International Continental Airlines PLC (LON:IAG), the owner of British Airways and Iberia, has asked shareholders for €2.75bn to plug its finances after losses soared to more than €4bn in its latest half-year.
The airline owner said the money will provide support for its balance sheet and help it withstand a prolonged downturn in air travel due to coronavirus restrictions.
Willie Walsh, IAG’s chief executive, said the money would put it in the strongest position possible ahead of a recovery, though he added he does not expect this now to be until 2023.
Qatar Airways, the company’s largest shareholder with a 25.1% stake, is backing the fundraise and will subscribe for the issue on a pro-rata basis.
The money will be raised through pre-emptive subscription rights that shareholders will have to approve on September 8.
British Airways has already announced 12,000 job cuts to reduce costs to cope with the pandemic crisis that has seen most of its fleet grounded since March.
With its results, IAG said it is currently planning for traffic to decline by 74% and 46% in the third and fourth quarters of 2020, respectively, compared to a year ago.
The company added that its forecast depends on an easing of lockdowns and travel restrictions, which in the case of Spain have just been tightened again.
On its current forecast, IAG said it would reach breakeven in terms of net cash flows from operating activities during the fourth quarter of this year.
IAG added that it made an operating loss of €1.36bn in the three months to end-June and €1.9bn over the half-year, but it also took a €2.14bn charge for fuel and forex losses. That pushed interim losses up to €4.2bn on revenues down 56% at €5.3bn.
Separately, IAG also announced the appointment of independent director Javier Ferrán as its new chairman to replace Antonio Vázquez who stands down at the end of 2020.
Published at Fri, 31 Jul 2020 07:04:00 +0000-British Airways owner IAG in €2.75bn rights call as losses top €4bn