IAG launches a wide-ranging review to cope with travel crisis
AER Lingus parent company IAG is reviewing its strategy to help reposition the group as it emerges from the coronavirus pandemic, people familiar with the matter have said.
The company is working with advisers to study its future business plan and liquidity needs, according to the anonymous sources. The airline group, which also owns British Airways and Iberia, is examining options that could include debt or equity fundraising, they said.
Like its peers, IAG has been ravaged by the effective shutdown of air travel brought on by Covid-19. IAG shares are down almost 53pc this year, giving the company a market value of £5.9bn (€6.5bn). The group has taken state financial support in the UK and Spain to help it through the downturn.
In Ireland, trade union
Fórsa is to ballot Aer Lingus cabin crew on planned changes to their working conditions due to the fallout from the coronavirus.
IAG’s discussions are at an early stage, and the result of the deliberations isn’t certain, the sources said. A spokesperson for IAG declined to comment.
IAG and many other airlines have signalled they will need to reduce costs drastically to realign their operations for a future with fewer passengers. BA has already said it plans to eliminate 12,000 jobs, or about 30pc of its staff, triggering a political debate over its use of state aid.
On Saturday, the UK’s Transport Committee released a report accusing BA of using the crisis as an excuse to shed workers even as the state was paying the wages of its employees through a national furlough scheme. The report drew a swift response from IAG’s chief executive Willie Walsh, who said in a letter to the committee’s chairman that “British Airways is fighting for its survival”.
Raising equity would ease cash-flow pressure on IAG, shore up its credit rating and potentially help it pay back government borrowings that have spawned the criticism. Qatar Airways will be key to any fundraising plan, as they’re the biggest shareholder in IAG with a 25pc stake, according to data compiled by Bloomberg.
Much of what IAG has raised in recent months has been via short-term debt facilities and those will need to be refinanced, CFO Steve Gunning said on an analyst call last month.
IAG also reached an agreement late last year to acquire Spain’s Air Europa in a €1bn deal. IAG has been seeking to reduce the purchase price, Bloomberg News reported in April.