Airline giant IAG logs 3.8-bn-euro loss on virus

British Airways owner IAG says recovery will not be before 2023

After months of grounded planes, the tentative return to flying in Europe, needed to salvage the summer season that provides the bulk of airline profits, has been threatened by signs of rising COVID-19 cases and new travel restrictions.

The capital raise proposed by British Airways-owner IAG will give the airlines group "a very comfortable buffer", said its chief executive, who added that he would not be extending his tenure again.

IAG, which also owns Spain's Iberia and Aer Lingus of Ireland, is seeking to swell its coffers with the long-haul routes in which it specializes expected to be some of the last to recover from the ravages of the pandemic.

"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.

International Airlines Group has reported an operating loss of €1.3 billion before exceptional items for the second quarter, compared to a profit of €960 million a year ago.

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.

Cash at period end stood at €6,016m, having reduced by €667m since end of year 2019, on top of a further €2.1bn in committed and undrawn general and aircraft facilities, for total liquidity of €8.1bn.

However, we strongly believe that now is the time to look to the future and strengthen IAG's financial and strategic position.

"We have seen evidence that demand recovers when government restrictions are lifted", he said, adding that IAG had taken extra measures to reassure customers about health and safety.

British Airways had already warned in April that it could slash up to 12 000 jobs, or a quarter of its workforce, in a drastic restructuring as the carrier grapples with fallout from the deadly pandemic.

The deal could see compulsory pilot job losses limited to around 270 staff, according to the union. The ballot closes on Friday.

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

"Our demand is not what we're actually seeing in our bookings, because bookings are being suppressed by government restrictions", Walsh said.

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