British Airways, an airline that was vocally against the UK government backing Virgin Atlantic last year, has taken a £2B loan guaranteed by the state.
The airline is prohibited from paying dividends to its parent IAG during the term of the loan that is five years.
Here’s an excerpt from the Financial Times:
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 (UKEF).
IAG said BA’s £2bn credit line would be drawn down in January, subject to settlement of terms.
However, 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.
Hypocrisy at its best. Don’t bail out our fierce competitor, but extend loan guarantees to us.
British Airlines is a UK airline but owned by IAG that is based in Spain.
The Brexit has caused some headaches to this structure as IAG should be majority owned by nationals of EU, Switzerland, Norway, Iceland or Liechtenstein, or airlines its owns (British Airlines, Iberia, Vueling, and Aer Lingus) would not be allowed to fly between EU countries.