LONDON (AFP) – British Airways, facing slumping demand due to coronavirus, has secured a £2 billion (S$3.6 billion) loan, parent group IAG said on Thursday (Dec 31) as it also unveiled a Brexit-propelled overhaul.
BA, which is slashing thousands of jobs as it battles to survive fallout from the deadly Covid-19 pandemic, also currently faces industrial action in a pay dispute with cargo workers at London’s Heathrow airport.
“International Airlines Group (IAG) announces that British Airways has received commitments for a five-year term-loan Export Development Guarantee Facility of £2 billion underwritten by a syndicate of banks, partially guaranteed by UK Export Finance (UKEF),” the aviation giant said in a statement.
“British Airways expects to drawdown the facility in January 2021 subject to agreement of final terms with the lenders and UKEF.”
UK Export Finance is a state-backed agency which guarantees finance for British companies in order to help them win valuable exports.
The loan, which includes restrictions on dividend payments by the airline to IAG, is aimed at helping BA tap into an anticipated vaccine-driven recovery in global aviation next year.
“The proceeds from the UKEF facility will be used to enhance liquidity and provide British Airways with the operational and strategic flexibility to take advantage of a partial recovery in demand for air travel in 2021 as Covid-19 vaccines are distributed worldwide,” IAG said.
The European travel giant noted it had “strong liquidity” with cash and undrawn facilities of €8 billion (S$13 billion) in total, excluding the new loan.
IAG, whose portfolio also includes Ireland’s Aer Lingus and Spain’s Iberia, added separately that it has conducted an overhaul to ensure compliance with EU laws following Britain’s final exit from the bloc.
“International Consolidated Airlines Group (IAG) has implemented plans to ensure that its EU licensed airlines continue to comply with EU ownership and control rules following Brexit,” it said.
“These remedial plans were approved by national regulators in Spain and Ireland and, as required, the EU has been notified about them.
“The plans include the implementation of a national ownership structure for Aer Lingus and changes to the group’s long-standing national ownership structure in Spain.”
IAG’s own board of directors has also been changed so that it has a majority of independent EU non-executive directors.