BA in pension pay deferment
MOVE TO BOOST FLAGGING FINANCES
CORONAVIRUS-hit British Airways has been allowed to defer £450million of pension payments to boost its flagging finances.
The airline said trustees of its pension fund had agreed to it delaying its contributions for last October through to this September in a move that will save the carrier £37.5m a month. In exchange, it has put up certain assets as security and agreed not to pay any dividends to parent company IAG until the end of 2023.
It came as IAG confirmed BA was also set to bank a £2billion government-backed loan by the end of this month. The loan was initially agreed in December.
IAG, which also owns Spanish airlines Iberia and Vueling and Ireland’s Aer Lingus, has also been forced to go cap in hand to investors to bolster its balance sheet. It comes as countries around the world have tightened travel restrictions over the last two months in response to new variants of the coronavirus.
“In addition to these arrangements, IAG continues to explore other debt initiatives to improve further its liquidity,” said IAG. BA is IAG’s biggest and most profitable airline and the pause in dividends means it could be years before IAG shareholders see payments again.
Meantime, figures revealed that just four big planes were ordered anywhere in the world last month as the pandemic slashes demand. The record low figure nosedived from 296 commercial aircraft bought in January last year before the pandemic struck, said trade body ADS.
Even then, all four were cargo planes, with no orders placed for passenger jets.