IAG International Airlines Group has extended its global partnership with American Express which includes a deal to sell the financial services company GBP750 million (USD965 million) worth of Avios loyalty points .
"American Express will make a payment to IAG Loyalty of approximately GBP750 million, a significant part of which is a pre-purchase of Avios points that American Express will utilise in the UK and world-wide for its British Airways co-branded cards and Membership Rewards Programme," the holding said.
IAG Loyalty manages the loyalty programmes of British Airways, Iberia, Aer Lingus, and Vueling Airlines. While co-branded credit cards and loyalty points are fairly common especially in Northern America, IAG is the only major European airline holding to engage in these transactions to such an extent.
Shortly after the announcement of the American Express deal, Reuters reported that IAG was planning to raise an additional EUR2.5 billion euros (USD2.9 billion) in equity through a new share issuance. Sources said that this was one of a few options under consideration to raise new equity and avoid having to resort to a government bailout.
Responding to these speculations in a stock market filing, IAG said it had yet to make any decisions in that regard.
"The Group is evaluating the merits of a rights issue of up to EUR2.75 billion (USD3.2 billion) that would further strengthen IAG's balance sheet. No decision has been made as to whether or when to proceed with a rights issue. A further announcement will be made as appropriate," Chief Financial Officer Steve Gunning said in the filing.
