Aer Lingus owner IAG to raise extra €825m to bolster finances amid continued uncertainty

Airline group is issuing a further bond after it raised €1.2bn in March as travel remains hit by pandemic fallout

Aer Lingus owner IAG is undertaking a further debt raise to bolster its finances.

Aer Lingus owner IAG has said it is raising a further €825m in debt in order to bolster its finances amid continued uncertainty around the resumption of air travel.

The group — which also owns British Airways and Spanish carriers Iberia and Vueling — is raising the money through the issuance of a convertible bond, with an interest rate of 1.12%.

IAG raised €1.2bn through a bond issuance in March, when it said it was burning through €175m of cash a week. It has also received €1.5bn in government-supported loans and raised €2.7bn in a rights issue last year.

IAG said the money would strengthen its balance sheet, increase its liquidity and give it the flexibility to benefit from industry recovery. The group currently has €10.5bn in cash and loan facilities.

Job cuts warning

Just last week, new Aer Lingus chief executive Lynne Embleton warned that the airline will have to cut jobs to survive the continued fallout from the pandemic, with a large proportion of this summer’s business already having effectively been largely written off.

Elsewhere, Lufthansa is understood to be working with banks on a plan to raise about €3bn in equity to help repay its state coronavirus bailout. Europe’s largest airline received a €9bn state bailout last year after Covid ended a decades-long boom in air travel. 

• Additional reporting Bloomberg