IAG, the parent company of British Airways, has said that the UK based subsidiary has received a new year funding boost through a state-backed loan.
The 5-year term-loan Export Development Guarantee Facility of £2B has been underwritten by a number of banks and is partially guaranteed by government-backed credit agency UK Export Finance (UKEF)
On New Year's Eve the Spanish based parent company, IAG, announced, "British Airways expects to drawdown the facility in January 2021 subject to agreement of final terms with the lenders and UKEF."
UKEF is the UK's export credit agency and provides an export development guarantee to support the working capital and capital expenditure needs of UK exporters that meet certain criteria.
"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."
"IAG continues to have strong liquidity with cash and undrawn facilities of &euro8 billion as at November 30, excluding the UKEF facility."
The much needed funding agreement also came alongside news that IAG is following through plans to ensure that its EU licensed airlines comply with European ownership and control rules following the UK's post-Brexit deal with the EU.
These remedial plans were approved by national regulators in Spain and Ireland and, as required, the EU has been notified about them. The plans include the implementation 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 EU non-executive directors. Deborah Kerr, Maria Fernanda Mejia and Steve Gunning have stepped down from the board and Peggy Bruzelius, Eva Castillo Sanz and Heather Ann McSharry have joined it, all with immediate effect. Steve Gunning's executive functions as chief financial officer remain unchanged.