The British Airways owner announced, that American Express would pay it $955 million to renew their partnership, signaling an impressive boost to the airline’s finances at a time when it is burning through cash.
Although restrictions seemed to have eased, flying has restarted, but pressure still mounts on airline companies like IAG because travel is still at less than half of pre-pandemic levels due to ongoing constraints for some destinations and consumer worries.
IAG’s finances have been strained by the pandemic, leading to media speculation that it could need to raise new equity. It said at the end of April that it had 10 billion euros ($11.6 billion) of liquidity and it was burning through 200 million euros a week.
The 750 million pound boost from the partnership deal announced on Friday, gives the company time to adjust its operations.
Shares in IAG were down 1.7% at 205 pence, in line with the FTSE 100 index. IAG’s shares have lost 67% of its value so far in 2020.
IAG said that the multi-year renewal agreement with American Express would extend the commercial partnership with the payments company and that American Express was paying IAG to pre-purchase Avios points, which members of rewards programs can use to buy flights.
The airline group, which also owns Iberia, Vueling, and Aer Lingus, is due to report second-quarter results on July 31.