BA owner IAG launches steeply discounted E2.75b rights issue

BA owner IAG has launched a steeply discounted E2.75b rights issue to help shore up its finances through the disruption caused by coronavirus. The airline group also warned it expects to carry fewer passengers than forecast this year and next as travel restrictions and quarantine measures hamper its recovery. Alex Cruz, BA CE, was one of several UK airline executives to write to the UK PM Thursday to plead for further support including testing on arrival. The lette said the industry risked “ruin” otherwise. IAG, which announced the emergency fundraising in July alongside a E2b Q2 loss, will issue nearly 3b new shares at E0.92 each, a 36% discount based on the new fully expanded share capital. Current shareholders will be entitled to buy three of the new shares for each two shares they currently own. Stephen Furlong, analyst at Davy Research, said the discount was steeper than he had expected. The shareholder dilution was also more than he expected. “You can see what they are trying to do, raise the money no matter what,” he said. “The key was just to raise the money, the price was just a secondary thought.” The rights issue won the overwhelming support of shareholders at IAG’s annual meeting in Madrid this week. Qatar Airways, IAG’s largest shareholder which has steadily been building its stake in the airline group since 2015, took up its share entitlement in full. IAG said it expected to be able to survive a “prolonged downturn” in air travel, and is confident it will emerge from the crisis as a more nimble and flexible company.<br/>