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British Airways has mortgaged 48 aircraft to raise $750m of new finance.
According to filing submitted to Companies House in the UK on Tuesday 26 May 2020, BA has entered into a $750m facility agreement arranged by Citigroup Global Markets Inc.
To obtain these funds, BA has mortgaged 40 short-haul and 8 long-haul aircraft, with Citibank acting as a security trustee.
These are detailed in Schedule 1 of the document and include:
2 Airbus A318 aircraft (It was widely thought one of these had been sold to Titan Airways!)
4 Airbus A319 aircraft
24 Airbus A320 aircraft
10 Airbus A321 aircraft
5 Boeing 777-200ER aircraft
2 Boeing 777-300ER aircraft
1 Boeing 787-9 aircraft
This represents around a third of BA’s short-haul fleet at Gatwick and Heathrow. The majority of the aircraft mortgaged were delivered to BA between 2000 and 2010, so some will be approaching retirement in the coming years. More recently delivered aircraft are likely to be subject to other financing arrangements.
For the avoidance of doubt, BA will continue to own and operate these aircraft. In the event that BA defaulted on loan repayments, Citibank would be entitled to seize the aircraft.
The loan is repayable by May 2021.
Since the outbreak of COVID-19, BA has secured additional finance by extending an existing $1.3 billion revolving credit facility.
BA’s parent company IAG has secured funds of £300m through the UK government’s Covid Corporate Financing Facility. Iberia and Vueling have raised €750m and €260m through syndicated loans guaranteed by Instituto de Crédito Oficial in Spain.
Whilst the possibility of BA securing state support from the UK government remains, at present it is focusing on “self-help” measures such as staff redundancies and changes to employee terms and conditions.
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