International Airlines Group PLC Says British Airways Has Received Commitments For 5 Year Export Development Guarantee Term Loan Of £ 2.0 Billion
The FTSE 100-listed group said British Airways plans to withdraw the facility in January 2021 subject to the final terms being agreed with the lenders and UK Export Finance.
International Airlines Group PLC (LON: IAG), after the market closed on New Years Eve, announced that British Airways had received pledges for a £ 2.0bn 5-year export development term loan from a syndicate of banks, partially guaranteed by UK Export Finance (UKEF).
The FTSE 100-listed group said British Airways plans to withdraw the facility in January 2021 subject to agreeing final terms with the lenders and UKEF.
UKEF is the UK’s export credit agency and provides the Export Development Guarantee to support the working capital and capital expenditure needs of UK exporters who meet certain criteria.
British Airways has the right to repay the loan at any time with notice. The agreement contains certain non-financial covenants, including restrictions on the airline’s dividend payments to IAG.
The airline group said the proceeds from the UKEF facility would be used to improve liquidity and provide British Airways with operational and strategic flexibility to take advantage of a partial recovery in air travel demand in 2021. as coronavirus (COVID-19) vaccines are distributed globally.
IAG added that it continues to have strong liquidity with cash and undrawn facilities of € 8.0 billion as at November 30, 2020, excluding the UKEF facility. In addition to the UKEF facility, the group is said to be exploring other debt initiatives to further improve its liquidity and will update the market in due course.
Brexit changes implemented
In a separate statement, IAG also announced that it has implemented plans to ensure that its EU approved airlines continue to comply with EU ownership and control rules post Brexit.
These corrective plans have been approved by national regulators in Spain and Ireland and, as required, the EU has been notified. The plans include the establishment of a national ownership structure for Aer Lingus and changes to the group’s long-standing national ownership structure in Spain.
In addition, the composition of IAG’s board of directors has been changed so that it has a majority of independent non-executive directors from the EU. Deborah Kerr, María Fernanda Mejía and Steve Gunning have left the board of directors and Peggy Bruzelius, Eva Castillo Sanz and Heather Ann McSharry have joined, all with immediate effect. Steve Gunning’s executive functions as CFO remain unchanged.
As previously announced, IAG President Antonio Vázquez is due to retire in January and at that time IAG’s board of directors will be reduced to eleven directors.
In the statement, Vázquez 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 recognizes the potential benefits of further liberalization of airline ownership and control, because we believe it is in the best interests of industry and consumers.
“I would like to thank Deborah and María Fernanda for their invaluable contribution to the Board of Directors and, in particular, Steve for supporting these changes.”
IAG President-elect Javier Ferrán added: “I am delighted that we have identified strong replacements for the outgoing board members and I am confident that IAG is well positioned to benefit from a partial recovery. of air transport demand in 2021. “