IAG, which also owns Aer Lingus and Vueling, reported a record operating loss of nearly € 1.4 billion ($ 1.7 billion) in the first half of 2020. It also hit € 2.2 billion ($ 2.6 billion) in connection with the early retirement of BA’s Boeing 747s and Iberia’s Airbus A340s. The Group canceled or postponed almost half of the planned aircraft deliveries until 2022.
Passenger transport fell by more than 98% in the second quarter compared to the same period last year. Sales fell by almost 90% this quarter.
“Our industry is facing an unprecedented crisis and the outlook remains uncertain,” said CEO Willie Walsh in a statement. “We firmly believe that now is the time to look to the future and strengthen the financial and strategic position of IAG,” he added.
Qatar Airways is the group’s largest shareholder with a share of 25.1%. The IAG has said that Qatar will support the capital increase, which means that it will provide new funds of almost EUR 688 million (USD 817 million).
“Qatar Airways … has confirmed its support for the proposed capital increase and has irrevocably committed to subscribe for its pro rata claim,” the IAG said in a statement.
Qatar is looking for two places on board. Shareholders will vote on the appointments and capital increase in September.
Goldman Sachs, Morgan Stanley and Deutsche Bank close the rest of the rights issue, which could double the number of IAG shares issued, according to Bernstein double analyst Daniel Roesk. “Investors face the choice between doubling their investments or diluting them substantially,” he said in a note.
IAG shares fell more than 7% in London on Friday. The group’s net debt has grown by 38% over the last year to almost € 10.5 billion ($ 12.5 billion).
Airlines are now anxiously trying to restore their schedules, but demand remains weak and ongoing government restrictions have other complicated issues.
Ials’s Walsh said the group was “nowhere near”, which it hoped would be in July, working with only 20% of capacity compared to the same month last year. “We were hoping to reach 50%,” he told BBC Radio on Friday.
Walsh said the UK decision to reintroduce quarantine for travelers coming from Spain following an outbreak of fresh coronavirus in some parts of the country was “disappointing” but did not discourage travel to other parts of Europe.
“Once the restrictions are removed, there is very clear evidence that demand will stop and passengers will start flying again,” he added.