The parent company od British Airways, IAG is considering plans to raise funds through a rights issue of up to €2.75 billion.
The group is looking at using the funding to strengthen its balance sheet amid the coronavirus crisis that has battered airlines.
The London-based group has not yet made a final decision on proceeding with the share sale, IAG’s chief financial officer Steve Gunning said in a statement to the stock exchange on Friday. A rights issue is where a company grants shareholders the right to buy new shares, usually at a discount.
“A further announcement will be made as appropriate,” Mr Gunning said.
Airlines around the world are fighting for survival as the Covid-19 pandemic brought global air travel to a near-standstill. As passenger numbers plunged in 2020 and a recovery is predicted to take years, airlines started to seek government aid, restructure their business and cut costs.
The Anglo-Spanish group, which also owns Aer Lingus and Iberia, did not receive the massive state aid injected into its rivals Deutsche Lufthansa and Air-France KLM, though it did get some relief on employee costs through government wage support schemes. The main markets on which the group is dependent may be the last to recover as the pandemic hurts economies and people remain wary of long-haul travel, delaying recovery in the lucrative transatlantic routes.
IAG on Friday also said it extended its global commercial partnership with credit card company American Express for an air miles deal and will receive a payment of approximately £750 million (Dh3.5bn).
The group is also cutting jobs and retiring older aircraft to reduce costs.
Last week, British Airways said it plans to retire its fleet of Boeing 747s with immediate effect due to the coronavirus pandemic’s impact on air travel.
IAG said it has a “strong balance sheet and liquidity”, pointing to cash and undrawn facilities of €10bn as of April 30.
In May, the group reported a first quarter operating loss before exceptional items of €535m, compared to a €135m operating profit in the same period last year.
“IAG expects that its second quarter will be significantly worse than the first quarter,” it said at the time. “IAG does not expect the level of passenger demand in 2019 to recover before 2023, making further group-wide restructuring measures essential.”
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As a result, IAG expects to defer deliveries of 68 aircraft.
It will release its second quarter results on July 31.
On Friday, IAG shares closed 4.8 per cent lower in London, extending the decline this year to 68 per cent.
