Annual Report2000.Pdf
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ANNUAL R E P O RT 2 0 0 0 IBERIA L.A.E. AND IBERIA GR O U P IBERIA L.A.E. AND IBERIA GR O U P I B E R I A,L Í N E A S AÉ R E A S D E E S PA Ñ A , S . A . I B E R I A G R O U P LETTER FROMTHE CHAIRMAN . 6 LEGAL INFORMATION . 99 LEGAL INFORMATION . 9 CONSOLIDATED FINANCIAL STATEMENTS . 103 FINANCIAL STATEMENTS . 13 -CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31,2000 AND 1999 . 104 -BALANCE SHEETSAS OF DECEMBER 31,2000 AND 1999 . 14 -CONSOLIDATEDSTATEMENTS OF INCOME FOR 2000 AND 1999 . 106 -STATEMENTS OF INCOME FOR 2000 AND 1999 . 16 NOTES TO 2000 CONSOLIDATEDFINANCIAL STATEMENTS . 109 NOTES TO 2000 FINANCIAL STATEMENTS . 19 -DESCRIPTION OFTHE CONTROLLING COMPANYAND OFTHE GROUP . 111 -COMPANY DESCRIPTION . 21 -DEPENDENT COMPANIES . 112 -BASIS OF PRESENTATION OFTHE FINANCIAL STATEMENTS . 22 -ASSOCIATEDCOMPANIES . 113 -DISTRIBUTION OF INCOME . 22 -BAS I S O FP R E S E N TAT I O NO FT H E CO N S O L I D ATE D FI N A N C I A L ST ATE M E N T S . 114 -VALUATION STANDARDS . 23 -DISTRIBUTION OFTHE CONTROLLING COMPANY’S INCOME . 115 -INTANGIBLEASSETS . 28 -VALUATION STANDARDS . 115 -PROPERTY, PLANTAND EQUIPMENT . 30 -INTANGIBLEASSETS . 122 -LONG-TERM FINANCIAL INVESTMENTS . 38 -PROPERTY, PLANTAND EQUIPMENT . 123 -ACCOUNTS RECEIVABLE . 44 -LONG-THERM FINANCIAL INVESTMENTS . 132 -SHORT-TERM FINANCIAL INVESTMENTS . 45 -GOODWILL / NEGATIVE GOODWILL IN CONSOLIDATION . 136 -SHAREHOLDERS’ EQUITY . 45 -SHORT-TERMFINANCIAL INVESTMENTS . 137 -PROVISION FORTHIRD-PARTY LIABILITY . 47 -SHAREHOLDERS’ EQUITY . 137 -PAYABLE TO CREDIT ENTITIES . 48 -MINORITY INTERESTS . 142 -FUTURESTRANSACTIONS . 49 -PROVISIONSFOR CONTINGENCIESAND EXPENSES . 143 -BA L A N C E SA N DT R A N S AC T I O N SW I T HG RO U PA N DA S S O C I AT E D CO M PA N I E S . 50 -PAYABLE TO CREDIT ENTITIES . 144 -TAX MATTERS . 52 -FUTURESTRANSACTIONS . 145 -REVENUESAND EXPENSES . 56 -TAX MATTERS . 146 -PLANS FORADAPTATION TO THE EURO . 59 -REVENUESAND EXPENSES . 149 -DIRECTORS’ COMPENSATIONAND OTHER BANEFITS . 59 -CONTRIBUTION OFTHE GROUPAND ASSOCIATED COMPANIES -INFORMATION RELATING TO THE MERGER OF TO CONSOLIDATED INCOME . 153 IBERIA,LÍNEAS AÉREAS DE ESPAÑAAND AVIACIÓN Y COMERCIO S.A. 59 -PLANS FORADAPTATION TO THE EURO . 154 -2000 AND 1999 STATEMENTS OF CHANGES IN FINANCIAL POSITION . 64 -DIR E C TO R S ’ C O M P E N S AT I O NA N D OT H E RB E N E F I T S . .154 MANAGEMENT REPORT . 67 -INFORMATION RELATING TO THE MERGER OF -2000 HIGHLIGHTS . 69 IBERIA,LÍNEAS AÉREAS DE ESPAÑA AND AVIACIÓN Y COMERCIO S.A. .155 -IBERIA PRODUCTION (BY NETWORK) . 74 2000 CONSOLIDATED MANAGEMENT REPORT . 159 -SUMMARY BY MANAGEMENT AREAOF IBERIA, L.A.E. 77 -2000 HIGHLIGHTS . 161 -RESOURCES . 84 -IBERIA GROUP (BYNETWORK) . 166 -IBERIA OPERATING RESULTS . 87 -SUMMARY BYSUBSIDIARY MANAGEMENTAREA . 173 GOVERNING BODIES . 93 -RESOURCES . 179 AGENDA . 97 -IBERIA GROUP OPERATING RESULTS . 182 Dear Shareholder, The best of Iberia in 2000, which we offer in this annual report, is not only to be found in our excellent business results -37 billion pesetas in gross profits from an income of 747 billion increases of 18.5% and 15.6%, respectively, from the previous year’s totals- but also in the fact that such results were achieved in an especially complicated year for the air t ra n s p o r tation industry, owing to the spectacular rise in the cost of fuel (our second-largest expense item), the rising of the dollar against the euro, and higher airport fees. But the markets behaved satisfactorily, and the company was able to avail itself of these circumstances to continue to grow. Indeed, demand for our services increased twice as fast as supply, and the average seat occupancy rate reached a record 74%, up five points from the preceding year. We carried 30 million passengers, counting those of our franchises, which was 14% more than the total in 1999. Furthermore, and despite the hike in fuel costs, our supply policies served to ensure that we paid much less than spot market price, although our outlay for fuel was still substantially larger than it had been in 1999. Of the many major developments during the year, particular ly noteworthy was our progress towards full privatisation, whereby the six representatives of our new private-sector partners took their seats on the Board.This completed the first stage of our privatisation, which will be concluded when the company’s shares are listed on stock markets early in 2001. Although for the past several years Iberia has been managed in strict accordance with private sector norms and practices, the entry of private capital took us another step forward in the adaptation of our corporate culture, and today all of us who work at Iberia are more focused on the interests of our customers and also of our shareholders individuals and institutions which, among so many investment options, chose Iberia. We fully understand that they deserve a return on their investments that can justify this choice. Another significant development in 2000 was the launch of our new strategic plan for 2000-2003, following the success of the previous three-year plan.Among the key objectives set forth in the new plan is the strengthening of our leadership in Iberia’s strategic markets -Spain-Europe and Europe-Latin America- while making ever more effective use of the new technologies, enhancing customer satisfaction, improving the utilisation of our assets and resources, developing our alliances, reducing costs, and heightening competitiveness.All these efforts are baked by a series of commercial, financial and organisational measure which are being implemented on schedule. 6 I would not want to omit a mention of one of the milestones reached by Iberia in 2000: it became Spain’s leading company in internet sales, by selling more than 300,000 air tickets on-line, generating some 6 billion pesetas’ worth of business in the year, far outstripping all other companies in electronic commerce. Iberia.com has become Spain’s standard-bearer in e-commerce, and studies show that our pages are highly appreciated and valued by the general public. And this is only the beginning, our strategic plan calls for even greater emphasis on the use of internet technologies as business tools. The year witnesses other ventures related to e-commerce, both B2C and B2B, such as our involvement alongside other European and U.S. airlines in a new portal focusing on air travel, and alongside other major Spanish companies in another portal designed to facilitate purchasing.These are but two early examples of how the Internet can be used to improve our services and procedures, while helping to reduce costs. We have continued with our fleet replacement programme, and in 2000 we took delivery of 26 new aircraft, while retiring all our DC-10s. In the course of 2001 our Boeing 727s and DC-9s will also be withdrawn from service, having written their respective pages in Iberia’s history. Their replacements will give Iberia a more modern and homogeneous fleet which will raise productivity while reducing operating costs. Our new aircraft are more friendly to the environment and more comfortable for our passengers. These passengers also benefited last year from several major improvements in our services. Our punctuality increases substantially, and we launched our new First Class and European Business Class services, while inaugurating a new European Reservations Centre, a new luggage problem hotline, and other innovations. Our airport passenger and aircraft handling operations were awarded ISO quality certification, our operations area had already earned such certification in 1999. The year under review was almost certainly last one during which Iberia operated as a public-sector company. For several years we have been preparing for the change, and the excellent business results we have obtained since the mid-1990s testify to the suitability of the decisions taken. XABIER DE IRALA CH A I R M A N O F I B E R I A 7 I B E R I A , LINEAS AEREAS DE ESPA Ñ A , S . A . BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 1999 S T ATEMENTS OF INCOME FOR 2000 AND 1999 T R A N S L ATION OF A REPORT AND FINANCIAL STATEMENTS ORIGINALLY ISSUED IN SPANISH AND PREPA R E D I N A C C O R D ANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN SPAIN (SEE NOTE 21). IN THE EVENT OF A DISCREP A N C Y , T H E S P A N I S H - L A N G U AGE VERSION PREV A I L S . I B E R I A , LINEAS AEREAS DE ESPA Ñ A , S . A . ASSETS MILLIONSOF PESETAS 2000 1999 FIXED AND OTHER NONCURRENT ASSETS: START-UP EXPENSES (NOTE 4-a) 105 285 INTANGIBLE ASSETS (NOTE 5) 67,904 58,290 PROPERTY, PLANTAND EQUIPMENT (NOTE 6) 289,466 282,070 AIRCRAFT: COST 424,216 407,562 ACCUMULATED DEPRECIATIONAND PROVISIONS (199,792) (189,093) 224,424 218,469 OTHER TANGIBLE FIXED ASSETS: COST 161,034 158,901 ACCUMULATED DEPRECIATIONAND PROVISIONS (95,992) (95,300) 65,042 63,601 LONG-TERM FINANCIAL INVESTMENTS 120,434 127,943 HOLDINGS IN GROUPAND ASSOCIATED COMPANIES (NOTE 7) 44,469 96,226 LOANS TO GROUP ANDASSOCIATED COMPANIES (NOTE 7) 4,263 33,625 LONG-TERM RECEIVABLES FROM GROUP COMPANIES (NOTE 14) 59,524 36,066 INVESTMENTS SECURITIESAND OTHER LOANS (NOTE 7) 59,531 11,440 PROVISIONS (NOTE 7) (47,353) (49,414) TOTAL FIXEDAND OTHER NONCURRENTASSETS 477,909 468,588 DEFERRED CHARGES (NOTE 5) 18,702 16,163 CURRENT ASSETS: INVENTORIES 15,780 10,285 RECEIVABLE FROM GROUP COMPANIES (NOTE 14) 6,930 12,353 ACCOUNTS RECEIVABLE (NOTE 8) 74,951 72,784 SHORT-TERM FINANCIAL INVESTMENTS (NOTE 9) 114,182 87,393 CASH 915 1,175 ACCRUAL ACCOUNTS 5,079 4,395 TOTAL CURRENTASSETS 217,837 188,385 TOTAL ASSETS 714,448 673,136 14 I B E R I A , LINEAS AEREAS DE ESP A Ñ A , S .