Last week, International Airlines Group, which owns British Airways, Iberia, Aer Lingus and Vueling, posted a loss of €2.035bn for the six months to June 30, 2021, compared to a loss of €4bn in the year-ago period. Total revenue for the half year period drop to €2.2bn compared to €5.288bn in 2020.
IAG has cash of €7.7bn at June 30, 2021 as well as committed and undrawn general and aircraft facilities of €2.5bn, bringing total liquidity to €10.2bn. Liquidity was boosted by IAG’s drawdown of previously committed borrowing for British Airways (£2.0 billion UK Export Finance) and Aer Lingus (remaining €75 million drawn against Ireland Strategic Investment Fund facility), as well as €1.2bn of IAG Senior Unsecured Bonds issued, with issue oversubscribed, and €825 million of IAG Convertible Bonds issued, also oversubscribed, and a new three-year $1.755 billion committed, secured revolving credit facility concluded for Aer Lingus, British Airways and Iberia and which remains. British Airways also secured an agreement to defer monthly pension deficit contributions totalling £450 million between October 2020 and September 2021.
The €10.2bn liquidity level also includes British Airways’ $553.610 million sustainability-linked EETC – the first EETC to include sustainability targets – to finance the airline’s remaining fleet deliveries for 2021. The EETC was issued in two tranches: $461.421 million 2.90% class A notes and $92.189 million 3.90% class B notes. Citi and Credit Suisse were joint structuring agents, joint sustainability structuring advisors and joint lead bookrunners. BofA, Credit Agricole-CIB, MUFG and SMBC were joint bookrunners.
IAG airlines passenger capacity in the second quarter of 2021 was 21.9% of 2019, which the group states continues to be adversely affected by the COVID-19 pandemic together with government restrictions and quarantine requirements. IAG is planning for third quarter capacity to be around 45% of 2019 capacity.
"In the short term, our focus is on ensuring our operational readiness, so we have the flexibility to capitalise on an environment where there's evidence of widespread pent-up demand when travel restrictions are lifted,” said Luis Gallego, IAG Chief Executive Officer. “This is reflected in Iberia's and Vueling's results. They were the best performers within the group in the second quarter reflecting stronger Latin American and Spanish domestic markets driven by fewer travel restrictions. We know that recovery will be uneven, but we're ready to take advantage of a surge in air travel demand in line with increasing vaccination rates.”
Gallego added: "Longer term we're preparing our business so that we can emerge stronger and more competitive in a structurally changed industry. For example, we're accelerating the digitalisation of our business and our agreements with unions are enabling us to improve productivity and reduce our cost base while increasing the proportion of variable costs.
"We remain resolute in our climate commitments. Recently, British Airways successfully raised $785 million through an EETC financing linked to the airline's sustainability targets. We have also been upgraded by the CDP (Carbon Disclosure Project) to A- in recognition of our comprehensive carbon management strategy. IAG is the only European airline group that has been awarded this high grade.