British Airways owner weighs $3.2bn right issue to improve finances

By Rahul Vaimal, Associate Editor
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British Airways
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British Airways owner International Airlines Group (IAG) is preparing a possible rights issue of up to $3.2 billion to improve its finances. 

The IAG Group said that no definitive decision has been made on whether or when to proceed with the rights issue which it expects to help in keeping the business afloat and avoid a government bailout.

“Being a rescue deal, investors will undoubtedly prefer to have more visibility on air traffic during the summer months,” one of the sources who are close to the matters said.

The Anglo-Spanish group, which also owns Iberia and Aer Lingus, has just renewed a $955 million partnership multi-year deal with American Express. It is also reconsidering a planned $1.16 billion takeover of Spanish carrier Air Europa because of the severe economic climate.

Even though the organization has not asked for a specific government bail-out it has taken advantage of state-backed loan schemes in Britain and Spain.

The group is working with U.S. investment banks Goldman Sachs and Morgan Stanley and its corporate brokers Barclays and Deutsche Bank on the plan. All of these financial institutions are yet to comment on the matter.

IAG reported a first-quarter operating loss before exceptional items of $ 622.73 million and expects significantly worse losses in the second quarter, reflecting the full extent of travel lockdowns during the pandemic. It will release its second-quarter results on July 31.