The owner of British Airways has announced plans for a rights issue of up to €2.75bn (£2.5bn, $3.6bn), as it warned the airline industry will take years to recover from the coronavirus crisis.
International Airlines Group (IAG.L), which also owns Iberia and Aer Lingus, revealed the fundraising measures as it also posted losses in both the second quarter and first half of the year.
With the pandemic hammering air travel, the company said operating losses came in at €1.365bn (£1.24bn, $1.63bn) in the three months to the end of the June.
The figures were only slightly lower than analyst forecasts reported by Reuters of €1.395bn, but marked a stark reversal of the €960m profits in the same period last year. It recorded a further €812m in exceptional costs.
The airline said on Friday the capital increase, giving existing shareholders the right to buy additional shares, would reduce leverage and increase liquidity, and had the backing of its biggest shareholder Qatar Airways.
Willie Walsh, CEO of IAG, said: "Our industry is facing an unprecedented crisis and the outlook remains uncertain. However, we strongly believe that now is the time to look to the future and strengthen IAG's financial and strategic position.
“While we have had to make tough decisions on both people and costs, these actions are the right ones to protect as many jobs and serve as many customers as feasible and put IAG in the strongest position possible.”
It comes a week after a union representing BA pilots urged members to accept drastic cuts to pay and hours to limit mass job losses, under a deal agreed with airline chiefs.
Thousands of pilots have voted over the past week on a deal negotiated between the UK’s flag carrier and the British Airline Pilots’ Association (BALPA) over the past three months.
IAG came under heavy fire from unions and MPs after announcing plans to axe up to 1,255 pilots and up to 12,000 jobs in total earlier this year. The company warned in April it had run out of other ways to save cash as the pandemic has hammered its revenue.
The deal could see compulsory pilot job losses limited to around 270 staff, according to the union.
The company also announced this month it would retire its entire fleet of 747 jumbo jets earlier than planned.
The pandemic has taken an unprecedented toll on BA and the rest of the aviation industry. IAG saw passenger numbers and revenue plummet as global air travel collapsed after the pandemic hit earlier this year.
BA is gradually increasing flights to short-haul destinations but does not expect passenger demand to return to 2019 levels until 2023