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IAG uses Aer Lingus slots at Heathrow to secure $1.8bn credit

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Deal: Aer Lingus slots at London Heathrow were used to secure the credit facility. Photo: Matthew Lloyd/Bloomberg

Deal: Aer Lingus slots at London Heathrow were used to secure the credit facility. Photo: Matthew Lloyd/Bloomberg

Deal: Aer Lingus slots at London Heathrow were used to secure the credit facility. Photo: Matthew Lloyd/Bloomberg

Prized Aer Lingus slots at Heathrow that were a crunch negotiating issue with the government when the airline was sold to IAG in 2015 can be used as security against a near $1.8bn (€1.5bn) revolving credit facility the airline group has just secured to bolster its finances, the Irish Independent understands.

The 23 take-off and landing slots that Aer Lingus controlled at Heathrow at the time of the €1.36bn sale to IAG were valued at as much as €900m.

IAG said yesterday that it has arranged the new revolving credit facility (RCF) with a syndicate of banks.

The facility is available to Aer Lingus, British Airways and Iberia, each of whom has a separate borrower limit within the overall facility.

IAG did not provide a breakdown of how much is available to each carrier.

Any amounts drawn will be secured against unencumbered aircraft assets and take-off and landing slots at Heathrow and Gatwick airports.

It’s believed that the number of slots that can be used as security under the new facility is a small proportion of the overall slots controlled by the three airlines at the airports.

The revolving credit facility is the latest liquidity push by IAG, whose chief executive is Luis Gallego, as it tries to ensure it has sufficient financial headroom to weather the lingering pandemic.

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The money available under the revolving credit facility will be available for a period of three years, with two one-year extensions possible at the discretion of lenders.

As part of the deal to sell Aer Lingus in 2015 to IAG, the government secured a commitment from IAG that the 23 take-off and landing slots at Heathrow which it operated would be used to service routes to Ireland for at least seven years.

The government also secured the legal right to veto any disposal of the Aer Lingus slots at Heathrow.

IAG said it continues to have strong liquidity, with an estimated total of €10.3bn. That includes €7.8bn in cash, cash equivalents and interest-bearing deposits and €1.7bn of undrawn general facilities, including the new RCF.

Last week, IAG sold €1.2bn worth of bonds that will be listed on the Dublin stock exchange.

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