British Airways owner IAG is considering launching a rights issue of up to €2.75bn to strengthen its balance sheet amid the coronavirus emergency.
The airline group said on Friday it was “evaluating the merits” of the capital raising, but said that no decision had been made as to whether or when to proceed with a rights issue.
IAG, which also owns Iberia, Aer Lingus and Vueling, issued the statement following a news report by Reuters that suggested the group was considering a potential rights issue.
It comes as airlines around the world have taken steps to shore up their balance sheets after lockdown forced them to ground entire fleets for months as the industry was hit by the worst crisis in its 100-year history.
In April, IAG became one of the first airline groups to start restructuring its business, announcing plans to cut up to 12,000 jobs at BA, almost 30 per cent of its workforce, as a result of the pandemic.
Willie Walsh, chief executive of IAG, has previously warned that BA is “fighting for its survival” with passenger numbers not expected to return to pre-coronavirus levels for several years.
He has said the pandemic is the “deepest crisis the company has ever faced”.
EasyJet last month sought to raise £450m with an equity placing representing almost 15 per cent of its share capital, as it aimed to boost liquidity after passenger numbers fell 7.4 per cent.
Virgin Atlantic agreed a £1.2bn rescue package including £400m of fee deferrals from shareholders Virgin Group and Delta Air Lines and £170m of debt financing from US hedge funds. Richard Branson’s Virgin Group also came up with £200m.
Most carriers are slashing jobs. EasyJet announced it would cut up to about 4,500 staff and Virgin 3,550.
In Friday’s statement, IAG noted that going into the crisis, the airline group had a strong balance sheet and liquidity with cash and undrawn facilities of €10bn as of April 30.
The company said: “IAG has taken appropriate actions to strengthen its balance sheet and boost its liquidity position.”
Earlier on Friday the group announced it had extended its global commercial partnership with American Express, which will involve it receiving a payment of about £750m.
However, redundancies have prompted criticism particularly after BA made use of state support, in the form of the job retention scheme — furloughing around 23,000 staff — and the government’s Covid Corporate Financing Facility.
This article has been amended to correct the number of BA staff that have been furloughed.
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