LONDON, Sept 20 (Reuters Breakingviews) - International Consolidated Airlines (IAG)’s decision not to pass another hat round its shareholders looks like the right one – just [nL4N2QL03P]. Unlike Germany’s Deutsche Lufthansa [nL1N2QL0CV], which unveiled a 2.1 billion euro rights issue on Sunday, the British Airways owner never had to accept state support that needs to be paid back. With 10 billion euros of liquidity, there’s also no immediate risk of a crunch. The big risk is that a sluggish recovery throws Chief Executive Luis Gallego’s deleveraging plans off course.
The carrier’s net debt, which stood at 12.1 billion euros in June, is scary given ongoing restrictions and slashed business travel budgets. However, analysts polled by Refinitiv predict the company will generate EBITDA of 3.5 billion euros next year. That suggests leverage of 3.5 times, just below the 3.6 times IAG had back in 2012, after the financial crisis. Two years later, the ratio was below 2. Gallego will be hoping for a repeat performance. But aviation optimists have recently had a habit of being wrong. (By Ed Cropley)