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(Alliance News) - International Consolidated Airlines Group on Friday said its Vueling and Iberia subsidiaries have between them secured loan agreements worth EUR1.01 billion, as the carriers grapple with the effects the Covid-19 pandemic has had on demand and their books.
Iberia, Spain's flag carrier, secured a financing agreement worth EUR750 million, while Spanish low-cost airline Vueling penned a EUR260 million loan pact.
The banks involved in the loan agreements will ask Spanish state-owned bank Instituto de Credito Oficial to grant guarantees on the financing.
"The financing is conditional on those guarantees being made available. The arrangement is within the legal framework set up by the Spanish government to mitigate the economic impact of Covid-19," IAG said.
The loans have a five-year term, and contain "a number of non-financial covenants to protect the position of the banks".
It could prove to be precious financing for Vueling and Iberia, but IAG's week will be better-remembered by news that it could make up to 12,000 workers redundant at British Airways.
IAG, which owns BA, warned it will take several years for passenger demand to return to pre-virus crisis levels, and in turn, the UK flag carrier is "formally notifying its trade unions about a proposed restructuring and redundancy programme".
The FTSE 100 firm, which owns the British flag carrier, also on Tuesday said it sunk to a loss in its first quarter, amid a EUR1.3 billion profit hit due to fuel and foreign currency hedges.
IAG shares were 3.6% lower at 213.90 pence each in London in early trade on Friday morning.
By Eric Cunha; ericcunha@alliancenews.com
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