined depending on the nature of the inputs used in determining the fair values (see note 28b for further details) and using the following methods and assumptions: \u2022 private equities are valued at fair value based on the most recent transaction price or third-party net asset, revenue or earnings-based valuations that generally result in the use of significant unobservable inputs. The dates of these valuations typically precede the reporting date and have been adjusted for any cash movements between the date of the valuation and the reporting date. Typically, the valuation approach and inputs for these investments are not updated through to the reporting date unless there are indications of significant market movements. \u2022 properties are valued based on an analysis of recent market transactions supported by market knowledge derived from third-party professional valuers that generally result in the use of significant unobservable inputs. \u2022 alternative investments fair values, which predominantly include holdings in investment and infrastructure funds are determined based on the most recent available valuations applying the Net Asset Value methodology and issued by fund administrators or investment managers and adjusted for any cash movements having occurred from the date of the valuation to the reporting date. The dates of these valuations typically precede the reporting date and have been adjusted for any cash movements between the date of the valuation and the reporting date. Typically, the valuation approach and inputs for these investments are not updated through to the reporting date unless there are indications of significant market movements. \u2022 other investments predominantly includes: interest receivable on bonds; dividends from listed and private equities that have been declared but not received at the balance sheet date; receivables from the sale of assets for which the proceeds have not been collected at the balance sheet date; and payables for the purchase of assets which have not been settled at the balance sheet date. \u2022 asset and longevity swaps - APS has a contract with Rothesay Life, entered into in 2010 and extended in 2013, which covers 25 per cent (2021: 25 per cent) of the pensioner liabilities for an agreed list of members. Under the contract, to reduce the risk of long-term longevity risk, Rothesay Life makes benefit payments monthly in respect of the agreed list of members in return for the contractual return receivable on a portfolio of assets (made up of quoted government debt) held by the scheme and the contractual payments made by APS to Rothesay Life on the longevity swaps. The Group holds the portfolio of assets at their fair value, with the government debt held at their quoted market price and the swaps accounted for at their estimated discounted future cash flows. During 2011, APS entered into a longevity swap with Rothesay Life, which covers an additional 21 per cent (2021: 21 per cent) of the pensioner liabilities for the same agreed list of members as the 2010 contract. Under the longevity swap, to reduce the risk of long-term longevity risk, APS makes a fixed payment to Rothesay Life each month reflecting the prevailing mortality assumptions at the inception of the contract, and Rothesay Life make a monthly payment to APS reflecting the actual monthly benefit payments to members. The cash flows are settled net each month. If pensioners live longer than expected at inception of the longevity swap, Rothesay Life will make payments to the scheme to offset the additional cost of paying pensioners and if pensioners do not live as long as expected, then the scheme will make payments to Rothesay Life. The Group holds the longevity swap at fair value, determined at the estimated discounted future cash flows. \u2022 insurance contract - During 2018 the Trustee of APS secured a buy-in contract with Legal & General. The buy-in contract covers all members in receipt of pensions from APS at March 31, 2018, excluding dependent children, receiving a pension at that date and members in receipt of equivalent pension only benefits, who were alive on October 1, 2018. Benefits coming into payment for retirements after March 31, 2018 are not covered. The contract covers benefits payable from October 1, 2018 onwards. The policy covers approximately 60 per cent of all benefits APS expects to pay out in future. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-680": { "value": "33 Contingent liabilities There are a number of legal and regulatory proceedings against the Group in a number of jurisdictions which at December 31, 2022, where they could be reliably estimated, amounted to \u20ac11 million (December 31, 2021: \u20ac22 million). The Group does not consider it probable that there will be an outflow of economic resources with regard to these proceedings and accordingly no provisions have been recorded. Contingent liabilities associated with income taxes, deferred taxes and indirect taxes are presented in note 10. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-635": { "value": "34 Government grants and assistance The Group has availed itself of government grants and assistance as follows: The Coronavirus Job Retention Scheme (CJRS) \u2013 recognised net within Employee costs The CJRS was implemented by the Government of the United Kingdom from March 1, 2020 to August 30, 2020, where those employees designated as being \u2018furloughed workers\u2019 were eligible to have 80 per cent of their wage costs paid up to a maximum of \u00a32,500 per month. From September 1, 2020 to September 30, 2020, the level of eligibility reduced to 70 per cent of wage costs and up to a maximum of \u00a32,197.50 per month. From October 1, 2020 to October 31, 2020, the level of eligibility reduced to 60 per cent of wage costs and up to a maximum of \u00a31,875 per month. Following the introduction of further lockdown restrictions in the United Kingdom in November 2020, the CJRS was extended from November 1, 2020 to November 30, 2020 and then further to March 31, 2021 and then further again to September 30, 2021 with the level of eligibility increased to 80 per cent of wage costs and a maximum of \u00a32,500 per month through to the end of June 2021. From July 1, 2021 the eligibility decreased down each month to 60 per cent of wage costs and a maximum of \u00a31,875 per month by September 30, 2021, at which time the CJRS ended. Such costs were paid by the Government to the Group in arrears. The Group was obliged to continue to pay the associated social security costs and employer pension contributions. The Temporary Wage Subsidy Scheme (TWSS) and the Employment Wage Subsidy Scheme (EWSS) \u2013 recognised net within Employee costs The TWSS was implemented by the government of Ireland from March 1, 2020 to August 30, 2020, where those employees designated as being furloughed workers were eligible to have 85 per cent of their wage costs paid up to a maximum of \u20ac410 per week. This scheme was replaced with the EWSS from September 1, 2020 and ran through to April, 2022. For those qualifying employees (earning less than \u20ac1,462 per week), the government reimbursed wage costs up to a maximum of \u20ac203 per week. Such costs were paid by the government to the Group in arrears. The total amount of the relief received under the CJRS, the TWSS and the EWSS by the Group during 2022 amounted to \u20ac11 million (2021: \u20ac286 million). Temporary Redundancy Plan (ERTE) \u2013 no recognition in the financial statements of the Group The ERTE was implemented by the government of Spain from March 1, 2020 and ran through to February 28, 2022. Under this plan, employment was temporarily suspended and those designated employees were paid directly by the government and there was no remittance made to the Group. The Group was obliged to continue to pay the associated social security costs. Had those designated employees not been temporarily suspended during 2022, the Group would have incurred further employee costs of \u20ac3 million (2021: \u20ac269 million). The Ireland Strategic Investment Fund (ISIF) \u2013 recognised within Long-term borrowings On December 23, 2020, Aer Lingus entered into a financing arrangement for \u20ac75 million. On March 27, 2021, Aer Lingus entered into a further financing arrangement to extend the total amount to \u20ac150 million. On March 4, 2022, Aer Lingus entered into a financing arrangement with ISIF, which subsequently extinguished the existing \u20ac150 million of facilities and replaced them with a \u20ac350 million facility that matures in March 2025. On December 13, 2022, Aer Lingus repaid \u20ac100 million of this financing arrangement with the amount repaid available to be redrawn through to March 2025. The facility is secured on specific landing rights. At December 31, 2022 \u20ac300 million of the facility remained undrawn. The UK Export Finance (UKEF) \u2013 recognised within Long-term borrowings On February 22, 2021, British Airways entered into a 5-year term loan Export Development Guarantee Facility of \u20ac2.3 billion (\u00a32.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The facility is unsecured. On November 1, 2021, British Airways entered into a further 5-year term loan Export Development Guarantee Facility of \u20ac1.1 billion (\u00a31.0 billion) underwritten by a syndicate of banks, with 80 per cent of the principal guaranteed by UKEF. The facility is unsecured. At December 31, 2022 the facility remained undrawn.", "dimensions": { "concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-636": { "value": "35 Related party transactions The following transactions took place with related parties for the financial years to December 31: \u20ac million 2022 2021 Sales of goods and services Sales to associates 1 5 6 Sales to significant shareholders 2 141 16 Purchases of goods and services Purchases from associates 3 61 49 Purchases from significant shareholders 2 113 69 Receivables from related parties Amounts owed by associates 4 1 1 Amounts owed by significant shareholders 5 25 5 Payables to related parties Amounts owed to associates 6 \u2013 3 Amounts owed to significant shareholders 5 26 2 1 Sales to associates: Consisted primarily of sales for airline related services to Dunwoody Airline Services (Holding) Limited (Dunwoody) of \u20ac4 million (2021: \u20ac5 million) and \u20ac1 million (2021: \u20ac1 million) to Serpista, S.A. and Multiservicios Aeroportuarios. 2 Sales to and purchases from significant shareholders related to interline services with Qatar Airways. 3 Purchases from associates: Consisted primarily of \u20ac35 million of airport auxiliary services purchased from Multiservicios Aeroportuarios, S.A. (2021: \u20ac33 million), \u20ac14 million of handling services provided by Dunwoody (2021: \u20ac8 million) and \u20ac13 million of maintenance services received from Serpista, S.A. (2021: \u20ac8 million). 4 Amounts owed by associates: Consisted primarily of \u20ac1 million of services provided to Multiservicios Aeroportuarios, Serpista, Dunwoody and Empresa Hispano Cubana de Mantenimiento de Aeronaves, Ibeca, S.A. (2021: \u20ac1 million). 5 Amounts owed by and to significant shareholders related to Qatar Airways. 6 Amounts owed to associates: \u20acnil (2021: \u20ac3 million). During the year to December 31, 2022 British Airways met certain costs of administering its retirement benefit plans, including the provision of support services to the Trustees. Costs borne on behalf of the retirement benefit plans amounted to \u20ac2 million (2021: \u20ac6 million) in relation to the costs of the Pension Protection Fund levy. The Group has transactions with related parties that are conducted in the normal course of the airline business, which include the provision of airline and related services. All such transactions are carried out on an arm\u2019s length basis. During the course of 2022, the Group renewed its loyalty currency exchange agreement with Qatar Airways, where Avios could be exchanged for points within the Qatar Airways\u2019 loyalty programme, the Privilege Club. In addition, in renewing the agreement, IAG Loyalty licensed the Avios brand name for use within the Privilege Club. During the course of 2022, the Group provided a long-term shareholder loan of \u20ac12 million ($14 million) to LanzaJet, Inc., a company which specialises in the generation of Sustainable Aviation Fuels of which the Group has a 16.7 per cent equity interest, classified as an associate and presented within Investments accounted for using the equity method in the Balance sheet. For the year to December 31, 2022, the Group has not made any provision for expected credit loss arising relating to amounts owed by related parties (2021: \u20acnil). Significant shareholders In this instance, significant shareholders are those parties who have the power to participate in the financial and operating policy decisions of the Group, as a result of their shareholdings in the Group, but who do not have control over these policies. At December 31, 2022, the only significant shareholder of the Group was Qatar Airways. At December 31, 2022 the Group had cash deposit balances with shareholders holding a participation of between 3 to 5 per cent, of \u20acnil (2021: \u20acnil). Board of Directors and Management Committee remuneration Compensation received by the Group\u2019s Board of Directors and Management Committee, in 2022 and 2021 is as follows: Year to December 31 \u20ac million 2022 2021 Base salary, fees and benefits Board of Directors Short-term benefits 4 3 Share-based payments 1 \u2013 Management Committee Short-term benefits 15 11 Share-based payments 2 1 For the year to December 31, 2022 the Board of Directors includes remuneration for one Executive Director (December 31, 2021: one Executive Director). The Management Committee includes remuneration for 14 members (December 31, 2021: 14 members). The Company provides life insurance for the Executive Director and all members of the Management Committee. For the year to December 31, 2022 the Company's obligation was \u20ac38,000 (2021: \u20ac35,000). At December 31, 2022 the transfer value of accrued pensions covered under defined benefit pension obligation schemes, relating to the current members of the Management Committee totalled \u20ac5 million (2021: \u20ac9 million). No loan or credit transactions were outstanding with Directors or officers of the Group at December 31, 2022 (2021: \u20acnil).", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-709": { "value": "The Group has transactions with related parties that are conducted in the normal course of the airline business, which include the provision of airline and related services. All such transactions are carried out on an arm\u2019s length basis. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-667": { "value": "Board of Directors and Management Committee remuneration Compensation received by the Group\u2019s Board of Directors and Management Committee, in 2022 and 2021 is as follows: Year to December 31 \u20ac million 2022 2021 Base salary, fees and benefits Board of Directors Short-term benefits 4 3 Share-based payments 1 \u2013 Management Committee Short-term benefits 15 11 Share-based payments 2 1 For the year to December 31, 2022 the Board of Directors includes remuneration for one Executive Director (December 31, 2021: one Executive Director). The Management Committee includes remuneration for 14 members (December 31, 2021: 14 members). The Company provides life insurance for the Executive Director and all members of the Management Committee. For the year to December 31, 2022 the Company's obligation was \u20ac38,000 (2021: \u20ac35,000). At December 31, 2022 the transfer value of accrued pensions covered under defined benefit pension obligation schemes, relating to the current members of the Management Committee totalled \u20ac5 million (2021: \u20ac9 million). No loan or credit transactions were outstanding with Directors or officers of the Group at December 31, 2022 (2021: \u20acnil).", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-637": { "value": "36 Post balance sheet events On February 23, 2023, the Group entered into an agreement to acquire the remaining eighty per cent of the share capital of Air Europa Holdings that it had not previously owned. On successful completion of the transaction, 54,064,575 ordinary shares of the Company (which represented \u20ac100 million at the date of the agreement) will be transferred to and \u20ac100 million in cash will be paid to Globalia, with a further \u20ac100 million paid on both the first and second anniversary of completion. In addition, the Group has agreed to pay a break-fee to Globalia of \u20ac50 million should: (i) the relevant approvals, detailed below, not be forthcoming within 24 months of entering into the agreement; or (ii) the Group terminates the agreement at any time prior to completion. The acquisition is conditional on Globalia receiving approval from the syndicated banks that provide the loan agreements that are partially guaranteed by the Instituto de Cr\u00e9dito Oficial (ICO) and Sociedad Estatal de Participaciones Industriales (SEPI) in Spain. The acquisition is also subject to approval by relevant competition authorities. Until the completion of these approvals, the acquisition does not meet the recognition criteria under IFRS 3 Business combinations, and no accounting has been made for the transaction in these consolidated financial statements. The execution of the agreement has not impacted the fair value of the 20 per cent shareholding in Air Europa Holdings as detailed in note 19. The fair value of the non-controlling equity interest in Air Europa Holdings will be remeasured to reflect the transaction price upon successful completion of the transaction.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:959800TZHQRUSH1ESL13", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } } } }