BA parent IAG weighs E2.75b rights issue to shore up balance sheet

BA owner IAG is considering launching a rights issue of up to E2.75b 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 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% of its workforce, as a result of the pandemic. Willie Walsh, CE 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”. 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 E10b 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 GBP750m. <br/>