IAG looking at ways to raise more cash

British Airways aircraft © BEN STANSALL/AFP via Getty Images

(Image credit: © BEN STANSALL/AFP via Getty Images)

published 30 July 2020

International Consolidated Airlines Group (IAG), which owns British Airways, is considering going “cap in hand” to investors, says Oliver Gill in The Daily Telegraph. A €2.75bn (£2.5bn) rights issue is one way it could boost its cash reserves.

Other options include a share placing with major institutional investors or issuing loans that can be converted into shares. IAG has already sold £750m of Avios loyalty points for future flights to American Express. Meanwhile, trade unions Unite and GMB are angry because BA, which announced 12,000 redundancies in April, has refused to rule out asking staff to re-apply for their jobs. A “jumbo-sized” rights issue and “painful” job cuts are drastic measures that have already been factored into IAG’s share price and led to BA being called a “national disgrace”, says Alistair Osborne in The Times. But critics could do with some “perspective”. It is important to remember that IAG is competing with the “likes of Lufthansa and Air France-KLM”, which have already received €9bn and €10.4bn in state bailouts respectively. Self-help is surely better than “having the taxpayer refinance IAG, even if jobs are lost.

The pandemic may the “deepest crisis” that IAG “has ever faced”, but other airlines have been grappling with similar pressures, say Tanya Powley and Bethan Staton in the Financial Times. EasyJet has sought to raise £450m with an equity placing representing almost 15% of its share capital. Virgin has secured a £1.2bn rescue package. The two airlines have cut a respective 4,500 and 3,550 jobs.

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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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