British Airways parent company could tap shareholders for more cash, aviation industry expert predicts
The parent company of British Airways could tap shareholders for more cash early next year, an aviation industry expert has predicted.
The reopening of the US to fully vaccinated foreign visitors last week gave a major boost to IAG, which has said it now expects to return to profit by next summer.
As the outlook for long-haul travel improves, HSBC aviation analyst Andrew Lobbenberg said a rights issue would be the fastest way for the aviation giant to tackle its €12.3billion debt and allow it to restart paying a dividend.
Brighter outlook: The reopening of the US to fully vaccinated foreign visitors last week gave a major boost to IAG
He said the only alternative to tapping shareholders as the company tries to boost its credit rating is gradually paying down debt ‘using cash flows’.
Lobbenberg said any decision on a rights issue is likely to be taken by IAG’s new finance chief Nicholas Cadbury, who starts early next year after joining from Whitbread.
The Premier Inn owner completed a discounted £1billion rights issue last June to cover Covid losses while its hotels and pubs were closed.
Lobbenberg previously told The Mail on Sunday in September that any plans to raise cash for IAG could be tied to positive news such as the reopening of the US.
Earlier this month, IAG secured a £1 billion five-year credit line for BA, backed by UK Export Finance.
IAG made a €452million (£387million) loss for the three months to September and it forecasts a €3billion (£2.57billion) loss for the full year. Rivals Air France-KLM and Lufthansa have returned to operating profit.