22nd Feb 2021 08:52
(Alliance News) - International Consolidated Airlines Group SA on Monday said its British Airways unit has secured two finance-support pacts worth GBP2.45 billion in total.
The UK flag carrier is to drawdown an export development guarantee term-loan of GBP2.0 billion before the end of this month after reaching a final agreement with UK Export Finance.
UKEF is the UK's export credit agency and provides an export development guarantee to support the working capital and capital expenditure needs of UK exporters that meet set criteria.
The airline holding group said BA had received commitments for a five-year export development guarantee term-loan of GBP2.0 billion underwritten by a syndicate of banks, partially guaranteed by UKEF, back in December.
IAG said in December that proceeds from the 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".
Additionally, IAG said BA has agreed with the trustee of New Airways Pension Scheme to defer GBP450 million pension deficit contributions due between October last year and September this year.
BA's repayment of this, as well as any interest, will be added to the end of the existing recovery plan as monthly payments under a revised recovery plan, which has an end date of March 2023. Monthly contributions have been GBP37.5 million.
"A new recovery plan will be based on the triennial valuation as at March 31, 2021. If a new recovery plan has not been agreed by September 30, 2021, the default position is that BA will return to making payments of GBP37.5 million per month from October 2021," said IAG.
BA will pay no dividends to IAG before the end of 2023. From 2024, any dividends paid will be matched by contributions to NAPS of 50% of the value of dividends paid, said IAG, with payments reducing the outstanding repayment balance. The requirement to make payments to NAPS will end after deferred contributions have been repaid, it added.
Shares in IAG were up 0.8% at 167.13 pence in London on Monday.
By Zoe Wickens; [email protected]
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