Dec 31, 2020
British Airways secures state backing for £2bn loan
British Airways will be temporarily barred from paying dividends to its parent IAG after securing a government guarantee for a £2bn loan, designed to help its recovery from turbulence caused by coronavirus and Britain's exit from the EU. IAG, which also owns Ireland's Aer Lingus and Spain's Iberia, said BA had received commitments for a five-year loan from a syndicate of banks. The new loan has been facilitated by a state guarantee designed specifically to help UK businesses post Brexit, offered through UK Export Finance. IAG said BA's £2bn credit line would be drawn down in January, subject to settlement of terms. BA will not be allowed to pay dividends to its parent for the term of the loan, which could put pressure on IAG's own capacity for dividend payments. As the UK prepared to quit the EU's single market on January 1, IAG also on Thursday announced board changes to ensure a majority of EU citizens sit as independent non-executive directors.
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