British Airways owner IAG plans to raise 2.75 billion euros ($3.27 billion) from shareholders to repair the coronavirus-sized hole in its finances and brace for a more chaotic future.
Chief Executive Willie Walsh said the plan, backed by biggest shareholder Qatar Airways, was needed to survive the most severe crisis in aviation history after the group lost more in one quarter than it has ever lost in a year.
“These are really extreme times,” Walsh told the BBC, adding IAG had hoped to be flying at about 50% capacity by July, but was instead at 20%.
“We’re seeing a much slower and more gradual build-up,” he added.
Airlines around the world have been brought to their knees by the halt to flights, forcing tens of thousands of job cuts, in what Walsh said was a crisis much worse for airlines than either 9/11 or the global financial crisis.
“This is worse by any measure, by many times,” he told investors.
Walsh said the proposed fundraising would give IAG, which also owns Iberia and Aer Lingus, a “very comfortable buffer” to withstand its worst-case scenario planning. Travel is not seen recovering to pre-pandemic levels until 2023.
Competitor Air France-KLM , which has secured a state-backed rescue to underpin its finances, also said on Friday it was ready to cut capacity plans further due to the anaemic recovery.
IAG on Friday slid to a second-quarter operating loss before exceptional items of 1.365 billion euros.
Goodbody analysts said the results showed how network carriers like IAG – with connecting short-haul and long-haul routes – would find it more difficult to recover than budget carriers such as Ryanair and easyJet .
Shares in IAG fell 7% to their lowest since 2012 at 167 pence, and are down 72% this year…