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British Airways: Qatar Airways pumps more cash into the IAG



International Air Group (ICAGY), which owns the two European carriers, said on Friday that it plans to raise up to € 2.75 billion ($ 3.3 billion) from shareholders, including Qatar’s airline, to help weather the deeper crisis in aviation history.
The company plans to use the money to pay off debt and increase the amount of cash, as it prepares for several years of poor demand.
The aviation industry has been decimated by the pandemic and the IAG does not expect global passenger demand to return to 2019 levels before at least 2023. British Airways has already announced plans to cut up to 12,000 jobs, more than a quarter of its workforce, and is withdrawing its entire fleet of Boeing 747s four years ahead of schedule.

IAG, which also owns Aer Lingus and Vueling, revealed a record operating loss of almost € 1

.4 billion ($ 1.7 billion) in the first half of 2020. It also had a € 2.2 billion ($ 2.6 billion) success related to the early retirement of BA’s Boeing 747s and Iberia’s Airbus A340s. The group has canceled or deferred nearly half of its scheduled deliveries from aircraft by 2022.

Passenger traffic in the second quarter of the year decreased by more than 98% compared to the same period last year. Revenue in the quarter fell nearly 90%.

“Our industry is facing an unprecedented crisis and the outlook remains uncertain,” Chief Executive Willie Walsh said in a statement. “However, we firmly believe that now is the time to look to the future and strengthen the IAG’s financial and strategic position,” he added.

Qatar Airways is the group’s largest shareholder with a 25.1% stake. IAG said Qatar will support the capital increase, implying that it will provide almost € 688 million ($ 817 million) in new funds.

“Qatar Airways … has confirmed its support for the proposed capital increase and irrevocably committed to subscribing to its pro rata right,” IAG said in a statement.

Qatar is looking for two seats on the board. Shareholders will vote on the appointments and the capital increase in September.

Goldman Sachs, Morgan Stanley and Deutsche Bank are subscribing to the remainder of the rights issue, which could double the number of IAG shares in question, according to senior Bernstein research analyst Daniel Roeska. “Investors face a choice between doubling on their investment or being substantially diluted,” he said in a note.

IAG shares fell more than 7% in London on Friday. The group’s net debt rose 38% over the past year to almost € 10.5 billion ($ 12.5 billion).

Airlines are now looking to reintroduce their flight schedules, but demand remains weak and government restrictions continue to have more complicated issues.

IAG’s Walsh said the group was “nowhere near” where it was hoping to be in July, operating only 20% of capacity compared to the same month last year. “We were hoping to reach 50%,” he told BBC Radio on Friday.

Airlines call for coronavirus testing to restore transatlantic flights

Walsh said the UK’s decision to reintroduce quarantine for passengers arriving from Spain, following a new coronavirus outbreak in parts of the country, was “disappointing” but did not shift travel to other parts of the country. -Europe.

“When the restrictions are lifted there is very clear evidence of lost demand and passengers will start flying again,” he added.

Last week, IAG, Lufthansa (PRESSURES), United Airlines (UAL) u American Airlines (AAL) wrote to governments on both sides of the Atlantic urging them to introduce a coronavirus testing program for passengers to allow air travel to be restored.

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