British Airways has received commitments for a five-year term-loan Export Development Guarantee Facility of £2.0 billion underwritten by a syndicate of banks, partially guaranteed by UK Export Finance (UKEF). Parent International Airlines Group (IAG) announced on December 31, 2020 that British Airways expects to drawdown the facility in January 2021 subject to agreement of final terms with the lenders and UKEF.
British Airways is entitled to repay the loan at any time on notice. The arrangement contains some non-financial covenants, including restrictions on dividend payments by the airline to IAG.
In a statement, IAG CFO Stephen Gunning said that the proceeds from the UKEF facility will be used to "enhance liquidity and 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".
He further confirmed that IAG continues to have "strong liquidity with cash and undrawn facilities of €8.0 billion as at 30 November, excluding the UKEF facility" and added that in addition to the UKEF facility, the Group is exploring other debt initiatives to improve further its liquidity and plans to update the market in due course.