International Airlines Group (IAG) has confirmed two financing agreements that British Airways has reached that will increase total liquidity by £2.45 billion.
On December 31, 2020, IAG announced that British Airways had received commitments for a five-year Export Development Guarantee term-loan of £2.0 billion underwritten by a syndicate of banks, partially guaranteed by U.K. Export Finance (UKEF). British Airways has now reached final agreement with UKEF and the lenders and expects to drawdown the facility before the end of February 2021.
Furthermore, British Airways has reached agreement with the Trustee of New Airways Pension Scheme (NAPS) to defer £450 million of pension deficit contributions due between October 2020 and September 2021. The agreement includes the deferral of monthly contributions of £37.5 million from October 2020 to September 2021 for a total value of £450 million. During negotiations, the NAPS Trustee agreed to temporary deferrals of the contributions due in October, November, December and January. Repayment of £450 million accumulated contributions plus interest will be added to the end of the existing Recovery Plan as monthly payments under a revised Recovery Plan, which is currently March 2023. British Airways has agreed to provide property assets as security, which will remain in place until the airline has repaid the deferred contributions. No dividends will be paid by British Airways 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. (£1.00 = US$1.41 at time of publication)
