IAG, which also owns Aer Lingus and Vueling, revealed a record operating loss of nearly 1.4 billion euros ($ 1.7 billion) in the first half of 2020. In addition, it took $ 2.2 billion ($ 2.6 billion) ) related to the early retirement of BA Boeing 747s and Iberia Airbus A340s. The group has canceled or postponed almost half of the planned deliveries of aircraft until 2022.
Passenger traffic in the second quarter fell by more than 98% compared to the same period last year. Revenues during the quarter decreased by nearly 90%.
“Our industry is facing an unprecedented crisis and the outlook remains uncertain,” said CEO Willie Walsh in a statement. “However, we strongly believe that now is the time to look to the future and strengthen the financial and strategic position of the IAG,” he added.
Qatar Airways is the largest shareholder in the group with a share of 25.1%. The IAG said Qatar would support the capital increase, assuming it would provide nearly 688 million euros ($ 817 million) in new funds.
“Qatar Airways … has reaffirmed its support for the proposed capital increase and is irrevocably committed to subscribing for its proportional right,” the IAG said in a statement.
Qatar is looking for two seats on board. Shareholders will vote on the appointments and the capital increase in September.
Goldman Sachs, Morgan Stanley and Deutsche Bank are signing the rest of the rights issue, which could double the number of shares issued by IAG, according to senior Bernstein research analyst Daniel Roesca. “Investors are faced with a choice between doubling their investment or significantly diluting,” he said in a note.
Shares of IAG fell more than 7% in London on Friday. The group’s net debt has risen 38% over the past year to almost 10.5 billion euros ($ 12.5 billion).
Airlines are now anxiously trying to restore their flight schedules, but demand remains weak and ongoing government restrictions still have complex issues.
Walsh of the IAG said the group was “nowhere near where it had hoped to be in July, operating at only 20% of its capacity compared to the same month last year.” We were hoping to reach 50%. he told BBC Radio on Friday.
Walsh said the UK’s decision to reintroduce quarantine for passengers arriving from Spain following new outbreaks of coronavirus in some parts of the country was “disappointing” but did not discourage travel to other parts of Europe.
“Once the restrictions are lifted, there is very clear evidence of reduced demand and passengers are starting to fly again,” he added.