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By Clara Denina , Pamela Barbaglia and Abhinav Ramnarayan
LONDON, July 24 (Reuters) - British Airways owner
IAG is set to issue shares at the end of the summer in
a bid to raise up to 2.5 billion euros ($2.88 billion) to keep
the business afloat and avoid a government bailout, several
sources said.
International Consolidated Airlines Group is most
likely to raise capital with a rights issue, where new shares
are offered to existing shareholders at a discount, by the
beginning of September, two of the sources added.
Other options, such as an equity placing and a concurrent
issuance of convertible bonds are also being considered, the
sources said.
"Being a rescue deal, investors will undoubtedly prefer to
have more visibility on air traffic during the summer months,"
one said.
IAG's share price has lost 66% of its value since the start
of the year, as global air travel came to a halt during the
coronavirus crisis.
The Anglo-Spanish group, which also owns Iberia and Aer
Lingus, renewed a 750 million pound ($955 million) partnership
multi-year deal with American Express on Friday.
IAG declined to comment.
With passenger numbers decimated this year and experts
forecasting it will be years before they recover, global
airlines began sweeping restructuring processes and in many
cases sought state assistance.
Air France secured a 7 billion euro aid package
from the French government and Lufthansa agreed a 9
billion euro government bailout.
IAG, which is also reviewing a planned 1 billion euro
acquisition of Spanish carrier Air Europa because of the harsh
economic climate, has not asked for a specific government
bail-out but has taken advantage of state-backed loan schemes in
Britain and Spain. British Airways has warned it needs to cut
12,000 jobs.
Spanish airlines Iberia and Vueling have secured 1 billion
euros of government-backed loans in May. BA has also accessed
the UK coronavirus corporate finance facility and used the
government's furlough schemes.
The company is working with U.S. investment banks Goldman
Sachs and Morgan Stanley and its corporate brokers Barclays and
Deutsche Bank on the plan, the sources said, expecting an
announcement could coincide with results on July 31.
DB and Barclays declined to comment. GS and MS did not
respond to a request for comment.
IAG reported a first-quarter operating loss before
exceptional items of 535 million euros and expects significantly
worse losses in the second quarter, reflecting the full extent
of travel lockdowns during the pandemic.
($1 = 0.8678 euros)
(Additional reporting by Arno Schuetze in Frankfurt and Sarah
Young in London;
Editing by Rachel Armstrong and Louise Heavens)
