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IAG Announces Capital Increase To Raise €2.74 Bln; Sees Further Capacity Decline Ahead

International Consolidated Airlines Group S.A. (IAG.L) Thursday announced a fully underwritten capital increase to raise gross proceeds of 2.74 billion euros through the issuance of 2.98 billion new shares in IAG.

The planned capital increase with pre-emptive subscription rights was approved by shareholders on September 8.

In the rights issue, the subscription price will be 0.92 euros for each New Share.

Qatar Airways Group Q.C.S.C., IAG's largest shareholder with 25.1 percent holding, has irrevocably undertaken to subscribe for its pro-rata entitlement under the Capital Increase.

The net proceeds of the capital increase will be used to strengthen its balance sheet by reducing financial leverage and increasing IAG's liquidity position.

Further, regarding the current trading, IAG said since July, it has experienced an overall levelling off of bookings. As anticipated, IAG has seen a delayed recovery of long-haul booking activity, impacted by the continued existence of travel restrictions to many long-haul destinations, including North and South America.

Long-haul bookings have seen a modest increase since mid-August.

Further, the company's capacity planning scenario for 2020 has been lowered to minus 63 percent in terms of available seat kilometres or ASKs compared to 2019 from minus 59 percent previously. This reflects the impact of current travel restrictions and quarantine requirements on booking activity.

For the third quarter, capacity is expected to decline by 78 percent compared to 2019 and lower than a decline of 74 percent in the previous scenario.

For the fourth quarter, capacity is expected to decline by 60 percent compared to 2019 and compared to a decline of 46 percent in the previous scenario.

For 2021, capacity is expected to decline by 27 percent compared to 2019, a reduction compared to 24 percent previously planned.

The company continues to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels.

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