British Airways Boeing 777-200 at London Heathrow (LHR/EGLL)
Taken by Ross Sugrue @irish_spotter35
International Airlines Group or most commonly known as IAG has accessed £300 million in UK government-backed loans to increase their liquidity according to recent reports. This money is directly coming from their country's Coronavirus Corporate Financial Facility (CCFF). This is a facility that is designed for larger firms to help with their cash flows through the purchase of a short-term debt.
There are a few characteristics associated with this funding according to the Bank of England. This includes: a maturity of one week to twelve months, applicants must have a suitable credit rating from at least one of Standards & Poor's, Moody's Fitch and DBRS Morningstar as at 1 March 2020 where applicable. It is also governed by English law and is subject to jurisdiction of the English courts and the facility will offer financing on terms comparable to those prevailing in markets in the period before the Coronavirus economic shock.
This isn't the first form on government financial aid that the group has accepted during the COVID-19 pandemic. It also secured $1.1 billion in government backed loans for the Spanish carriers, Iberia and Vueling. Iberia will receive $825 million while Vueling will receive $260 million.
IAG Chief Executive Officer, Willie Wish, said early last week that his airline needs to be restructured in order to fight the future effectively and successfully. Part of this restructuring process was to cut 12,000 workers operating for British Airways. They also have closed their secondary hub of London Gatwick. They aren't the only airline part of IAG who have cut their workforce in the past week. Aer Lingus have recently cut 20% of their workforce to deal with the financial strain due to low demand. There is currently an extended national lockdown in Ireland at the moment with many airports temporarily in use. This has resulted in a great decrease in travel demand for the flag carrier which has lead to these job reductions. For more information on Aer Lingus, click here.
IAG is also cancelling their new aircraft orders. Over the next three years, they were meant to take delivery of 143 bur have decided to reduce this number to only 75. With many airlines in the group such as BA, they are considering retiring their fuel heavy Boeing 747 and Airbus A340 aircraft while ceasing operations with planes who leases are about to be finished at the end of this term. It will be a great pity to see such beautiful aircraft robbed from the skies.
Despite all this, the group haven't commented on their intentions to buy 200 Boeing 737 MAX jets or their plans to but Air Europa. However, Walsh stated back in March that IAG were not going to apply for bailouts and that airlines should look at self-help before calling for help. He even clarified his position stating that: 'What I've always been opposed to is where inefficient failing companies receive bailouts from governments... Where airlines have been unwilling or unable to reform, they should not be bailed out by receiving free money.' Although, the group have now receives two government-backed loans to help these airlines who are apart of IAG. It is unknown how the group will be in the future during these unprecedented times.
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