Friday, 07 August, 2020

British Airways Moves Forward With Share Sale Backed by Qatar

British AIrways British AIrways planes have been largely grounded due to the crisis Credit REUTERS Toby Melville File
Ginger Lawrence | 02 August, 2020, 17:11

BA's parent company has confirmed plans to press ahead with a proposed capital increase of up to €2.75 billion, with its largest shareholder Qatar Airways supporting the move and set to take up its pro rata entitlement.

British Airways has warned it needs to cut 12,000 jobs and its plans to change contracts for its remaining 30,000 staff has provoked a furious reaction from cabin crew union Unite, who have threatened strike action.

"The results. were significantly impacted by the outbreak of Covid-19, which has had a devastating impact on the global airline and travel sectors, particularly from late February 2020 onwards", the company said.

IAG reported a second-quarter operating loss of 1.36 billion euros versus a 960 million-euro year-earlier profit, excluding items, as its planes were virtually grounded for the entire period.

The London-listed titan has meanwhile embarked upon a massive jobs-slashing efficiency drive, in line with carriers like Air Canada, American Airlines and Lufthansa.

Chief executive Willie Walsh said: "The industry will recover from this crisis, though we do not expect this to be before 2023, and there will be opportunities for IAG to capitalise on its strength and leadership positions".

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"We have seen evidence that demand recovers when government restrictions are lifted", he said, adding that the group's airlines had taken measures to additional reassurance to customers about health and safety.

IAG had €8.1 billion in liquidity on hand at the end of June, but will seek to raise further funds in light of the unpredictable market.

The International Air Transport Association had warned earlier this week that global air traffic will not return to levels seen before the coronavirus pandemic until at least 2024, adding that new United Kingdom restrictions on travel with Spain had created a lot of uncertainty.

IAG share price closed at 170.55p - 5.79% lower on Friday amid a record quarterly loss.

IAG suffered a record loss during the second quarter as government restrictions on the back of the Covid-19 pandemic almost wiped out all passenger traffic. AJ Bell investment director Russ Mould said investors would be taking "considerable risk" by participating in the rights issue and backing IAG in its "darkest hour".

He went on: "Our bookings are being suppressed by Government restrictions".