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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
UK inflation expected to rise to 2.8%The rate of UK inflation is expected to rise when January’s figures are published tomorrow, partly driven by a bounce in airfares and the introduction of VAT on private school fees
-
Blow for Premium Bonds savers as NS&I announces interest rate changesNS&I has announced changes to a number of its savings products including Premium Bonds today. We explain what it means for savers.
-
India is a new global powerhouse — should you invest?India’s growth rate has slowed recently, but there is still ample scope for investors to benefit from its development.
-
Why Chinese stocks are so far out of favourThere’s little appetite for Chinese stocks despite low valuations.
-
Three companies that dominate their markets with critical productsA professional investor tells us where he’d put his money. This week: Charlie Huggins, manager of Wealth Club’s Quality Shares Portfolio, picks three stocks.
-
Should you continue to hold Smithson Investment Trust?Opinion Smithson Investment Trust, a small- and mid-cap fund, has struggled to live up to lofty expectations, says Rupert Hargreaves.
-
Primark owner Associated British Foods is an overlooked gem going cheap — should you buy shares?Associated British Foods, the owner of Primark, is a family-owned business, which means it is passed over by the increasingly popular passive investment funds. That spells opportunity for private investors, says Jamie Ward.
-
Trump's tariffs and a shrinking market for alcohol deal double blow to DiageoDonald Trump's tariffs are a further headache for drinks giant Diageo, which is already being buffeted by a decline in alcohol consumption.
-
Three stocks in recruitment companies with promising recovery playsRecruitment agency Robert Walters and its peers are struggling, but now's the time to buy, says Rupert Hargreaves
-
Four UK data companies to buy nowCompanies that create, harness or turn data into a valuable offering could be sitting on a hugely profitable gold mine. Rupert Hargreaves picks four of the best UK data companies to buy now.
