IAG announces €2.74bn capital increase amid poor bookings

IAG International Airlines Group has announced a fully underwritten capital increase to raise EUR2.741 billion euros (USD3.24 billion) to bolster its finances and help it withstand a prolonged downturn in air travel. It will issue 2,979,443,376 new shares, it said in a statement on September 10. The move, which shareholders approved on September 8, will give the shareholders the opportunity to subscribe to three new shares for every two they own. IAG, which owns British Airways, Iberia, Aer Lingus, LEVEL, and Vueling Airlines, will issue the shares at EUR0.92 (USD1.09) each, representing a 35.9% discount based on the closing price on September 9. The Reuters news agency described it as “a heavily discounted rights issue.” Qatar Airways Group, IAG’s biggest shareholder with a 25.1% stake, “has irrevocably undertaken to subscribe for its pro-rata entitlement under the capital increase,” the statement said. IAG, which has vowed to avoid any state aid, initially revealed the plan for a rights issue on July 31. It said that the increase in shares necessary for the growth in equity had been backed earlier this week by more than 99% of the votes. The group is launching the rights issue under a new chief executive, Luis Gallego, who replaced Willie Walsh on September 8. Walsh had delayed his previously scheduled retirement for March from the Spain-based holding he created in 2011, to help guide it through the chaotic initial months of the COVID[-19 pandemic.