British Airways’ planes at the Heathrow Airport, London. File/Reuters

British Airways' owner IAG said it is drawing up plans for a possible rights share issue of up to 2.75 billion euros ($3.2 billion) to strengthen its balance sheet.

International Consolidated Airlines Group (IAG) made the statement after Reuters reported that it was planning a rights issue of up to 2.5 billion euros, citing three sources.

IAG's share price has lost 66% of its value since the start of the year, as global air travel came to a halt during the coronavirus crisis. On Friday its stock fell more than 4% following the Reuters story on the rights issue.

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IAG said that no final decision has been made on whether or when to proceed with the rights issue, where new shares are offered to existing shareholders at a discount.

Two sources had earlier told Reuters that the company was targeting the end of the summer for the capital raise, which would keep the business afloat and avoid a government bailout.

"Being a rescue deal, investors will undoubtedly prefer to have more visibility on air traffic during the summer months," one said.

British Airways Airbus A380 airplanes are stored in France. File/Reuters

The Anglo-Spanish group, which also owns Iberia and Aer Lingus, just renewed a 750-million-pound ($955 million) partnership multi-year deal with American Express.

With passenger numbers decimated this year and experts forecasting it will be years before they recover, global airlines began sweeping restructuring processes and in many cases sought state assistance.

Air France secured a 7-billion-euro aid package from the French government and Germany's Lufthansa agreed on a 9-billion-euro government bailout.

IAG, which is also reviewing a planned 1-billion-euro acquisition of Spanish carrier Air Europa because of the harsh economic climate, has not asked for a specific government bail-out but has taken advantage of state-backed loan schemes in Britain and Spain. British Airways has warned it needs to cut 12,000 jobs.

Spanish airlines Iberia and Vueling have secured 1 billion euros of government-backed loans in May. British Airways (BA) has also accessed the UK coronavirus corporate finance facility and used the government's furlough schemes.

IAG is working with US investment banks Goldman Sachs and Morgan Stanley and its corporate brokers Barclays and Deutsche Bank on the plan, the sources said.

Deutsche Bank and Barclays declined to comment. Goldman Sachs and Morgan Stanley did not respond to requests for comment.

IAG reported a first-quarter operating loss before exceptional items of 535 million euros and expects significantly worse losses in the second quarter, reflecting the full extent of travel lockdowns during the pandemic.

It will release its second quarter results on July 31.

British Airways, the world's largest operator of Boeing 747s, will retire its entire jumbo jet fleet with immediate effect after the novel coronavirus pandemic sent air travel into freefall. For over 50 years, Boeing's 'Queen of the Skies' has been the world's most easily recognised jetliner with its humped fuselage and four engines, but its days had already been numbered before the pandemic struck earlier this year.

BA had been planning to retire the aircraft in 2024 but with passenger numbers decimated this year and forecasts that it will be years before they recover, the airline said it was unlikely its 747s would ever operate commercially for it again.

BA has said it needs to cut up to 12,000 jobs, or about 28% of its workforce, to prepare for the smaller travel market expected over the coming years.

The Sun reported last month that BA had reached an agreement with its pilots to sack 350 and another 300 in pool for rehiring when needed. The majority of pilots being pooled were expected to be the jumbo jet first officers.