British Airways to raise a billion euros to fight downturn in travel

THE OWNER of British Airways plans to raise €1 billion (£855m) to help it withstand a prolonged downturn in the travel sector and to tap into the hoped for recovery.

IAG said it would sell two sets of bonds, each raising around €500m.

The group, which also owns

Iberia and Aer Lingus, said it wanted to strengthen its balance sheet and increase overall liquidity.

The cash will also be used by IAG to help “the group withstand a more prolonged downturn in air travel” and provide it with “the operational and strategic flexibility to take advantage of a recovery in demand for air travel”.

The interest on the bonds, which will be available only to professional investors, is yet to be decided.

The first tranche will mature in March 2025, with the second four years later.

The bonds will be traded on the Dublin exchange.

Bonds are intended as ways for companies to borrow money from investors.

Each bond pays an annual interest rate and at the end of the fixed period investors get their original money back – provided the business is still able to pay. The international aviation industry has been among Covid-19’s main business victims.

Last year IAG made a €7.4 billion (£6.3 billion) operating loss – swinging from a €2.6 billion (£2.2 billion) profit in 2019 – and made 10,000 staff redundant. Had IAG focused purely on its passenger arm, things could have been even worse as passenger revenues took a dip of around three-quarters.

However, due to the cargo its planes also carry, IAG made up some lost ground.