LONDON (Reuters) – British Airways owner IAG

launched a heavily discounted rights issue on Thursday to raise 2.74 billion euros ($3.2 billion) to help strengthen its pandemic-hit finances, in a first test of faith in its new boss Luis Gallego.

Airline group IAG, which also owns Iberia, said in a statement that its largest shareholder, Qatar Airways Group, which has a 25.1% holding, had undertaken to subscribe for its pro-rata entitlement in the fully underwritten capital increase.

The funds will be used to reduce debt and help IAG withstand a prolonged downturn in travel, the group said, as it also warned that the outlook for the rest of the year and 2021 had worsened since the rights issue was announced in July.

IAG expects its September to December capacity to be 60% lower than 2019’s level, a cut from its previous estimate of a 46% drop, and said in 2021

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