British Airways-owner IAG said it planned to raise about 1 billion euros ($1.20 billion) through a bond issue, strengthening its finances to help it survive the pandemic in case the travel downturn lasts longer than expected.
Airlines are counting on a travel restart this summer after a year of minimal income due to restrictions, but rising case numbers in some countries and delays to the vaccine roll-out in Europe could derail the recovery.
Last month IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, said it had liquidity to ride out the crisis, but on Thursday decided to issue two bonds to add to its war chest.
In its statement, the airline group said the proceeds from the offering could be used to “withstand a more prolonged downturn in air travel” or provide “flexibility to take advantage of a recovery in demand for air travel”.
The senior unsecured bonds would be issued in two tranches, IAG said, with 500 million euros of bonds due in 2025 and another 500 million euros due in 2029, and final terms due to be determined shortly.
Settlement is expected to take place on Mar. 25.
IAG has been cutting costs to help it survive while flying only 20% of its normal capacity. It is burning through about 185 million euros per week. ($1 = 0.8366 euros)
(Reporting by Sarah Young; editing by Costas Pitas and Paul Sandle)