News: British Airways owner IAG boosts liquidity by 2.45 billion pounds.
LONDON (Reuters) – British Airways owner IAG added £ 2.45 billion ($ 3.4 billion) to total liquidity through a loan and deferred pension contributions and continued to explore other debt options to improve its finances .
The IAG stated that the BA had agreed not to pay dividends to parent company IAG before the end of 2023 in order to meet the deferral of the £ 450million pension deficit contributions due between October 2020 and September 2021.
Like all airlines, the IAG ran out of cash after nearly twelve months with minimal revenue. In April last year the dividend was canceled and in October € 2.74 billion was raised by shareholders to ensure survival.
Countries around the world have tightened travel restrictions in the past two months in response to new variants of the coronavirus. It’s unclear when travel will resume, which continues to put pressure on airlines’ finances.
“In addition to these agreements, the IAG is reviewing other debt initiatives on Monday to further improve its liquidity,” said IAG, which also owns Iberia and Vueling airlines in Spain and Irish carrier Aer Lingus, in a statement on Monday.
BA said it had reached a final agreement on a new £ 2 billion 5-year loan, partially guaranteed by the UK through its UK export finance unit, which will be drawn on the facility by the end of this month.
This facility was secured in December and also includes restrictions on BAs making dividend payments to IAG.
The pension funds also agreed to allow the BA to defer monthly contributions of £ 37.5 million. This included listing real estate assets as collateral and suspending dividends to parent company IAG until the end of 2023.
BA is the largest and most profitable airline in the IAG. Due to the dividend pause, it may be years before IAG shareholders receive payments again.
Given the airline group’s new debts and the fact that travel expenses are unlikely to reach 2019 levels until 2024, this should come as no surprise to shareholders.
($ 1 = 0.7148 pounds)
Reporting by Sarah Young, Editing by Estelle Shirbon
Original Source © Reuters