State-Backed £2bn Bailout Loan Helps BA Covid Recovery.
British Airways has received a £2 billion new year funding boost through a state-backed loan. Its Parent company, International Airlines Group, secured commitments for a five-year loan underwritten by a syndicate of banks- it is being partially guaranteed by state-backed credit agency UK Export Finance (UKEF).
“British Airways expects to drawdown the facility in January 2021 subject to the agreement of final terms with the lenders and UKEF,” IAG announced on new year’s eve. The proceeds from the UKEF facility will now 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 continues to have strong liquidity with cash and undrawn facilities of €8 billion as at November 30, excluding the UKEF facility.” IAG revealed it is exploring other debt initiatives to further improve its liquidity in addition to the UKEF facility and will update the market “in due course”.
BA had previously received £300 million over a year from a Bank of England loan programme for the UK’s biggest companies. It also claimed support from the taxpayer-funded furlough scheme.
A spokesman for UKEF said: “British Airways is one of the UK’s most important airlines and its only hub carrier. “This support will ensure that British Airways can bounce back after the pandemic and continue providing critical connections between the UK and the rest of the world.”
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