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* Biggest shareholder Qatar Airways backs cash call
* Qatar proposes two directors join IAG board
* Group sinks to second-quarter loss of 1.37 billion euros
* Shares down 7%
(Adds BALPA statement on BA pilots accepting jobs deal)
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, 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.
"These are really extreme times," Walsh told the BBC, adding
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,
in what Walsh said was a crisis much worse for airlines than
either 9/11 or the global financial crisis.
"This is worse by any measure, by many times," he told
investors.
Walsh said the proposed fundraising would give IAG, which
also owns Iberia and Aer Lingus, a "very comfortable buffer" to
withstand its worst-case scenario planning. Travel is not seen
recovering to pre-pandemic levels until 2023.
Competitor Air France-KLM, which has secured a
state-backed rescue to underpin its finances, also said on
Friday it was ready to cut capacity plans further due to the
anaemic recovery.
IAG on Friday slid to a second-quarter operating loss before
exceptional items of 1.365 billion euros.
Goodbody analysts said the results showed how network
carriers like IAG - with connecting short-haul and long-haul
routes - would 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.
CASH CALL
The capital increase, which is fully underwritten, 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.
Qatar Airways, which owns 25% of IAG, has proposed adding
two directors to IAG's board after backing the move. Walsh said
of the new appointments: "I don't think it signals anything
other than Qatar's support for our business."
As well as Walsh being succeeded by Iberia boss Luis
Gallego, chairman Antonio Vazquez will be replaced at the
beginning of 2021 by Javier Ferran.
Walsh told Irish radio he believed shareholders would be
supportive of the capital increase, which will be launched as
soon as possible after approval at the meeting.
IAG said the proceeds would not be used to fund the
acquisition of Air Europa, the Spanish airline it agreed to buy
for 1 billion euros last November, a deal it said it is trying
to restructure.
Spanish media have reported that IAG is seeking a reduced
price of 500-600 million euros.
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.
Separately, UK pilots' union BALPA said late in the evening
that British Airways pilots have accepted a jobs deal with
reduced pay of about 20% and some compulsory job cuts estimated
at around 270.
After months of grounded planes, the tentative return to
flying in Europe, needed to salvage the summer season that
provides the bulk of airline profits, has been threatened by
signs of rising COVID-19 cases and new travel restrictions.
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.
($1 = 0.8415 euro)
(Reporting by Sarah Young and Kate Holton;additional reporting
by Bhargav Acharya; Editing by David Goodman, Mark Potter and
Jonathan Oatis)
