IAG may have to return to the capital markets in 2021 to raise further equity, according to Julian Cook of Atka Capital.
In a webinar called “investing in the recovery of the airline sector” Cook said he anticipates “another round of equity”, probably next year if they want to avoid getting into negative equity.
Last month IAG closed a €2.75 billion ($3.21 billion) rights issue to boost its liquidity amid a plunge in demand for air travel created by the Covid-19 crisis.
“They raised equity at a 36% discount over the share price and the transaction translated into over 60% dilution for existing shareholders,” he said.
"In spite of this capital raise we expect the equity position of IAG to be at around €1.2-1.5 billion at the end of the year versus $6.8 billion at the end of 2019 which we don't believe will be enough."
Cook estimates that IAG burned around €770 million of cash on a monthly basis in the third quarter.
IAG recorded a €6.6 billion net loss in the first half of this year, including a €2.13 billion exceptional charge on fuel and foreign exchange hedges.
As of 30 June, the company had €6.01 billion of cash, down €667 million on 31 December, 2019. Committed and undrawn general and aircraft facilities totalled €2.1 billion, bringing total liquidity at €8.1 billion.