British Airways has secured a £2 billion loan to help it weather the pandemic and be ready for a recovery in demand.
The carrier’s owner International Airlines Group (IAG) – which also owns Iberia and Aer Lingus – said the five-year loan facility was underwritten by a syndicate of banks and is partially guaranteed by the Government’s UK Export Finance (UKEF).
BA, which is set to drawdown from the loan in January, is able to repay the loan at any time with notice, but is bound by some restrictions on dividend payments by the airline to IAG.
IAG said the loan will “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”.
UKEF is the Government’s export credit agency that provides loans to overseas buyers of British goods and services.
It said that as well as the UKEF facility, IAG is looking at other “debt initiatives” to bolster its balance sheet in the face of the pandemic and will update the market “in due course”.
It comes as IAG also reshuffled its board to comply with new EU ownership and control rules following Brexit.
The group has now changed the make-up of its board so that it has a majority of independent European non-executive directors.
Deborah Kerr, Maria Fernanda Mejia and Steve Gunning have stepped down from the board while Peggy Bruzelius, Eva Castillo Sanz and Heather Ann McSharry have joined it, IAG said.
But Mr Gunning’s executive role as chief financial officer remains unaffected.
Outgoing chairman Antonio Vazquez is also due to retire in January and the IAG board will be cut to 11 directors.
Mr Vazquez said: “It is disappointing that it has become necessary to make these changes to the board.
“However, we are pleased that the EU-UK Trade and Cooperation Agreement recognises the potential benefits of further liberalisation of airline ownership and control because we believe that it is in the best interests of the industry and consumers.”