British Airways owner preparing to tap shareholders for as much as £2.3bn to help it ride out coronavirus crisis
The owner of British Airways is preparing to tap shareholders for as much as £2.3billion to help it ride out the coronavirus crisis, according to reports.
IAG may offer new shares at a discount to existing investors.
But it is also thinking about other options, such as selling new stock and raising debt, as it fights what boss Willie Walsh has said is ‘the greatest crisis’ the industry has ever faced.
Long haul: IAG thinks it will take until at least 2023 for numbers to reach 2019 levels
Lockdowns and restrictions to prevent the spread of the coronavirus virtually wiped out international travel for several months. And IAG, which also owns Spanish carrier Iberia and Ireland’s Aer Lingus, thinks it will take until at least 2023 for numbers to reach 2019 levels.
It makes a lot of its money through long-haul trips, which are expected to take longer to recover than the short routes.
Reports of the fundraising plan came as IAG announced a £750m deal to renew its airmiles partnership with American Express. A large chunk is a pre-purchase of Avios points that Amex will use in the UK and elsewhere for its BA co-branded cards and membership rewards.
If IAG decides to go ahead with the fundraising, it would take place by September, sources said. It would mean the company could avoid turning to the Government for a bailout.
So far it has used state furlough schemes, accessed £300m of Government loans and retired its 747 jumbo jets. It has also embarked on huge job cuts at BA – and is likely to announce cuts at its other airlines.
BA originally said it would axe up to 12,000 roles.
It struck a deal with pilots’ union Balpa this week that would make fewer people redundant – 270, down from plans for 1,250 – in return for other staff taking pay cuts.
Pilots have until next Thursday to vote on the package.
IAG declined to comment. Shares in the group fell 4.8 per cent, or 10p, to 198.6p.