British Airways has secured a £2 billion state-backed loan to help it recover from the ongoing effects of the Covid crisis.
BA parent IAG confirmed on Monday (4 January) it had received the necessary commitments and hoped to draw the facility immediately, subject to final terms.
The £2 billion cash injection has been underwritten by a syndicate of banks and is partially guaranteed by the state-backed UK Export Finance agency.
The UKEF is the UK’s export credit agency; its export development guarantee is designed to support the working capital and capital expenditure needs of UK exporters.
BA can repay the loan at any stage of the five-year term.
The proceeds, said IAG, would be used to boost BA’s liquidity and provide the carrier 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".
IAG said it had cash reserves and undrawn facilities totalling £8 billion as of 30 November, excluding the newly announced £2 billion UKEF facility.
Stephen Gunning, the group’s chief financial officer, added IAG was exploring other debt initiatives to further boost liquidity.