By Kate Holton
LONDON (Reuters) -British Airways owner IAG (LON:ICAG) is examining all options to cope with a volatile business environment, but does not need a rights issue for now because it can see bookings recover, its boss said.
Chief Executive Luis Gallego told Reuters the airline group was recovering from the turmoil of the pandemic but that in an uncertain environment it would be negligent not to look at different scenarios and how best to address them.
"We don't have a plan right now to do a rights issue because in the current circumstances that we have, we see the recovery of the business, we see the high level of bookings," he said in an interview.
Gallego replaced Willie Walsh in September 2020 to run one of the biggest airline groups in the world, seeking to steer a company that also owns Aer Lingus, Iberia and Vueling through the biggest crisis in modern aviation.
Since the pandemic hit, IAG has had to scrap thousands of jobs, raise billions of euros and navigate frequently changing COVID restrictions, before the outbreak of war in Ukraine shut vast swathes of airspace and pushed the price of oil higher.
He said in an unpredictable environment IAG was analysing scenarios for the business - "and always we have in mind that what we want is to maximise shareholders' value."
Asked if the group, with 11.7 billion euros ($13 billion) of net debt, would consider asset sales or partnerships with other airlines, Gallego said: "We would be negligent if we don't analyse all of these scenarios because the world is very uncertain now and we need to analyse all of them."
Bernstein analysts said on Monday IAG did not need an equity fundraising because it had enough liquidity, but that it could pursue one to gain flexibility, though not at a steep discount.
RECOVERY IN SIGHT
IAG said on Friday it expected to return to profitability in the second quarter, with passenger capacity expected to reach 85% of pre-pandemic levels this year. It should also benefit from the collapse or retrenchment of rivals on key routes, and is hedged against volatile crude prices.
Gallego said IAG had not seen any impact on bookings from Russia's invasion of Ukraine, and the rerouting of flights to places like Singapore, Pakistan and India to avoid Russian airspace was manageable.
Airline analysts have said the closure of Russian airspace could delay the reopening of routes between Asia and Europe after the pandemic, but Gallego said he did not expect flights to the likes of China or Hong Kong to be restarting soon anyway.
On Friday, hours after delivering a more upbeat set of results, the CEO faced another challenge when British Airways was hit by an IT failure that echoed a lengthy computer outage in 2017 that damaged its reputation.
Gallego said the latest problem, which was resolved by Saturday, was sparked by a hardware issue and that the group had constantly increased IT investment, with non-fleet capital spending - the majority of it IT-related - set to be around 600 million euros this year.
Further out, he said the industry was still working to fully understand how people would want to travel after the pandemic. Currently, demand for premium leisure destinations is strong due to pent up demand and the fact many people can now live and work anywhere.
"I am sure that we are going to adapt our business to these new requirements," he said.
($1 = 0.9010 euros)