IBERIA SUSTAINABILITY REPORT 1 Content guide IBERIA SUSTAINABILITY REPORT 3

Chairman’s01 Statement

I am delighted to greet you from environment. There are many actions these pages for another year. around the aviation business which can be “greener”, and therefore one 2019 was a good year, in the broadest of the goals we wish to achieve is the sense of sustainability: we invested sustainable growth of operations. in caring for the environment and What is more, we are committed to in innovation, in our customers and the Sustainable Development Goals our employees; we achieved very of the United Nations, and thus we good financial results and continued have made public our commitment, contributing to a better society. A as part of IAG, to have zero net year, in short, about which we can emissions in 2050. feel satisfied. To this end, we foster sustainability However, at the time of writing through actions designed to these lines, now in 2020, there is a contribute to improving efficiency, disconcerting contrast between the such as renewing the fleet with year covered by this report and what the most sustainable aircraft in the is happening now, due to the effects market, operational measures to of Covid19, in the world in general reduce consumption and emissions, and this industry in particular which the use of electrical equipment in has forced us all to look at reality airports, sustainable management of from a new perspective and adapt. waste and use of renewable energy; and also through actions aimed at As I said at the beginning, however, employees, such as promoting car this report is about 2019, a year in sharing, electric vehicles and waste which the collective consciousness reduction. intensified in favour of becoming more environmentally careful and We can all contribute to making the responsible, being more respectful world more sustainable, more towards the planet and being aware habitable and healthier; companies that our actions today will have and people. repercussions on the lives of our children, grandchildren and future Together with sustainability, generations. innovation was key in how 2019 developed. I firmly believe that Aviation is one of the most thrilling innovation is essential to grow, to sectors in the world, but we know adapt ourselves to new situations, that we have an impact on the to offer customers what they need, IBERIA SUSTAINABILITY REPORT 4

because yesterday’s requirements are worst of scenarios that we could have not those of today, and nor will they imagined, Iberia has continued to be those of tomorrow. To this end focus on commitment and on we created a new department, the innovation. A commitment to society, Transformation Department, which is to the employees themselves, to the directly present on the Management environment. And innovation to adapt Committee of the of the company. to a new way of working, of assisting customers and of flying. This year, we have made great strides in this area, both internally and Allow me to end this letter with a externally, in our ways of working and couple of items of financial data. in the services that we offer to you, We are a private company and we our customers. However, we still have also have a duty to our investors and a long way to go. shareholders. 2019 was a positive year in which we achieved an Some examples are assisting operating profit of 497 million euros, customers through WhatsApp adjusted operating margin of 8.8%. and voice systems such as Alexa, Aura and Google Home; facial 2020 is going to be a very negative recognition, which we launched as year, due to the pandemic, but we are a pilot project for flights to Asturias working with the same willingness and Brussels, and scanning luggage and effort as the first day, in this case items using a mobile phone, thanks to to protect the future of the company collaborations with start-ups born out and jobs, its contribution to tourism of our accelerator project for these and the economy of our country and, companies, Hangar 51. Later in this of course, the health of our customers report, you will be able to find out in and employees detail what each of these initiatives consisted of, as well as many more Luis Gallego which we have rolled out over the course of the year.

Among them, I would like to highlight the Stopover Hola Madrid product, a new service through which customers on connecting flights can increase their stopover time in Madrid and purchase trips, guided tours and museum tickets for the city and the surrounding area with significant discounts. And thus we promote our city, our hub and our country.

2020 was going to be the year for the launch of this product, but the situation created by Covid19 has forced us all to adapt to a new reality.

When we publish the Sustainability Report next year, we will also have reasons to be proud of how, in the Iberia company profile IBERIA SUSTAINABILITY REPORT 6

Iberia02 company profile

Achievements. With the focus on innovation

The most Iberia is immersed in a process of now also assist its customers through digitalisation which aims to make it a the Amazon Echo, Google Assistant outstanding 100% connected airline. We want and Movistar Aura virtual assistants, to reinvent tomorrow, because it is in which can also be used to Check in achievements our DNA to be non-conformist and and find out flight status, among innovative and we believe we can be other benefits. in 2019 better every day. We want to leverage the synergies of both our flight and Prior to the flight, our customers also our ground operating processes have the option of finding out if their to advance even further and, by luggage meets the measurement developing innovative projects and requirements that allow them to take initiatives, make our operations more it into the cabin when they board. efficient and agile, so as to offer both And they can do this anywhere and our customers and our employees a at any time, without needing to go new-generation experience. to the airport. This is made possible through Iberia’s app and thanks to In following this strategy, we have the incorporation of virtual reality developed different projects to offer technology. our customers a new-generation experience. Once the luggage dimensions have been calculated and still before One of the main new features for our going to the airport, Iberia also offers customers involves the channels they passengers the opportunity to travel use to communicate with us, such “hands-free”, without a suitcase. as our new virtual assistant through Thanks to our collaboration with Bag WhatsApp which customers can use On Board (BoB), customers can go to to Check in, verify their flight status, the airport without having to worry view information about their booking about their luggage. All they have to and calculate the price for adding do is hire the service the day before additional baggage, among other their flight leaves. BoB collects the functionalities. luggage from anywhere in Madrid or Barcelona and the surrounding Another communication channel area and checks it in at the airport, with our customers for which the and the customer collects it when airline is constantly including new they reach their final destination. features is voice-based. Iberia can IBERIA SUSTAINABILITY REPORT 7

At Terminal 4 at Madrid-Barajas we on-board entertainment to a new launched facial recognition for dimension. customers who travel on our routes to Brussels and Asturias. This means To develop a lot of these new customers can identify themselves at additions, Iberia has applied open the general security control, the “Fast innovation to how it works, to Track” service and the boarding gate participate in programmes such as with their biometric profile, without Hangar 51, together with the rest needing to show their documentation. of the companies of the IAG Group, in order to evolve the innovation While on board, customers travelling strategy, experience new ways of with Iberia on some of our routes will working and develop new business have the chance to swim with sharks, opportunities walk with penguins and explore New York or Vienna, among other content, without moving from their seats. Iberia offers an on-board virtual reality glasses service that takes IBERIA SUSTAINABILITY REPORT 8

Sustainability, the overriding objective

One of Ibería’s priorities is to grow its To boost environmental operations sustainably. The company sustainability, it has implemented is committed to the Sustainable measures to improve efficiency, such Development Goals (SDG) of the as sustainable management of waste United Nations and has set itself the and use of renewable energy, and goal of achieving zero net emissions taken action aimed at employees, of CO2 in 2050. In addition, it aims such as promoting the use of to contribute to the well-being of reusable cups instead of single-use the communities where it operates, items in offices and car sharing. support disadvantaged children and integrate people who are at risk of All the information about the exclusion. company’s main sustainable projects is available later in this report

IAG incorporates Air Europa through Iberia

The agreement for IAG’s purchase As well as reinforcing the network of Air Europa through Iberia enables between Europe and Latin America, the airline to join a strong group the acquisition will enable IAG to that offers great opportunities for gain connectivity and critical mass to development. The transaction, which open new routes and grow in markets includes maintaining the Air Europa where it is not currently present or brand, will contribute to making has a very limited presence, and offer Madrid a more efficient hub that customers better services. can compete better with the main European airports. The purchase is expected to be completed in the second half of 2020, once all the necessary approvals hhave been received IBERIA SUSTAINABILITY REPORT 9

Good score on punctuality and customer satisfaction

The Iberia Group was the second three points, to 30.1%,. The main most punctual in Europe and factors which had a positive impact the fifth in the world among on the result were punctuality, an major network airlines, with an improved boarding experience and arrival punctuality rate of 84.24%, hand luggage through the less bag according to the report published by initiative, the launch of the WiFi Cirium for FlightStats. Iberia Express service in the short- and medium- was rated the most punctual low- haul fleet, improved comfort through cost airline in Europe for the sixth the arrival of the new A350 and year running, and fourth at global A320neo aircraft to our fleet, the level, with an arrival punctuality rate introduction of digital press services of 87.05%. and virtual reality, and an improved experience in London’s Terminal 5 Iberia improved its Net Promoter Score (NPS), the index that measures customer satisfaction, by almost

The best airline in southern Europe

In 2019, Iberia was considered the The yearly awards from Skytrax best airline in southern Europe result from a survey answered by by consultants Skytrax, ahead over 21 million customers of 100 of companies renowned for their different nationalities which rated quality such as Turkish Airlines, the on-board and airport service of which was a finalist in this edition. 300 airlines IBERIA SUSTAINABILITY REPORT 10

New latest-generation aircraft

In 2019 nine latest-generation and the A350 Juan Sebastián el Cano, aircraft were added to the Iberia in memory of the fifth centenary of fleet: four A350-900 and five the Spanish mariner’s completion A320neo. of the first round-the-world voyage. VIEW VIDEO

The A350-900 model, for long- The A320neo aircraft are planes haul flights, incorporates the for the short-haul and medium-haul latest technology, as regards both fleet and are 50% more silent and construction and operation, and environmentally friendly, as they

offers more space and comfort for emit 5,000 tonnes less CO2 and

customers. In addition, the average 50% less NOX per year. Their names

consumption of fuel and CO2 pay homage to aviation history and emissions are up to 35% lower than its historical figures, such as A320neo for similar aircraft. These aircraft Amelia Earhart, the first woman were given names associated with aviator to fly solo across the Atlantic Spanish talent, such as the A350 Ocean, A320neo Patrulla Águila (the Museo del Prado with which the aerobatic demonstration team of airline has joined the celebration of the Spanish Air Force), and A320neo the bicentenary of this institution, Getafe, the cradle of Spanish aviation

Airbus 2018 - photo by E. GRIMAULT / master films. We inaugurate nine routes in Europe

In 2019, the Iberia Group inaugurated Iberia Express operated Bari nine routes, some of them seasonal (Italy) and Zadar (Croatia). In addition, and all in Europe. The new over the course of the year flights destinations for Iberia were Corfu were reinforced on the routes to (Greece), Bastia, Genoa and Verona Portugal, Latin America and Africa (Italy), Oslo and Bergen (Norway). IBERIA SUSTAINABILITY REPORT 11

We present Stopover Hola Madrid

In 2019, Iberia inaugurated its Stopover Hola Madrid service, which offers the free option of a stopover of up to six nights in the Spanish capital for customers with flights from Latin America who have connecting Iberia flights from Barajas airport. The goal is to provide a new service for its customers, strengthen its hub in Madrid and boost demand for its long-haul flights. The initiative includes offers of discounts for leisure, cuisine and cultural activities

Spanish talent on board

Throughout its history Iberia has artists and athletes, famous or as demonstrated true passion for yet unknown, who enthusiastically Spanish talent, such as through its and eagerly endeavour to give sponsorship of Spanish national the best of themselves every day. teams and collaborations with Fashion, photography, music, art, entities such as the Museo del sport and cuisine come together Prado and PhotoESPAÑA, to give at Talentoabordo.com to discuss some examples. This is why it creativity and culture, dreams which launched Talento a Bordo [On- came true and those as yet still board Talent] in 2019, a space at unfulfilled and, of course, much VIEW WEBSITE Iberia to pay tribute to Spanish talent IBERIA SUSTAINABILITY REPORT 12

Once again this year, Iberia has striven This is why we believe the only way Every day to better ourselves and improve day to get better is to work every day as after day, driven by our philosophy. if it was all still left to be done. This is is the first day. We are not willing to just settle for our attitude and the way we face our what we have already achieved and work to offer the best of ourselves The maxim this leads us to always be considering every day as if it were the first what our next goal will be. we follow IBERIA SUSTAINABILITY REPORT 13

For a company like Iberia, committed Safety should extend to users, Safety in all to serving society, safety –understood naturally; but it must start from in a global, positive and humanistic within, through recycling and operations is our way – is a key pillar. individualised, ongoing training programmes designed to make it commitment This is an ongoing process, which possible to maintain a team which affects all the areas at horizontal is prepared at all times. Improving to excellence level and the entire organisational the simulation programmes, structure at vertical level. But, above incorporating the latest technology all, it is a way of being and of acting. and development action protocols, A philosophy which is leading to both our own and in conjunction the implementation of the most with the responsible authorities, are sophisticated, latest developments, part of the work done daily at our whether in the area of technology, company. in interconnection via the internet of all the processes and systems, Building a responsible, safe in understanding the environment organisation is no fad - it is a in which we are acting, and in the characteristic which identifies us and application of predictive programmes enables us to make progress, through or projects specially aimed processes for continual improvement at prevention. with their corresponding roadmaps IBERIA SUSTAINABILITY REPORT 14

2019 in figures

Air transport

Around Additional flights on 141 destinations 600 flights a day 46 routes Entre ellas: Tokyo, Iberia, Iberia Express San Juan de Puerto Rico, Rio de Janeiro, Bogotá, in 49 countries and Iberia Regional/Air Nostrum). Athens, Berlin, Oporto, Florence and Oslo.

Inauguration of new routes: direct flight to Guayaquil all year round, flight throughout the year to Oslo and Chalons-Vatry, and seasonal flight to Bergen, Bastia, Corfu, Verona, Genoa, Bari and Zadar.

More than More than 300 additional destinations 140,000 flights a day in conjunction with the partner en 80 countries in codeshare airlines in oneworld. with other airlines. IBERIA SUSTAINABILITY REPORT 15

Our fleet 86 42 23 aircraft aircraft aircraft

151 aircraft

Fleet renewal

The fleet is being renewed with the market’s most advanced aircraft. The company already has six units of the A350-900 and five units of the A320neo.

Before the COVID-19 crisis began, it was planned to incorporate four A350 and two A320neo in 2020 IBERIA SUSTAINABILITY REPORT 16

Airport services

361,066 aircraft handled, 1.08% more than in 2018.

170 client companies in the 29 national airports where we provide our handling service.

Over 101 million passengers assisted at all the airports in the Spanish network, 4.79 % more than in 2018, a record number.

Over 56 million items of luggage handled.

In 2019, we assisted 64,254 GoUp! This is Iberia’s project to transform the airport business into a more unaccompanied children. efficient and sustainable activity, whose cornerstones include digitalisation. Some of the initiatives of this project are:

Kepler. A tool which serves to plan, manage and assign our resources in real time. We have already deployed it in airports in northern Europe and in 2020 we will continue to roll it out in the other national airports.

PushToTalk. This technology uses the mobile data network and replaces traditional channels. It improves process efficiency by making them simpler and more agile.

With the focus on environmental sustainability, initiatives are being developed that optimise the use of fuel and therefore reduce emissions. Some examples are the installation of catalysers or telemetrics in ground equipment, which makes it possible to optimise tasks, maximise safety levels and increase the efficiency of fuel consumption

We renewed 80 % of the ground equipment. 40% of the equipment which has a model that can be electric already is, which has made possible a very significant reduction in emissions and consumption of fossil fuels. IBERIA SUSTAINABILITY REPORT 17

Aircraft maintenance

160 engine inductions performed in 2019, compared to 154 inductions in 2018.

292 major maintenance overhauls completed, with a 92% punctuality rate for delivery.

542 line maintenance checks.

There were more than 4 million parts and components handled, and more than 25,000 certified aircraft components were repaired (5,000 of them as overhaul), which means a 10% increase compared to 2018.

Iberia Maintenance Sites: In addition to Madrid and Barcelona, we provided a maintenance service at 23 Spanish and international sites.

Iberia Maintenance bases its strategy on a model of global service and excellence, and focuses on innovation and sustainability. These are some of the projects developed in 2019:

Investments were made in improving facilities, such as the engine accessory and wheel and brake workshops to make them more advanced and efficient.

The start-up acceleration programme from IAG, Hangar 51, made it possible to develop technologies such as fuselage checks using drones, voice recognition tools, and augmented reality applied to the maintenance business.

Digital tools were developed that eliminate paper and streamline processes. Mobility applications were implemented that increase efficiency.

To improve the sustainability of operations, two units of the Mototok electric vehicle were incorporated and the aircraft tow tractors which have no electric alternatives were updated to models with more efficient engines. The use of workstation trucks which incorporate all the necessary material for line checks was also implemented, thus preventing additional travel and reducing fuel consumption and, consequently, emissions as well IBERIA SUSTAINABILITY REPORT 18

Membership of associations

Iberia is an active member of different alliances and associations of the air transport sector. These are the following:

Oneworld. Iberia is a member of oneworld, one of the three largest world alliances of airline companies. Its members are characterised by being the leaders in their natural markets and operating with high quality standards. In addition to Iberia, the alliance includes American Airlines, British Airways, Cathay Pacific, Finnair, Japan Airlines, LATAM*, Malaysia Airlines, Qantas, Qatar Airways, Royal Jordanian, S7 Airlines and SriLankan Air, Royal Air Maroc* and up to 30 affiliate members. Through the oneworld alliance customers increase their options in terms of destinations, combined itineraries and types of fare, and enjoy more convenient connections, greater access to airport lounges and a package of benefits and exclusive services throughout the flight network of the alliance

IATA. Iberia is a member of the International Air Transport Association (IATA), the international organisation founded in 1945 which brings together 290 airlines that operate 82% of the world’s air traffic. Iberia is part, through its chairman, of its Chair Committee and its Board of Governors

ALA (Association of Airlines operating in Spain). Iberia is represented on the Management Board of the association and has held the office of Deputy Chairman since 2018

ALTA (Latin American and Caribbean Air Transport Association). Iberia participates as an associated company

A4E (Airlines for Europe). Iberia (through IAG) has belonged to the leading European air transport association since it was created in January 2016 and participates in its working groups IBERIA SUSTAINABILITY REPORT 19

Joint businesses

North Atlantic. An agreement between Iberia, British Airways, American Airlines and Finnair to offer a joint network of routes between North America (Canada, USA and Mexico) and Europe (EU, Switzerland and Norway)

Europe-Latin America. Iberia and LATAM Peru are part of an agreement between Europe and Peru which includes the Madrid/Barcelona- Lima routes. At the same time, Iberia and LATAM Ecuador are part of an agreement between Europe and Ecuador for the Madrid-Quito/Guayaquil routes

Europe-Japan. In October 2016, with the start of flights between Madrid and Tokyo, Iberia joined the agreement between Japan Airlines, British Airways and Finnair for routes between Europe and Japan (Siberian Joint Business). For the agreement’s partners, Iberia’s incorporation reinforces the alliance with a new direct flight IBERIA SUSTAINABILITY REPORT 20

Certificates

Certification Scope Certifying entity

Greenhouse Gases Verification Flight and ground operations AENOR

Measuring and monitoring quality AENOR Mark AENOR of service

Madrid Excelente Management excellence AENOR

National and international agencies. Aircraft maintenance certifications Competent body (EASA, FAA, etc.)

Iberia Servicios Aeroportuarios: Integrated Quality and Environment Activity in the 29 stations of the national AENOR System, ISO 9001 and ISO 14001 airport network

Iberia Servicios Aeroportuarios: Central services and airport of Madrid, certification in ground operation safety Bilbao, Ibiza, Malaga, Palma de Mallorc ISAGO (passengers, luggage, loading and Tenerife Sur and aircraft)

National and international agencies

Standard 145 - Maintenance Centres: AESA, Spain; FAA, United States; TCCA, Canada; CAAC, Certification China; KCASR, Kuwait; GACA, Saudi Arabia; Competent body for aircraft MRO CAAB, Bangladesh; SAACA, South Africa

Standard 147 - Training Centres: EASA 147, Training of Type for new fleet

Management Systems Aircraft maintenance centres AENOR for quality 9001 and 9110

All Iberia’s activities with an impact on Occupational risk prevention system Audelco occupational risk prevention IBERIA SUSTAINABILITY REPORT 21 IBERIA SUSTAINABILITY REPORT 22

IAG and Iberia Express

IAG is one of the world’s largest airline groups, with 598 aircraft flying to 279 destinations and carrying around 118 million passengers a year. It is the third largest group in Europe and sixth in the world in terms of revenue. Created in January 2011, IAG is the parent company of Aer Lingus, British Airways, Iberia and Vueling, and the Level brand. The company is registered in Spain and its shares are listed on the London and Spanish stock markets. The corporate head office of IAG is in London, United Kingdom.

100% owned by Iberia, Iberia Express has consolidated its status as the most punctual low-cost airline in the world for the sixth year in a row and the fourth in the world. It currently has a fleet of 23 aircraft and flies to more than 40 destinations, consisting of 13 national and 30 international destinations IBERIA SUSTAINABILITY REPORT 23

Financial performance The operating profit attributed to the Iberia segment in the consolidated financial statements of the IAG Group came to 497 million euros in 2019, which was an increase of 60 million euros compared to the previous year, achieving a lease adjusted operating margin of 8.9 %.

Direct economic value generated (€M) 2019

Recurring operating income 5,138

Operating income (including non-recurring) 5,138

Financial assistance received from government 0*

* 2million received in official subsidies for training, 2 million in deductions for R&D and subsidised loans worth 1.3 million euros.

Economic Value distributed (€M) 2019

Operating costs 5,126 (including non-recurring)

Employee wages and benefits 1,051

Company’s total contribution to pension plans 39

Total amount paid to the Social Security 207

Airport or air navigation taxes 387

Taxes paid 856

EU investments 0

Economic Value Distributed (€M) Spain Rest of Europe America Rest

Employee wages and benefits 1,036 2 12 1

Operating costs (including non-recurring) 4,065 191 819 51

Direct economic value generated (€M) Spain Rest of Europe America Rest

Recurring operating income 2,982 848 1,298 10

Operating income (including non-recurring) 2,982 848 1,298 10 IBERIA SUSTAINABILITY REPORT 24

Activity In 2019, the load factor of the Iberia Group was 87.0%, with an improvement of 1.3 points compared to the previous year.

The evolution of key indicators 2019 % 2019 vs 2018

RPK (million) Revenue-Passengers-Kilometre (Demand) 68,024 10.9

ASK (million) Available-Seat-Kilometre (Offer) 78,194 9.2

FTK (million) Freight-Tonne-Kilometre (Demand) 1,093 -4.6

Other representative figures of the company are the following: Iberia:

Accounts for 39% of the total activity of Madrid airport (measured in ASK).

Latin America is the company’s main market. We offer more than 250 flights a week which link Europe to 19 destinations in 16 countries in. Latin America. Iberia is the leader in this market.

Half of Iberia’s capacity, measured in available seat kilometres (ASK), is on flights to and from Latin America, as in 2018.

In terms of domestic activity, Iberia is second with 26% of total activity (also measured in ASK). The market leader, with a 35% share, is Vueling, which is also an IAG company.

Market No. destinations in 2019 Europe 67 Domestic 37 Latin America 19 Africa and Middle East 10 Far East 2 United States 6 TOTAL 141

Intermodality contributes to Intermodality has consolidated its sustaining medium-haul and position, therefore, as a collective long-haul international flights, by transport alternative to individual attracting the traffic from passengers transport in a private vehicle. With who live in cities which in most this strategy, Iberia facilitates cases do not have an airport through territorial accessibility and ensures offering connections with T4, using the mobility of its customers in a the Bus and Train & Fly formulas. sustainable, environmentally friendly There are currently connections to/ manner from 16 Bus & Fly cities and 14 Train & Fly cities. IBERIA SUSTAINABILITY REPORT 25

Innovation management

Iberia believes that R&D RFID. This initiative aims to improve investment is a differentiating monitoring of use of the personal tool factor and of strategic value. employed in aircraft maintenance in That is why it devotes considerable a safe and traceable manner, through resources to projects with a strong radio frequency techniques (RFID) and technological component in order Internet of Things (IoT) technologies, to gradually improve its activity minimising any damage caused to the and create new services. In this aircraft by foreign objects. respect, digital transformation is a crosscutting initiative from the Ancillaries. The aim of this project company’s Future Plan, which is to create a new multi-platform affects all areas. system offering theancillaries for plane tickets (the ancillary elements In terms of tax incentives for R&D of the basic fare). In this way, activities, the company accredited customers can easily select the through the established mechanisms services they need at each point in a deduction of more than two million time, which fosters differentiation euros in the 2019 tax year. and emphasise the services offered by the company In terms of public financing, two projects were financed, through its innovation line, by the Centro para el Desarrollo Tecnológico Industrial (CDTI): IBERIA SUSTAINABILITY REPORT 26

Quality of service

Punctuality

In 2019 the Iberia Group was the In 2019, the Iberia Group had to second most punctual in Europe tackle several problems which and the fifth in the world among affected its punctuality such as major network airlines, with an a number of strikes in the sector, arrival punctuality index of 84.24%. airspace regulations, adverse weather Iberia Express was ranked as the conditions and the closure of one of most punctual low-cost airline in the runways at Madrid airport due to Europe for the sixth year running, remodelling in the month of March. and was fourth at global level, with an arrival punctuality rate of 87.05%. Despite these circumstances and in All this is according to the report view of the expectation of quality published by Cirium for FlightStats. that customers have of Iberia Group companies, its workers, thanks to The Iberia Group thus improved its their commitment and vocation position in 2018, when it was ranked for service, achieved punctuality the third most punctual network rates that consolidate the positive airline in Europe and sixth in the punctuality results obtained in the world, while Iberia Express remained last six years on the European podium for a further year against a backdrop of operational difficulties.

Departure punctuality in 2019

100 95.8 94.4 95.0 94.4 95 93.4 92.9 92.9 92.0 IBERIA EXPRESS: 92.3% 94.1 91.3 91.9 92.5 93.0 90.3 90.6 91.0 89.5 90.9 89.7 90 88.1 87.0 86.8 88.5 87.2 87.8 85.5 85.3 88.0 87.8 SHORT/MEDIUM HAUL: 89.3% 86.0 88.0 85.3 85 85.2 82.9 84.4 84.4

LONG HAUL: 86.5% 80 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC IBERIA SUSTAINABILITY REPORT 27

Commitment to Satisfaction (NPS)

The NPS (Net Promoter Score, a related to punctuality, such as strikes recommendation index) improved in the sector, airspace regulations, in 2019 by almost three points adverse weather conditions and the compared to the figure for the closure due to remodelling of one of previous year and reached the runways at Madrid airport. a score of 30.1. The NPS is an index drawn up on The main factors that had a the basis of the answers to a single positive impact on this result were question in the survey is sent to NPS in 2019 punctuality, an enhanced customers to assess their travel boarding and hand luggage experience: How likely would you be 35% experience through the less bag to recommend Iberia to a relative, 30.1 28.6 30% initiative, the launch of the WiFi friend or acquaintance? (where 0 is 27.5 service in the short-haul and “very unlikely” and 10 “very likely”). 25% medium-haul fleet, an increase in The customers whose answer is 9 or

20% comfort through the incorporation of 10 are considered promoters, while the new A350 and A320neo aircraft, those who give a score of 0 to 6 15% the introduction of digital press are categorised as detractors. The 10% and virtual reality services and the NPS is the difference between the improved experience of terminal percentage of promoters and the 5% 5 in London. However, the NPS was percentage of detractors 0 2017 2018 2019 negatively impacted due to problems

Claims

The project to transform claim management implemented in 2017 enables us to handle claims more efficiently and reduce response times. In 2019, the response to customers took on average three days, compared to four days in the last quarter of 2018 IBERIA SUSTAINABILITY REPORT 28

Personnel Breakdown of personnel by group

Average length Group Personnel at year end Average age (years) of service (years) National Ground 12,182 44.2 16.1

Pilots 1,406 44.8 16.2

Cabin crew 3,591 42.7 17.0

Local personnel abroad 279 45.2 12.6

TOTAL 17,458 43.9 16.3

Breakdown of personnel by business area

Area Ground Flight Total

Corporate 391 391

Air transport 1,112 4,997 6,109

Airports and cargo 8,118 8,118

Maintenance 2,840 2,840

TOTAL 12,461 4,997 17,458

Personnel evolution type Personnel by contract

2017 2018 2019 No. of people

16,393 16,968 17,458 Indefinite with regular timetable 11,460

Indefinite part-time 1,524

Indefinite discontinuous 213 Indefinite contracts signed Indefinite with irregular timetable 1,554 Seasonal 2,707 In 2019, 823 indefinite contracts were signed, of which TOTAL 17,458 506 were conversions from temporary to indefinite

Employees with temporary contracts enjoy the Salario mínimo same fringe benefits as employees with indefinite interprofesional vs Iberia contracts

Minimum wage: 12,600. Iberia minimum wage: 15,748 IBERIA SUSTAINABILITY REPORT 29

Gender diversity

Women % Men % TOTAL %

Senior Management 12 27% 32 73% 44 0.30%

Senior Managers and Technicians Group 447 49% 461 51% 908 5%

General administration body 2,997 69% 1,334 31% 4,331 25%

Support services 412 9% 3,967 91% 4,379 25%

Aircraft maintenance technical 51 2% 2,269 98% 2,320 13%

Other 189 39% 290 61% 479 3%

Total Ground 4,108 33% 8,353 67% 12,461 71%

Pilots 85 6% 1,321 94% 1,406 8%

Cabin crew 2,488 69% 1,103 31% 3,591 21%

Total Flight 2,573 51% 2,424 49% 4,997 29%

TOTAL GENERAL 6,681 38% 10,777 62% 17,458 100%

Personnel age pyramid by gender

Women Men Total % Women % Men

<30 781 1,315 2,906 37% 63%

30-50 3,968 6,105 10,073 39% 61%

>50 1,932 3,357 5,289 37% 63%

TOTAL 6,681 10,777 17,458 38% 62%

The salaries of employees covered by collective bargaining agreements are set according to their professional rank, length of service and position, according to their collective bargaining agreements. The wages of employees not covered by collective bargaining agreements (management, senior personnel) are negotiated between the company and the employee, following criteria of specialisation, experience and duties. In all cases, discrimination on grounds of sex, race or any other criteria is avoided IBERIA SUSTAINABILITY REPORT 30

Diversity in management positions

Women Men Total

Chairman 0 1 1

Management Committee 1 7 8

Director 13 26 39

Senior Manager 13 44 57

Manager M1 48 77 125

Manager M2 44 77 125

Specialists 100 104 204

Total 219 336 555

Wage differences, categories not covered by collective bargaining agreements %*

Senior Manager 4.69%

Manager M1 -0.21%

Manager M2 -3.26%

Specialists Especialistas -3.73%

*% Average wage difference women/men

According to the most recent study on the competitiveness of the salaries of those of its employees not covered by collective bargaining agreements performed by an external company, there is not a gender-based wage gap at Iberia IBERIA SUSTAINABILITY REPORT 31

Number of employees signed up for reduced working hours for legal guardians in 2019

Women Men Total

FLIGHT 1,062 493 1,555

Pilots 26 215 241

Cabin crew 1,036 278 1,314

GROUND 762 470 1,232

Total 1,824 963 2,787

Percentage of union membership through payroll deductions

Ground 63.55%

Cabin crew 33.03%

Pilots 100% IBERIA SUSTAINABILITY REPORT 32

Combatting discrimination and harassment

As indicated in Iberia’s Code of no discrimination on grounds of race, Conduct, it undertakes to continue origin, religion, gender, political or its policy of action based on the union ideas, sex, marital status, age or development and running of all disability personnel selection processes with

Diversity and Inclusion Plan

This commitment goes further than the legislation and compliance with the Equality Plan and works in different areas:

In generating an inclusive culture inside the company, in which diversity is valued and fostered, with the focus placed mainly on gender diversity. Some of the initiatives that promote this culture are the “Mujeres que inspiran” conference series featuring women with exemplary careers and with different profiles, online training for the entire workforce on equality, and on-site training for executives on managing diverse teams.

In professional development of diverse talent, through the “Take the lead” development and mentoring programme, and policies which promote equality in all the talent management processes.

Contributing to getting girls to consider traditionally male professions as an option. With the goal of attracting and fostering technical careers among younger girls, careers in which women are still very much a minority, a VIEW VIDEO programme was launched entitled “Quiero ser”.

With all this, the number of women in executive positions at Iberia increased significantly in 2019, rising to 27% and boosting our commitment to continue growing and building on the path of diversity and inclusion IBERIA SUSTAINABILITY REPORT 33

Plan person@

This project brings together all the of healthy habits through the “Elige initiatives which the company Cuidarte” health programme and launches aimed at fostering the the agreements with sports centres, well-being of all the employees of employee recognition, and the Iberia. fostering of the “Iberia Lab” idea generation, among other initiatives These include training in new technologies and tools the fostering

Our values

During 2019, a team made up of the employees of this great family employees from all groups and and which drive them to do things organisational levels worked to differently to the rest. They are the identify the six values that define following: We put heart and soul into what we do. We connect to our customers. We make it simple and efficient. We carry safety in our DNA. We reinvent tomorrow. We are one. IBERIA SUSTAINABILITY REPORT 34

People with disabilities

Pursuant to current laws and In both cases Iberia guarantees regulations, Iberia must hire a number compliance through its collaboration of workers with disabilities equivalent with the Envera Association and its to no less than 2% of its total special employment centres. This headcount. Owing to the company’s association was created in 1977 by complex productive nature, it is Iberia employees with children with especially difficult to incorporate special needs, and the association’s workers who have disabilities in activities are explained later in this sufficient number to meet that quota report so the company meets its legal obligation through the alternative measures stipulated in law. En ambos casos Iberia garantiza

Iberia guarantees compliance with the Spanish General Disability Act through its collaboration with the Envera Association. IBERIA SUSTAINABILITY REPORT 35

Health and Safety

The Prevention Plan is the tool that In 2019, different activities were ensures the health and safety of its conducted in which prevention was a employees, facilitates the integration key element. One example was the of prevention at the company and holding of the charity run and the lays down the necessary procedures naming ceremony of the A320neo - to perform preventive activities Virgen de Loreto at Iberia’s industrial and include them in the different facilities at La Muñoza. For this event, management areas. the company ensured the safety of those attending by creating and At Iberia, there are work centres following the emergency plan, with where different companies are the goal of responding efficiently present, and it is therefore necessary and in a coordinated way if that to strike a suitable balance between emergency occurred. Other action the health and safety of the workers conducted during 2019 was the and flexibility in applying the internal campaign carried out on the occupational risk prevention plans. A occasion of the World Day for Safety key element to manage prevention and Health at Work and the programmes is to coordinate business ergonomic improvement programme activities. which made it possible to train people who do physical work, thus reducing the risk of injury and improving their working techniques IBERIA SUSTAINABILITY REPORT 36

No. occupational health and safety committees 20 committees + 1 Inter-centre Committee

91 (72 POs with committee No. of prevention officers + 13 POs without committee + 6 inter-centre POs)

% workers represented on committees 100%

% absenteeism rate due to occupational accidents 0,60% Tot. Iberia; 0,70% Tierra; 0,32% Vuelo

% accident rate compared to 2018 1,7%

% Economic sanctions for breach of prevention laws 5

Men Women

Number of days lost due to occupational or commuting accidents 21,422 12,731

Number of very serious accidents 1 0

Number of serious accidents 1 0

Number of minor accidents 674 324

Occupational Risk Prevention Training 2019 Ground Flight

Number of courses given 286 53

Number of students 14,999 796

Hours of occupational risk prevention training per employee 2.03 3 IBERIA SUSTAINABILITY REPORT 37

Training

In 2019, the important role of the The incorporation of new A350 in-house trainer continued to and A320neo aircraft during 2019 be promoted, with programmes significantly increased the hours of focussing on training new facilitators training of the flight group, pilots and which welcomed more than cabin crew. 100 people. Many of these new facilitators gave training to new As a specific sustainability measure, employees joining the company, who during 2019 a dramatic reduction experienced a great increase in all in the use of paper was achieved the employment groups in 2019. thanks to initiatives such as digital access to information about the Training on diversity has been classrooms or surveys in digital reinforced and complemented with format. numerous communication activities, as have leadership development Attention must be drawn to the programmes, essential for the new launch of the new educational and managers appointed in 2019. training programme for new pilots, Average number of training “Iberia Cadetes”, through which the hours by job category New developments in 2019 were the airline will finance 50% of the cost employee training which began on of their training, interest free. Iberia Pilots 161.62 data protection and social media, wants to have the best qualified Cabien crew 36.58 the training on the applications professionals in the sector, by of Microsoft 365 and new participating in their training, Corporate 10.77 methodologies such as Agile, which and promote the profession of pilot Maintenance 59.61 are key for the digital transformation among young people, helping them in which the company is immersed. to finance their training under very Airports 31.2 advantageous conditions, so that they can develop their vocation In 2019, there were 798,368 hours of training given, of which 40.63% were online. IBERIA SUSTAINABILITY REPORT 38

Recruitment and talent Recruitment

There were 252 recruitment previous year, this volume is due processes held in 2019, above all to the need to incorporate 10% more than the previous new crew members (pilots and cabin year. Individual vacancies handled crew) to cover the increase in our externally increased by 17% flight plan. These results are coherent compared to 2018. As with the with the company’s growth.

Talent

We manage our talent through Taking into account the result of two key drivers, appraisal of these regular assessment processes, performance and training on the as well as the training required on position, to help our employees the position, we make decisions to grow and develop within the related to succession and career, company. On a periodic basis, using promotion and development, and models adapted to the needs and also we identify their potential for requirements of our different groups, participation in the internal job we assess and offer feedback on their posting processes or attendance of professional performance. high potential programmes, among other opportunities

Grants

At Iberia we remain committed to grants for recent graduates, young talent and to learning, to associated with projects which are facilitate their incorporation into the developed in the different areas of job market through postgraduate the company IBERIA SUSTAINABILITY REPORT 39 Governance and stakeholders IBERIA SUSTAINABILITY REPORT 41

Governance03 and stakeholders

IAG-Iberia Shareholders governance

structure Board of Directors

Audit Committee Safety Committee and Compliance 5 5 12 Nominations Committee 5 5 Remuneration Committee

Executive Management

Board of Directors

3 Remuneration Committee Safety Committee 3 9 3 Audit Committee

Executive Management IBERIA SUSTAINABILITY REPORT 42

The bodies that participate corporate social responsibility in corporate governance include policy, in addition to regularly the Boards of Directors of IAG monitoring internal information and Iberia, which are responsible and control systems, directly or for defining the objectives and using reports compiled by the Audit strategies of the company, including Committees. the responsibility for approving the general policy lines, devising The Board of Directors takes note programmes and defining priorities of and approves the Corporate for performance of the corporate Responsibility report, after objects, as well as fostering and reviewing it and presenting it to the overseeing the management Management Committee. and fulfilment of the objectives established. The nomination and remuneration policies are the responsibility of The many duties of the Boards of the Nominations Committee and Directors of both IAG and Iberia, the Remuneration Committee, include approving the business plan respectively, which both report to the and budgets, the financing policy and IAG Group’s Board of Directors structure, the supervision policy and risk management and the policy on

No. No. of non-executive No. of directors directors women

Board of Directors 12 10 (84%) 3 (25%) of the IAG Group

Board of Directors 9 4 (44%) 2 (24%) of Iberia IBERIA SUSTAINABILITY REPORT 43

Stakeholders Looking deeper into the relationship with our stakeholders is one of the goals of the company’s Sustainability Plan.

The relationship between IAG and shareholders is essential for the Iberia Group. To this end, there is a specific area in charge of developing the consultation processes between shareholders and the senior governing body for economic, environmental and social issues

Breakdown Goal Communication Channels Materiality Analysis

- Commercial Communications. - Customer services offices. Airline Customers, - Iberia.com - Interviews with key managers of airport services Achieve customer satisfaction with our - Social networking. customer service. and aircraft services. Ensure business sustainability.

Custom - Call centres. - Claims analysis. maintenance. - Claims Management. - Events.

Airline To defend the common interests - Direct participation in these associations and within the airline industry. Expand associations. - IATA materiality analysis. alliances. presence in the aviation market. - Working groups.

- Social networking. - Interviews with managers of - Press Releases. external communications. Maintain a permanent interaction Media and society - Corporate website. - Studies from the Centro. with the media. Inform and interact in general. - Interviews and meetings with de Investigaciones Sociológicas. instantly with the digital community. journalists. - Merco Analysis and Madrid - Institutional relations. Excelente.

Society - Applicable law. Preserve the environment - Annual IAG Report. - External audits. Environment. and take care of it. - Iberia’s CR Report. - Internal and external materiality results.

- CSR communication channel Collaborate actively in organisations, - Corporate website. - Analysis of requests from NGOs NGOs and social especially those related to our - Associated NGOs. and foundations. organisations. employees.. - Volunteering information (Intranet).

Public administrations, Guarantee compliance with the AENA, Civil regulations in each area of activity. - Working groups. - Key aspects Aviation, ICAO, Maintain a cooperative attitude with - External audits. of applicable regulations. IATA, national regulators to help maximise the benefit - Specific Statements. Regulator and local of regulation for all stakeholders. governments.

- Internal communication channels. Contribute to the career development - Regular meetings between - Materiality internal survey. Employees. and well-being of employees. managers and employees. - Workplace climate survey.

Employees - Whistleblowing channel. - Suggestions box. IBERIA SUSTAINABILITY REPORT 44

Breakdown Goal Communication Channels Materiality Analysis

Guarantee transparent contracting processes and maintain a relationship Suppliers and - Suppliers management - Interviews with services that adds value to all parties. Establish subcontractors. systems. procurement managers. and promote responsible purchasing Suppliers criteria.

- Shareholder and investor

relations office. - Responsible investment criteria. - Shareholders of Transparently transmit all relevant - Shareholders’ Meeting. - Key issues addressed in the the IAG Group. corporate and financial information. - Board of Directors. Shareholders’ Meeting. - Market analysts. Fulfil corporate governance obligations. - Quarterly and annual reports. - Corporate Governance functions,

Shareholders - Market presentations. dependent on the Board of Directors. - IAG website. IBERIA SUSTAINABILITY REPORT 45

Business One of Iberia’s priority goals is to To do this, we have the IAG Audit and identify the most significant risks Compliance Committee and the risk to the company and assess their Iberia Audit Committee set up financial impact, likelihood and time in 2017, pursuant to applicable management horizon. regulations

Main responsibilities comprise:

Supervising the effectiveness and periodically reviewing the internal control systems, internal auditing and risk management systems in the group companies.

Acting as a communication channel between the Board of Directors and external auditors.

Giving opinions about its independence.

Supervising the compilation and presentation of mandatory financial information.

Through its management, control addition, the Iberia Audit Committee activities are implemented in order coordinates its activity with the IAG to reduce or eliminate the impact Audit and Compliance Committee of risks and achieve the goals set. In IBERIA SUSTAINABILITY REPORT 46

Ethics Iberia applies the General Code of The directors’ obligations are defined Conduct of the IAG Group, which in the Board of Directors Regulations and integrity regulates the conduct of Group and in the IAG and Iberia Corporate directors, executives and employees Bylaws. The Annual Report analyses when carrying out their duties and the compliance thereof. in their business and professional relationships. In 2019, as in the previous year, no conflicts of interest were detected in The code stipulates that they should the performance of duties of the prevent any personal or family Iberia Board of Directors or its interests from interfering in the Management Committee. decisions, actions, services or advice that they take, perform or provide on IAG has a Supplier Code of Conduct, behalf of Iberia. which is applicable to the supply of any goods and/or services to either IAG or any IAG Group company IBERIA SUSTAINABILITY REPORT 47

Internal The transparency requirements of the These internal control systems are securities markets are an important configured around a protocol of and issue for providing security regarding processes that must be followed the reliability of financial information. by the Board of Directors, the IAG external audit For this reason, and as set out in the Audit and Compliance Committee, financial reporting internal control the Iberia Audit Committee, senior policy, Iberia has monitoring systems management and the personnel based on the reference framework involved established by the CNMV.

Regulatory The Iberia Group makes several tools Compliance Committee consisting available to all its employees for of senior managers of the company, compliance obtaining advice and addressing any is informed in order to review them incidents that they may observe. and take decisions. Each year, the committee There is also a grievance mechanism company performs an internal audit handled by an external service on the compliance offence prevention provider to guarantee total model, which ensures the model is confidentiality. All reports are always up to date analysed and a Regulatory IBERIA SUSTAINABILITY REPORT 48

Rules on The programme for complying with anti-competitive behaviour rules is anti-competitive based on a specific IAG risk matrix. Implementation of the programme behaviour is ensured via the commitment of senior management to the approved compliance strategy.

This is also reflected in the compliance commitment within the company’s Code of Conduct, the internal guidance for employees through the Competition Compliance Manual and specific guidelines, training initiatives, internal whistleblowing channel and process monitoring

Compliance Iberia is committed to complying with expediting the payment of refunds the European Aviation Customer and attending reduced-mobility with European Commitment, a code of conduct passengers and minors. signed on 2 July 2002 together with regulations the other airlines in the Association of Another important point regarding European Airlines (AEA). passenger rights is dealing with on passenger customer complaints. Iberia complies The code lays down obligations with European regulations on rights such as respecting the agreed price, passenger compensation and providing any information requested assistance to passengers in the on the operating carrier, notifying event of boarding being refused, passengers of any incidents and cancellation or long flight delays providing them with assistance, IBERIA SUSTAINABILITY REPORT 49

Anti-corruption We have integrated the fight against Compliance, Iberia regularly carries corruption and bribery in the crime out due diligence processes (finding policy prevention programme. The and analysing information) on third programme is a series of measures for parties linked to it. In particular, these preventing, detecting and reacting to check the suitability of bidders in possible crimes set out in the Spanish tenders and business intermediaries, Penal Code. according to various set criteria.

In addition, it is a commitment to In 2019, 129 due diligence processes permanently monitor and penalise were carried out focusing on the unethical behaviour and integrity of third parties. In addition, to maintain effective mechanisms IAG GBS, the company in the IAG for informing and raising the Group, responsible for centralising all awareness of all employees to foster outsourcing processes and payment a preventive culture. of invoices, carries out an overall analysis of the level of compliance In order to comply with the and alignment with the regulations of company’s anti-corruption policy and those third parties internal regulations on Regulatory

Human Iberia has subscribed to IAG’s This policy is communicated to statement on modern slavery. all the suppliers, contractors, and rights Applicable to all the people who work partners at the start of the business at the company or on behalf of it, it relationship and is reinforced, where includes a zero tolerance policy on appropriate, in the development of this issue. that relationship IBERIA SUSTAINABILITY REPORT 50

Responsible Procurement and outsourcing industrial property, data management at Iberia is managed protection, labour commitment, procurement by IAG Global Business Services (IAG environmental commitment, the GBS) which, in line with Iberia’s goals, UN Global Compact and regulatory is regulated by internal procedures. compliance.

The tender process includes a Compliance with these clauses is survey that assesses Corporate assessed with adequate frequency Social Responsibility (CSR) aspects according to the monitoring and labour policies and regulation, information, the level of risk to the reviewed by the outsourcing company’s reputation and criticality area. The process monitors the for the value chain. clauses related to confidentiality,

The clauses on the UN Global Compact require all suppliers awarded service contracts to:

Support and respect the protection of internationally proclaimed fundamental human rights, in their sphere of influence.

Make sure that they are not complicit in human rights abuses.

Uphold the freedoms and rights of their employees in the labour area.

Support the effective abolition of child labour.

Support a precautionary approach to environmental challenges and promote the development and diffusion of the most environmentally friendly technologies.

Undertake any necessary initiatives to promote greater environmental responsibility.

IAG GBS continued progressing in health and safety and the environment in 2019 by conducting audits and working with suppliers to be leaders in safety through training and local programmes Sustainable operations IBERIA SUSTAINABILITY REPORT 52

Sustainable04 operations

Corporate The sustainable growth of its management of waste and the use operations is one of the company’s of renewable energy, in all areas of Social priorities. Iberia is committed to the the company. The company also Sustainable Development Goals wants to contribute to the well- Responsibility of the United Nations and has set being of the communities where it itself the goal of achieving zero operates and is committed to helping

Strategy net emissions of CO2 in 2050. To disadvantaged children, children’s this end, it develops initiatives that health and integration of people at risk contribute to improving the efficiency of exclusion of operations, the sustainable

The SDGs are the centre of the sustainability strategy and the initiatives developed contribute directly or indirectly to achieving all of them, albeit with the focus on the following: IBERIA SUSTAINABILITY REPORT 53

Initiatives Iberia is committed to the following national and international initiatives, which it uses as a permanent benchmark of its sustainability strategy: joined United Nations Global Compact (Iberia, together with another 13 companies from the tourist industry, takes part in the ‘Responsible Tourism’ working group which is coordinated by the Spanish network of the Global Compact).

United Nations Sustainable Development Goals.

The International Labour Organization’s Fundamental Conventions.

The OECD’s principles of good corporate governance.

Corporate programme for a society without gender-based violence from the Spanish Ministry of the Presidency, Parliamentary Relations and Equality.

The World Tourism Organization’s Global Code of Ethics for Tourism

Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

United for Wildlife Transport Taskforce Buckingham Palace Declaration.

Grupo Español de Crecimiento Verde, an association of Spanish companies with the general purpose of conveying to society and public administrations its vision about the development of a sustainable economic growth IBERIA SUSTAINABILITY REPORT 54

Social Iberia contributes to the well-being of people at risk of exclusion and the the communities where we conduct development of the societies of the sustainability our business and we are committed destinations we fly to. To achieve this, to helping disadvantaged children, we participate in different projects children’s health and integration of and initiatives:

Disadvantaged children and children’s health

VIEW WEBSITE NGO Mano a mano.

It was founded in 1994 by Iberia employees to take advantage of the aircraft holds to send humanitarian aid to countries affected by natural catastrophes or wars. This commitment to those who are disadvantaged in dangerous situations also led the NGO to develop plans on children’s health. At the current time, Iberia cooperates with Mano a Mano by transporting children who need urgent medical treatment to save their lives and transporting cargo for humanitarian aid IBERIA SUSTAINABILITY REPORT 55

Fundación Sepla Ayuda.

It was created in 2006 with the aim of helping people in need through educational projects, health care and, in general, assistance for all their basic needs in decent conditions. The main projects of this foundation, with which Iberia cooperates, centre on the field of education in countries in Africa and VIEW WEBSITE Latin America

Aviation Without Frontiers.

A non-profit entity declared to be a social asset, set up on the initiative of workers from the world of aviation, it implements projects based on collaboration and service to others. Iberia collaborates with this association, which extends its “wings” over projects involving children’s health, integration VIEW WEBSITE and international development/cooperation

Unicef.

The United Nations Children’s Fund (UNICEF) has been working for more than 70 years to defend the rights of all boys and girls in more than 190 countries and territories. But they do not do it on their own. They work with governments, NGOs, mothers and fathers, teachers, companies and people interested in achieving a better world for children. Iberia has cooperated with Unicef since 2013; over that time, and thanks to the involvement of our VIEW VIDEO customers we have obtained vaccines for more than one million children in Angola, Chad and Cuba IBERIA SUSTAINABILITY REPORT 56

Make-A-Wish.

Working since 1999, its mission has been to bring hope to children who suffer from serious illnesses and their families. The children’s wishes are a source of joy and emotional strength, which contributes to boosting the fight against their illness. We have been collaborating with the mission of Make-A-Wish- Spain since 2001 as its official transport company, and in this time we have VIEW VIDEO contributed to making wishes come true for nearly 300 children

Save the Children.

It began in 1919 with the aim of creating a world in which all children can survive, receive education and be protected. Since then, they have achieved many milestones, but they keep on working day by day to reach the very last child, to ensure that they all survive, learn and are protected from violence. Iberia supports the work of Save the Children in its “Institutos Construyendo Paz” project, which teaches life lessons to children in secondary schools in Ciudad de Guatemala IBERIA SUSTAINABILITY REPORT 57

Fundación Juegaterapia.

It was launched in spring 2010 to bring joy to the lives of children in hospital. Since then, it has donated video consoles, tablets and video games to the paediatric areas of hospitals, built roof gardens at children’s hospitals and supported the work of the Spanish National Cancer Research Centre (with Spanish acronym CNIO). Since 2016, over 4,000 Baby Pelones dolls have been sold on Iberia flights, the entire proceeds of which have gone to Fundación VIEW VIDEO Juegaterapia IBERIA SUSTAINABILITY REPORT 58

Integration of groups at risk of exclusion

Envera.

It was set up in 1977 by Iberia employees with children with special needs. It focuses on the protection and the social and professional integration of people with physical, mental or sensory disabilities. Each year Envera attends to 1,500 people with functional diversity. It has 330 places in care services and provides jobs for over 400 people with a disability.

Iberia collaborates actively with this organisation in Its mission to integrate these people into society and the workforce through comprehensive care and assistance throughout their lifetime. At the special workplaces run by Envera, the workers perform tasks for Iberia such as packing the on-board cutlery for our aircraft, document management and laundry, as well as managing the VIEW WEBSITE inventory of the aircraft component storage areas

Fundación Integra.

It supports marginalised people and people with disabilities, so that they can take up the reins of their lives once more through entering the job market. Iberia is part of “Compromiso Integra”, a network of companies and organisations committed to socially responsible employment, which support and actively participate in integrating women who have been victims of gender-based VIEW WEBSITE violence into the workplace through direct hiring, corporate volunteering and raising awareness IBERIA SUSTAINABILITY REPORT 59

Development projects in destinations

Aula Iberia In Guatemala.

In March 2017, Iberia and Mano a Mano inaugurated the “Aula Iberia” at the Maya Kaqchikel Beleje Noj Educational Centre in Guatemala. This schooling project, focusing on promoting employability in the Los Tunayes community in San Martín Jilotepeque, is the only secondary school in this rural region. Since then, 40 young people have been receiving training each year at this educational institution, fostered by rural community development association ADECOR and with financial support from the NGO Mano a Mano created at Iberia. In 2019, Mano a Mano funded the installation of the internet network in the classroom and a group of Iberia employees travelled as volunteers to Guatemala to teach computing

Drinking water project in Morocco.

The NGO Mano a Mano, in collaboration with AMED (the Mediterranean Association for Development and Protection of the Environment), is taking drinking water to Douar Afernou el Fouki, a rural area of Morocco in the Larache province. This project was made possible through the funding raised by auctioning off for charity two Meninas belonging to Iberia which were part of the “Meninas Madrid Gallery 2018” exhibition. The project consists of rehabilitating two existing water sources, building a reservoir and channelling water to the homes of the local inhabitants. The ultimate goal is to improve living conditions, and more specifically those of women and children, as it is the women who are in charge of transporting the water to the home and children often help with these tasks, pushing them to abandon their schooling IBERIA SUSTAINABILITY REPORT 60

Other projects.

Organización Nacional de Trasplantes .

Iberia actively supports the work of the Spanish national transplant organisation, the Organización Nacional de Trasplantes(ONT). We offer our resources to expedite and facilitate the transportation of organs to their destination, ensuring the survival of the organ and the viability of the transplant. Since 2003, more than 400 organs for transplants have been transported in our aircraft

Avios Solidarios .

As part of its transformation project, Iberia convened an ideas lab so that its employees could bring into the company sustainable improvements in any area. Avios Solidarios was the first proposal to become a reality; thanks to this initiative, Iberia Plus customers can donate their Avios to projects that collaborate in development, children’s health and social integration initiatives, among others. This scheme is an example of open innovation and corporate social responsibility that Iberia has developed in a collaboration with its VIEW VIDEO customers and employees

... Iberia Plus customers will be able to donate their Avios to cooperation projects focusing on development, children’s health and social integration, among other schemes. IBERIA SUSTAINABILITY REPORT 61 IBERIA SUSTAINABILITY REPORT 62

Environmental The sustainable growth of operations is one of our priorities; the following projects have been developed to achieve this: sustainability

VIEW VIDEO

VIEW WEBSITE Flightpath Net Zero Strategy.

Iberia, as part of the IAG Group, has undertaken to achieve zero net emissions in 2050.

To meet this goal, the following intermediate targets have been set:

2025: 10% reduction in emissions per passenger (compared to 2020). 2030: 20% net emissions. 2050: Zero net emissions.

With this strategy, Iberia has aligned itself with the goal set by the Intergovernmental Panel on Climate Change (IPCC), to keep the average global temperature increase within the limit of 1.5ºC IBERIA SUSTAINABILITY REPORT 63

Fleet renewal.

Iberia is incorporating into its fleet the most efficient, advanced and silent aircraft on the market. The A350-900 is a latest-generation aircraft, whose fuel consumption and CO2 emissions are up to 35% lower than the aircraft they are replacing. The A320neo emits less CO2 and 50% less Nitrogen Oxide. Iberia already has six units of the A350-900 and five of the A320neo

Operational fuel efficiency measures.

Additional measures are developed and implemented to reduce fuel consumption and, by extension, CO2 emissions. The implementation of this type of operations prevented the emission of more than 40,000 tonnes of

CO2 in 2019. These initiatives include:

The reduction in the use of the APU (Auxiliary Power Unit) which is used to supply the aircraft with the necessary energy to start up, fostering to the greatest extent possible use of ground facilities and thus avoiding consumption of the aircraft’s fuel.

The optimisation of the fuel management system: searching for the ideal flight level using the Nimbus system; optimisation of fuel through improvements in the closest alternative airport policy; promoting more efficient procedures, such as green approaches at Heathrow and Single Engine Taxi In (SETO)/Single Engine Taxi Out (SETI) IBERIA SUSTAINABILITY REPORT 64

Sustainable management of the waste generated on board. The LIFE + Zero Cabin Waste project, headed by Iberia and with the participation of Gate VIEW VIDEO Gourmet, Ferrovial, Ecoembes and ESCI-UPF, has created a sustainable management model for catering waste. In 2019, more than 2,250 tonnes of packaging from Iberia flights were recycled thanks to this project.

Zero Cabin Waste began in 2016 with the analysis and classification of the waste generated inside aircraft, the subsequent designing of a more appropriate trolley to perform on-board waste separation and, finally, its implementation in June 2019 on all the flights operated by Iberia. Last year, a total of 2,253 tonnes of waste was separated to be recycled, a figure which represented an increase of 42% compared to the data recorded before the project began.

Therefore, Iberia has introduced compartmentalised trolleys on its flights; these make it possible to separate plastic packaging, cans and cartons (the waste placed in the yellow container in Spain) and paper and cardboard packaging (those placed in the blue container in Spain) from the other waste. In addition, since LIFE + Zero Cabin Waste began, training workshops have been given to more than 4,000 professionals at the company to make them aware of how important recycling is to care for the environment.

Likewise, through Zero Cabin Waste, the airline has implemented other initiatives to reduce the waste generated on its flights, such as eliminating on- board press and reducing plastic wrapping on blankets or headphones. All these measures have made it possible to reduce flight weights by 15% and, at the same time, eliminate more than 5,000 tonnes of waste in 2019 alone IBERIA SUSTAINABILITY REPORT 65

Digitalisation.

The Electronic Flight Bag and digital press schemes have made it possible to reduce the weight loaded onto the aircraft and consequently fuel consumption and CO2 emissions.

Electronic Flight Bag: replacing the documentation wallets carried by the pilots has reduced weight by an average of 60 kilogrammes per flight,

avoiding 1,908 tonnes of CO2 emissions a year.

Iberia has replaced on-board press with an app through which passengers can choose between more than 7,000 publications to enjoy during the flight. This has made it possible to eliminate more than 20 tonnes of paper waste a month IBERIA SUSTAINABILITY REPORT 66

Reduction in use of plastics.

Iberia has reduced the plastic we carry on board by 68.5 tonnes a year, through a series of initiatives:

The plastic bag which wrapped blankets and coverings has been replaced by a paper band.

The wrappings of certain items in the Business Class toiletry bags for long- haul flights have been eliminated.

The headphones for Economy, Premium Economy and Business are also no longer wrapped in plastic.

The children’s kit given to children on long-haul flights has also had its plastic wrapping removed.

Instead of plastic stirrers for drinks, now only bamboo options are used.

The new bags used to collect the laundry items from the aircraft (blankets, coverings and pillows) are less thick than those they have replaced.

Paper straws are offered instead of plastic cups for certain drinks IBERIA SUSTAINABILITY REPORT 67

More efficient ground equipment in airports.

Since 2015, 80% of the ground equipment has been renewed and 40% of equipment which can be electric already is, thereby enabling a significant reduction in emission and in fossil fuel consumption. In addition, two projects are being developed with the dual purpose of reducing fuel consumption and emissions into the atmosphere:

Catalyser. This device facilitates cleaner combustion of the fuel, which reduces emissions of pollutant gases and increases engine power.

Telemetry. Geolocation devices are being incorporated into the ground equipment fleet to become more efficient in terms of fuel consumption and emissions, and to ensure the safety of operations at airports

Renewable electrical energy at all our facilities.

All the electric energy consumed at the facilities belonging to Iberia (Antigua Zona Industrial, La Muñoza, the Cargo Terminal, Comité Intercentros in Núñez de Balboa, illuminated sign in Avenida de América, in Madrid, and the maintenance hangar in Barcelona) already come from 100% renewable sources. The environmental impact that comes from the use of this energy is non-existent, as the emission of greenhouse gases, such as CO2, is reduced to zero IBERIA SUSTAINABILITY REPORT 68

More efficient and ecological lighting in our hangars.

In 2017, a project was started in La Muñoza led by the General Services area and aligned with the company’s target of seeking energy efficiency and protecting the environment. It involved the renewal of the lighting in the workshops and hangars in La Muñoza, which over the last two years have been replaced with other, more efficient and more environmentally friendly options. In the engines building, the general workshops and hangars 4, 5, 6 and 7 the lighting, which up until now was metal-halide and vaporized mercury based, has been replaced with LED lights. The energy savings from the hangars alone amount to nearly 1.5 million KWh

VIEW VIDEO Iberia Wood.

This project is a small demonstration of Iberia’s commitment to contributing to the well-being of the communities where it operates. The planting of the first 1,500 trees took place in November 2019, with the participation of Iberia employees, accompanied by the Chairman of the company and the Management Committee, along with representatives of the Paracuellos del Jarama Council. In the next three years, the Iberia Wood will grow to have 4,000 units of several local species, such as willows, dogwoods, rosemary, poplars, elms, juniper, holm oaks and pines, creating a leisure area for the inhabitants of Paracuellos del Jarama IBERIA SUSTAINABILITY REPORT 69

COP25.

As a demonstration of its commitment to environmental sustainability, Iberia took part in the COP25 Climate Change Conference, held in Madrid in December 2019. During the two weeks the conference lasted, the company participated in different events about sustainability, the aviation sector, the tourism industry and associated sectors. These events addressed all the environmental challenges of the sector, essentially those related to the measures to be adopted for decarbonisation.

As part of the Climate Change Conference, Iberia received the award for business climate leadership given by Business Ambition for 1.5ºC of the Global Compact España, which Iberia recently joined

H2020 Aviator.

This project, led by the INTA and in which Iberia is involved along with a further 16 partners, is funded by the European research and innovation programme Horizonte 2020 and the Canadian National Research Council (NRC). The participation of the company is part of its goal to achieve more sustainable operations, through which it aims to contribute to a greater understanding in the aviation industry of emissions so as to develop more efficient and cleaner engines. This year, the first measurements of the composition and mechanisms for dispersal of aircraft engine emissions were taken IBERIA SUSTAINABILITY REPORT 70

* The data of these indicators correspond solely with the company Iberia, unless otherwise specified.

Environmental indicators Total internal energy consumption (Gj) 98.9% of the energy is consumed in flight operations, which use as their source of combustion aviation 80 M. kerosene (Jet-A1) whose economic 67,606,820 69,101,996 72,473,448 70 M. and technical advantages to date 60 M. have made the use of alternative 50 M. options unfeasible. The rest of

40 M. the energy (1.1%) is consumed in

30 M. ground operations. The increase in

20 M. energy consumption in the last few

10 M. years corresponds to an increase in 0 company operations 2017 2018 2019

Aircraft reactor fuel (millions of tonnes)

2.0 1.55 1.60 1.68

1.5

1.0

0.5 The increase in consumption of fuel is due to the increase in activity 0.0 experienced in the last few years 2017 2018 2019

Total electricity consumption (Gj)

350,000 281,078 291,104 231,456 300,000

250,000

200,000 To reduce its consumption of 150,000 electrical energy, the company 100,000 is developing energy efficiently 50,000 improvement projects, such as the

0 use of LED type lights at its facilities 2017 2018 2019 IBERIA SUSTAINABILITY REPORT 71

* The data of these indicators correspond solely with the company Iberia, unless otherwise specified.

Average age of fleet (years)

12 10.6 10.8 10.7

10

8

6

4

2

0 * includes Iberia Express and Level - Barcelona. 2017 2018 2019

Emissions intensity of flight operations

(g/C02 per passenger - km transported)

The emissions intensity of flight * includes Iberia Express. operations indicator improved significantly due to the incorporation 100 83.25 80.88 78.77 of the new A320neo and A350-900, 80 up to 35% more efficient that the

aircraft they replaced. In addition, the 60 initiatives to increase fuel efficiency have a positive impact on this 40 indicator. In 2019 they avoided the 20 emission of more than 40,500 tonnes of CO 0 2 2017 2018 2019

GHG Scope 1 Direct emissions

(million tonnes of CO2e)

6 4.93 5.06 5.31 5

4

3 The increase in direct emissions in 2 recent years was due to the increase 1 in flight operations and the number of

0 aircraft 2017 2018 2019 IBERIA SUSTAINABILITY REPORT 72

* The data of these indicators correspond solely with the company Iberia, unless otherwise specified.

Water consumption (m3)

300 248,594 233,420 241,820 240 Water consumption reduced in 2018 thanks to the implementation 180 of saving policies, changes in working

120 models, and awareness-raising campaigns among employees. The 60 increase in consumption in 2019 occurred due to the increase in 0 2017 2018 2019 activity of the company IBERIA SUSTAINABILITY REPORT 73

* The data of these indicators correspond solely with the company Iberia, unless otherwise specified.

Ground emissions (tonnes of CO2) Direct emissions. Scope 1

These emissions are due to boilers and diesel and natural gas 35 generators, as well as the emissions 27,765 24,143 25,971 30 caused by diesel vehicles when

25 they perform tasks to assist the aircraft. In 2018, they had dropped 20 through replacing boilers and diesel 15 generators and increasing the fleet 10 of electric vehicles; the slight increase 5 in 2019 corresponds to the increase

0 in operations 2017 2018 2019

Direct emissions. Scope 2

The Scope 2 emissions correspond to the emissions generated in producing 35 30,600 31,698 20,638 the electricity consumed at the 30

company’s facilities. The reduction 25 in 2019 was achieved thanks to the 20 replacing of the old lighting with 15 more environmentally friendly LED- type lights. It was also relevant that 10 the Spanish energy mix reduced its 5

emissions 0 2017 2018 2019

Direct emissions. Scope 3

35 21,961 22,571 23,223 30

25

20

15

10 Other indirect emissions (Scope 3). 5 These are produced by transporting

0 employees to the workplace 2017 2018 2019 IBERIA SUSTAINABILITY REPORT 74

* The data of these indicators correspond solely with the company Iberia, unless otherwise specified.

Local air quality

The standards for emissions of gases such as nitrogen oxide (NO) and noise are set by the International Civil Aviation Organisation (ICAO), which is responsible for establishing the maximum emissions of these gases and noise levels for aircraft.

100% compliance with the good practices set out in CAEP4.

Although the most restrictive standards in CAEP6 and CAEP8 do not apply to the company’s aircraft engines, their level of compliance was analysed as an exercise in good practices, achieving 90% and 50%, respectively. In the next few years, it is expected that these percentages will increase due to the introduction of the new fleet of A350 and A320neo

Noise

100% compliance with the noise standard defined in CAEP3.

100% of the fleet complies with CAEP4.

43% compliance with the new standard CAEP14.

To mitigate the impact of the noise of operations, Iberia complies with the operating procedures laid down by the Spanish civil aviation authorities, making limited use of auxiliary engines in airports, reducing the use of brakes by using the thrust reverse technique and following the routes established by air control for arrival and departure at airports IBERIA SUSTAINABILITY REPORT 75

* The data of these indicators correspond solely with the company Iberia, unless otherwise specified.

Effluents

The water used at Iberia’s industrial facilities in Madrid is treated by the wastewater treatment plants (EDAR). In 2019, 95,884 cubic metres were discharged in an urban wastewater treatment plant which discharges into the River Jarama, a figure which has not had significant changes in recent years

Waste (tonnes)

3,000 2,175 1,453 2,486

2,400 MSW 1,800

1,200 Iberia produced 2,486 tonnes of municipal solid waste (MSW) as a 600 result of its activities in industrial areas, airports and 0 2017 2018 2019 managing cargo

3,000 1,018 1,955 1,132 Hazardous waste 2,400

Hazardous waste was reduced in 1,800

2019 to 1,132 tonnes. This waste 1,200 was handed over to authorised waste managers, which defined the method 600 of elimination 0 2017 2018 2019 Materiality IBERIA SUSTAINABILITY REPORT 77

Materiality05 Material aspects for each stakeholder

This analysis is updated annually to ensure that the company is aware of the material aspects of its stakeholders and manages its Corporate Responsibility on the basis thereof.

Stakeholder General Aspect Specific Aspect Section CR Report

Iberia company profile> 2019 - Products and service categories where safety and health in figures > Financial results - Product impacts are evaluated. Iberia company profile> 2019 in responsibility. figures> Activity - Iberia company - Customer satisfaction surveys. profile> 2019 in figures > Quality Airline of service. customers, airport services and air- - Iberia’s economic performance. craft maintenance. Economic - Presence of the company in the market. 2019 en cifras > Resultados Customers aspects. - Development of investments and indirect economic económicos. impacts.

Iberia company profile>2019 in Employees. - Training programmes for employees. figures > Training.

- CO2 emissions and other polluting emissions. - Spills and waste. Sustainable development > Environmental. Airline - Our products and services. Environmental indicators. associations and - Fines and penalties for environmental violations. alliances. Product - Products and service categories where safety and health Governance and stakeholders. responsibility. impacts are evaluated.

Iberia company profile>2019 in figures>- Training- Iberia company - Employees (hiring, benefits, etc.). profile > 2019 in figures > - Company/employee labour relations. Workforce – Iberia company pro- Employees. - Composition of the workforce (diversity and equal file>2019 in figures > Diversity opportunities). and equal opportunities- Iberia company profile > 2019 in figures > People with disabilities.

- Products and service categories where safety and health impacts are evaluated. Society Product - Customer satisfaction surveys. Governance and stakeholders. responsibility. - Products subject to public debate or banned. Media and society - Substantiated complaints regarding customer privacy in general. and data.

- Iberia’s economic performance. - Market presence of the company. 2019 in figures > Financial Economic aspects. - Development of investments and indirect economic results. impacts.

- Impacts of operations on biodiversity.

Medio a - CO2 emissions and other polluting emissions. Sustainable development > Environment - Effluents and waste. Environmental indicators. mbiente. - Our products and services (environmental impacts). - Environmental assessment of suppliers. IBERIA SUSTAINABILITY REPORT 78

Stakeholder General Aspect Specific Aspect Section CR Report - Centres with development programmes for the Sustainable Development > Society. local community. Social sustainability. - Evaluation of the social impact of suppliers. NGOs and - Agreements and contracts containing Human social organi- Rights clauses and employee training in this matter. Governance and stakeholders > Human Rights. sations. - Operations and suppliers at risk in terms of child Human rights. Sociedad labour. - Composition of the staff (diversity and equal Iberia company profile > 2019 in Employees. opportunities). figures > Personnel.

Public - Complaints and claims on environmental matters. administra- - Grievance mechanisms. tions, AENA, - Complaints about human rights through formal Civil Aviation, All. grievance mechanisms. Various. ICAO, IATA, - Significant fines and sanctions for legal violations. Regulator national and local govern- - Fines and sanctions in relation to the provision and use of the company’s products. ments. Iberia company profile>2019 in - Employees (hiring, benefits, etc.). figures > Training - Iberia company profile> 2019 in figures > Workforce - Company/employee labour relations. - Iberia company profile > 2019 - Protection of employee health and operating in figures > Diversity and equal Employees. safety. opportunities - Iberia company profile Employees. - Training programmes for employees. > 2019 in figures > People with disabilities - Iberia company profile > - Composition of the workforce (diversity and equal 2019 in figures > Health and safety Employees opportunities). - Iberia company profile > 2019 in figures > Recruitment and talent. Corporate - Company management. Decision-making system. Governance and stakeholders > governance. IAG-Iberia governance structure. Economic - Iberia‘s economic performance. 2019 in figures > Financial results. Suppliers and aspects. subcontrac- tors. Governance and stakeholders > Suppliers Environment. - Environmental assessment of suppliers. Responsible procurement.

Corporate - Company management. Governance and stakeholders > governance. - Decision-making system. IAG-Iberia governance structure. - Iberia’s economic performance. Economic - Market presence of the company. 2019 in figures > Financial results. aspects. - Development of investments and indirect economic impacts. IAG Group - Energy consumption in the development of sharehol- operations. ders. Market - Water consumed and recycled. Sustainable development > analysts. Environment. - Impacts of operations on biodiversity.

Shareholders Environmental indicators. - CO2 emissions and other polluting emissions. - Effluents and waste. - Our products and services (environmental impacts). - Centre with development programmes for the local Sustainable development > Social community. Society. sustainability - Governance and stake- - Measures taken by Iberia to fight corruption. holders > Anti-corruption policy. IBERIA, L.A.E., S.A. OPERADORA, SOCIEDAD UNIPERSONAL Calle Martínez Villergas, 49 - 28027, Madrid Telephone - 901 111 500 www.iberia.com/ grupo.iberia.es/portal/site/WebCorporativa/