British Airways secures £ 2bn taxpayer-backed loan for post-Covid expansion
BA’s new loan is for five years and she plans to start withdrawing money in January. The loan agreement places restrictions on the payment of dividends by BA to its parent company.
Before the deal, IAG had € 8 billion in cash reserves. UKEF’s support should help it raise additional funds in commercial markets.
John Strickland, an aviation consultant, said: “Although IAG is one of the most financially sound airline groups, it continues to burn cash at an enormous rate because of the coronavirus and any additional funding helps.
“UKEF’s support to BA is recognition of the importance of the airline for both exports and tourism. So far, there hasn’t been a lot of support from the government. “
In addition to new routes, Mr Strickland said the loans could be used to retrofit planes with new cabin configurations. They could also help BA adopt more digital and automation technologies after the mass layoffs.
A UKEF spokesperson said: “British Airways is one of the UK’s most important airlines and its only central carrier. This support will allow British Airways to bounce back from the pandemic and continue to provide essential connections between the UK and the rest of the world. “
The United States is imposing new tariffs on some imports from Europe amid a long-standing dispute over state support for Airbus and Boeing. The U.S. Trade Representative said new taxes of up to 25% will be imposed on imports of aircraft parts and certain alcoholic beverages such as brandy.
The levies are introduced after the WTO ruled that European company Airbus and US rival Boeing received unfair state support, with each side’s government then applying sanctions to redress the situation.
However, the US has said the EU has calculated tariffs too high and is adjusting its sanctions to reflect this.
Although the UK has said it will not impose tariffs on US imports when it leaves the EU, the latest US tariffs appear to include Britain.
The targeted items include the wings of Airbus aircraft, which are manufactured in the UK. Most of them are sent to Europe where they are mounted on airliners, a small number going to the Airbus plant in Alabama.