IAG, which also owns Aer Lingus and Viling, unveiled a record operating loss of approximately € 1.4 billion ($ 1.7 billion) in the first half of 2020. It was also a € 2.2 billion ($ 2.6 billion) hit related to BA’s early retirement. The Boeing 747 and Iberia’s Airbus A340. The group has canceled or postponed half of its scheduled aircraft deliveries through 2022.
Passenger traffic fell by more than 98% in the second quarter compared to the same period last year. Revenue was down nearly 90% in the quarter.
“Our industry is facing unprecedented crises and the outlook remains uncertain,” CEO Willie Walsh said in a statement. “However, we strongly believe that now is the time to look to the future and strengthen IAG’s financial and strategic position,” he said.
Qatar Airways is the largest shareholder of the group with a 25.1% stake. The IAG said that Qatar would support the capital increase, meaning it would provide around € 688 million ($ 817 million) in new funds.
“Qatar Airways … has reaffirmed its support for the proposed capital increase and has irrevocably supported subscribing to its pro rata,” the IAG said in a statement.
Qatar is seeking two seats on the board. Shareholders will vote on appointments and capital increases in September.
Goldman Sachs, Morgan Stanley and Deutsche Bank are underlining the rest of the rights issue, which could double the number of IAG shares in the issue, according to Bernstein senior research analyst Daniel Roeska. “Investors face a choice between doubling their investments or being quite diluted,” he said in a note.
IAG shares fell more than 7% in London on Friday. The group’s net debt has climbed 38% to nearly € 10.5 billion ($ 12.5 billion) in the past year.
Airlines are now eagerly seeking to restore their flight schedule, but demand remains weak and there are more complex matters due to continued government restrictions.
IAG’s Walsh said the group was “almost anywhere” in July, where it was expected to be in July, operating at a capacity of just 20% compared to the same month last year. “We were expecting to reach 50%,” he told BBC Radio on Friday.
Walsh said Britain’s decision to resume quarantine for travelers arriving from Spain, following an outbreak of fresh coronaviruses in some parts of the country, was “disappointing” but did not discourage travel to other parts of Europe is.
He said, “When the restrictions are lifted, very clear evidence of demand is found and passengers start flying again.” ”