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BA owner plans billion-euro bond sale to withstand prolonged downturn

IAG will sell bonds in two rounds.

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BA flights have been severely impacted by the pandemic. (Tim Ockenden/PA)

BA flights have been severely impacted by the pandemic. (Tim Ockenden/PA)

BA flights have been severely impacted by the pandemic. (Tim Ockenden/PA)

The owner of British Airways plans to raise a billion euros (£855 million) to help it withstand a prolonged downturn in the travel sector and to tap into the eventual recovery.

IAG said it would sell two sets of bonds, each raising around 500 million euros.

The group, which also owns Iberia and Aer Lingus, said it wanted to strengthen its balance sheet and increase overall liquidity.

The cash will also be used by IAG to help “the group withstand a more prolonged downturn in air travel”, and provide it with “the operational and strategic flexibility to take advantage of a recovery in demand for air travel”.

The interest on the bonds, which will only be available to professional investors, is yet to be decided.

The first tranche will mature in March 2025, with the second four years later. The bonds will be traded on the Dublin exchange.

Bonds are intended as ways for companies to borrow money from investors. Each bond pays an annual interest rate, and at the end of the fixed period investors get their original money back – provided the business is still able to pay.

Shares in IAG fell 0.7% on the news.

The international aviation industry has been among Covid-19’s main business victims.

Last year IAG made a 7.4 billion euro (£6.3 billion) operating loss – swinging from a 2.6 billion euro (£2.2 billion) profit in 2019 – and made 10,000 staff redundant.

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Had IAG focused purely on its passenger arm, things could have been even worse as passenger revenues dipped by around three-quarters.

But due to the cargo its planes also carry, IAG made up some lost ground, increasing cargo revenues more than six-fold.


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