Aer Lingus owner raising billions to deal with Covid shock

Cornelia Mascio
Agosto 2, 2020

British Airways owner IAG SA advanced plans to raise €2.75 billion in equity to help ride out the coronavirus crisis, saying No 1 investor Qatar Airways has agreed to back a rights issue.

Walsh said he was optimistic British Airways would reach a deal with cabin crew trade union Unite over the 12,000 jobs the airline says it needs to cut, explaining that the scale of the downturn should now be clear to the union.

In the first six months, IAG's turnover, also the owner of Iberia and Vueling Airlines, fell by 56% to Euro 5.3 billion.

"The results. were significantly impacted by the outbreak of Covid-19, which has had a devastating impact on the global airline and travel sectors, particularly from late February 2020 onwards", the company said.

International Consolidated Airlines Group has announced the capital increase this morning alongside its half-year results, which show the company fell to an operating loss of €4 billion in the first half of 2020, which compares with a profit of €1.1 billion in the same period past year.

The London-listed titan has meanwhile embarked upon a massive jobs-slashing efficiency drive, in line with carriers like Air Canada, American Airlines and Lufthansa.

Chief Executive Willie Walsh said the plan, backed by biggest shareholder Qatar Airways, was needed to survive the most severe crisis in aviation history after the group lost more in one quarter than it has ever lost in a year.

He added that business had begun to pick up as guidance on travel overseas was loosened: "We have seen evidence that demand recovers when government restrictions are lifted".

They added it will take until at least 2023 for passenger demand to recover to pre-coronavirus levels. The company warned in April it had run out of other ways to save cash as the pandemic has hammered its revenue. The ballot closes on Friday.

"The airline sector is in desperate need of cash to help see it through a very hard period and investors will be taking considerable risk by participating in its rights issue".

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.

He went on: "Our bookings are being suppressed by Government restrictions".

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