IAG Signs A Three-Year $1.8 Bn Credit Line To Boost Liquidity

IAG on the airIAG's total credit facilities have increased by almost €400 M

IAG Group announced on Tuesday that it has signed a revolving credit facility with a syndicate of banks for an available amount of $1.755 billion. The facility will be in operation for a period of three years plus two one-year extension terms at the convenience of the lenders. The credit line is available to the Aer Lingus group airlines, British Airways and Iberia, each of which has a separate borrowing limit within the overall credit facility. The amounts borrowed would be secured by eligible unencumbered aircraft assets, as well as take-off and landing rights at London Heathrow and London Gatwick airports.

In parallel with the subscription of this new revolving credit facility, British Airways has cancelled its US dollar credit line which was due to expire on June 23, 2021 and which had 786 million dollars undrawn and available at December 31, 2020. In addition, approximately 400 million euros of credit facilities are scheduled to expire undrawn at the end of March. As a net result, IAG’s total credit facilities have increased by almost 400 million euros and its weighted average availability period has been extended by at least 1.5 years compared to previous times.

IAG continues to have a strong liquidity position, with an estimated total of 10.3 billion euros at March 31, which was comprised of 7.8 billion euros of cash, cash equivalents and bonus-carrying deposits, 1.7 billion euros of undrawn general-purpose credit facilities, including this week’s undrawn facility, and also 0.8 billion euros of credit facilities for aircraft related obligations.

According to analysts at Intermoney, in the current context, it is always “good news” that the company has improved its liquidity positio:

“This further reduces the possibility of a further capital increase in the event of a more prolonged slowdown in air travel.”

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