International Consolidated Airlines Group PLC (LON:IAG) said that British Airways has reached two financing arrangements that will increase total liquidity by £2.45bn.
On December 31, the flag carrier received commitments for a five-year Export Development Guarantee term-loan of £2bn underwritten by a syndicate of banks, partially guaranteed by UK Export Finance (UKEF).
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It has now reached final agreement with UKEF and the lenders and expects to draw down the facility this week.
The airline has also agreed with the Trustee of New Airways Pension Scheme (NAPS) to defer £450mln of pension deficit contributions due between October 2020 and September 2021, normally paid in monthly instalments of £37.5mln.
The repayment, including interest, will be added to the end of the existing recovery plan in March 2023 under a revised plan, with property assets provided as security.
IAG will not receive dividends from British Airways before the end of 2023 and, from 2024, NAPS will receive half of the value of dividends paid to plug the pension deficit.
If a new recovery plan has not been agreed by September 2021, British Airways will return paying £37.5mln per month from October.
IAG said it continues to explore other debt initiatives to improve further its cash position.
“While it is still possible for IAG to pay dividends before the end of 2023 using cash from other parts of the group, we believe this gives an indication of the long road to recovery before dividends are a realistic prospect,” analysts at Liberum commented.
Shares in IAG rose 1% to 167.25p early on Monday.