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By Sarah Young
LONDON, July 31 (Reuters) - IAG, the owner of British
Airways, said it planned to raise 2.75 billion euros from
shareholders to prop up its finances and allow it to survive
what could be a longer-than-expected collapse in flying
triggered the coronavirus pandemic.
Backed by its biggest shareholder Qatar Airways, the plan
will boost the group's liquidity from the 8.1 billion euros it
had at the end of June, and see it through a period of anaemic
demand that could last until as far out as 2023.
"We strongly believe that now is the time to look to the
future and strengthen IAG's financial and strategic position,"
CEO Willie Walsh said in a statement on Friday.
Airlines around the world have been brought to their knees
by the abrupt halt to flying, forcing tens of thousands of
redundancies, state bailouts and the collapse of some companies.
A tentative return to flying in Europe, needed to salvage
airline's peak summer season when they make most of their
profits, has been threatened by signs of rising COVID-19 cases
in some popular holiday destinations such as Spain and France.
British Airways, for which IAG counts on for over half of
its annual profits, is only flying around 15% of its normal
schedule and demand for its two biggest markets U.S. and India
is weak due to ongoing UK quarantine rules.
IAG, which also owns Iberia and Aer Lingus, reported an
operating loss of 1.365 billion euros for the second quarter.
British Airways has warned it needs to cut 12,000 jobs and
its plans to change contracts for its remaining 30,000 staff has
provoked a furious reaction from cabin crew union Unite, who
have threatened strike action.
IAG said that the capital boost would also enable it to
withstand a more prolonged downturn in its worst case scenario
planning. Reuters had previously reported the plan for a rights
issue.
"Our industry is facing an unprecedented crisis and the
outlook remains uncertain," Walsh said. "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."
(Reporting by Sarah Young; editing by Kate Holton/Guy
Faulconbridge)
