* Biggest shareholder Qatar Airways backs cash call
* Sinks to second-quarter loss of 1.37 billion euros
* Shares down 7%
(Adds CEO comment, share price, analyst comment)
By Sarah Young and Kate Holton
LONDON, July 31 (Reuters) - British Airways owner IAG
plans to raise 2.75 billion euros ($3.27 billion) from
shareholders to repair the coronavirus-sized hole in its
finances and brace for a more chaotic future.
Chief Executive Willie Walsh said the plan, backed by
biggest shareholder Qatar Airways, is needed to survive the most
severe crisis in aviation history after it lost more in one
quarter than it has ever lost in a year.
"These are really extreme times," Walsh told the BBC, adding
that IAG had hoped to be flying at about 50% capacity by July
but was instead at 20%.
"We're seeing a much slower and more gradual build-up," he
added.
Airlines around the world have been brought to their knees
by the halt to flights, forcing tens of thousands of job cuts,
state bailouts and the collapse of some companies.
Walsh said that IAG, which also owns Iberia and Aer Lingus,
was preparing for a structural change and anaemic demand that
could last until 2023. British Airways, which accounts for more
than half of IAG's profit, has already said it needs to cut
12,000 jobs.
The group slid to a second-quarter operating loss, before
exceptional items, of 1.365 billion euros and said it had
liquidity of 8.1 billion euros at the end of June.
Walsh said the proposed fundraising would give IAG a "very
comfortable buffer" to withstand worst-case scenarios.
Goodbody analysts described the capital increase as
"expensive money", given that a 5% discount on the offer would
result in 70% more shares in issue.
They said the results demonstrated how network carriers with
connecting short-haul and long-haul routes will find it more
difficult to recover than budget carriers such as Ryanair
and easyJet.
Shares in IAG fell 7% to their lowest since 2012 at 167
pence and are down 72% this year.
AIR EUROPA DEAL
IAG said the proceeds of the cash call would not be used to
fund the acquisition of Air Europa, the Spanish airline it
agreed to buy for 1 billion euros last November.
The group said on Friday that it was in discussions to
restructure that deal and Spanish media have reported that IAG
is seeking a reduced price of between 500 million and 600
million euros.
A tentative return to flying in Europe, needed to salvage
the summer travel season that provides the bulk of airline
profits, has been threatened by signs of rising COVID-19 cases
in some popular holiday destinations, including Spain and
France.
Britain brought in quarantine rules for arrivals from Spain
last week and has said it is looking at other countries. The
United States and India, two big markets for British Airways,
remain subject to quarantine rules.
The capital increase is conditional upon shareholder
approval on Sept. 8, which Walsh said would be his last day in
the job after the postponement of his retirement to steer IAG
through the pandemic.
($1 = 0.8415 euros)
(Reporting by Sarah Young and Kate Holton
Editing by Guy Faulconbridge and David Goodman)