New capital raise
BA owner to raise €2.75bn after falling to loss
Losses have piled up at IAG
British Airways owner International Airlines Group is raising €2.75 billion to strengthen its balance sheet.
Qatar Airways Group, IAG’s largest shareholder (25.1% holding), has confirmed its support for the proposed capital increase.
IAG said it believes the fund raising, together with its quick response to the crisis, should enable the group to emerge from the current pandemic in a strong position, with more resilience, greater flexibility and the ability to make the right operational and strategic decisions for the long term benefit of all its stakeholders.
The company plunged to a pre-tax loss of €4.2 billion (£3.8bn) in the first six months of the year against a €1bn (£0.9bn) profit in the same period a year ago. Revenue fell 56% to €5.3bn (2019:£4.8bn).
Willie Walsh, CEO of IAG, said: “Our industry is facing an unprecedented crisis and the outlook remains uncertain. However, we strongly believe that now is the time to look to the future and strengthen IAG’s financial and strategic position.
“While we have had to make tough decisions on both people and costs, these actions are the right ones to protect as many jobs and serve as many customers as feasible and put IAG in the strongest position possible.
“The industry will recover from this crisis, though we do not expect this to be before 2023, and there will be opportunities for IAG to capitalise on its strength and leadership positions.”
The company’s downside scenario reflects an overall reduction in passenger capacity of c.66% in 2020 compared to the current capacity planning scenario of c.59%.