IAG to raise $4.5b capital as virus bites

IAG, owner of British Airways, said it planned to raise 2.75 billion euros ($A4.5 billion) in a capital increase backed by its biggest shareholder Qatar Airways, to strengthen its finances after the pandemic wiped out travel.

IAG's chief executive says the capital increase will boost the group's liquidity, which at the end of June stood at 8.1 billion, and put it in the strongest position possible for a market that is unlikely to return to pre-pandemic levels until 2023.

"We strongly believe that now is the time to look to the future and strengthen IAG's financial and strategic position," chief executive Willie Walsh said in a statement on Friday.

With international travel threatened by a new wave of the pandemic before a recovery from the three-month grounding of planes has got properly underway, the outlook for airlines remains bleak.

IAG said the capital boost would also enable it to withstand a more prolonged downturn in its worst-case planning.

The airline group, which also owns Iberia and Aer Lingus, reported an operating loss of 1.365 billion euros for the second quarter, broadly in line with a consensus forecast for a loss of 1.395 billion euros.