IAG International Airlines Group has confirmed two financing agreements that its British Airways (BA, London Heathrow) subsidiary reached that will increase total liquidity by GBP2.45 billion (USD3.43 billion), including a deal to defer GBP450 million (USD631 million) worth of pension payments and finalising a GBP2 billion (USD2.8 billion) loan.

To secure the deferral of the pension deficit contributions, which had been due between October 2020 and September 2021, it was agreed that “no dividends will be paid by British Airways to IAG before the end of 2023,” the group said in a BA financing update on February 22.

The flag carrier will start to will draw down on the five-year loan, which Britain has partially guaranteed through its UK Export Finance agency, by the end of this month. The facility was secured on December 31, 2020, and includes restrictions on BA making dividend payments to the parent company, the statement said.

“In addition to these arrangements, IAG continues to explore other debt initiatives to improve further its liquidity,” said the group, which also owns Aer Lingus, Iberia, and Vueling Airlines.

British Airways usually pays GBP37.5 million (USD52.7 million) each month into the New Airways Pension Scheme (NAPS), but the deal with trustees means it can delay its contributions until this coming September, deferring payments for 12 months in total. It plans to repay the pension contributions, with interest, and has put forward some of its properties as security until the debt has been repaid in full.

NAPS closed to new employees in 2003. However, during a valuation in 2018, a GBP2.4 billion (USD3.37 billion) hole in the scheme was discovered, which BA has been trying to fill ever since. It has so far paid GBP1.3 billion (USD1.8 billion) of this total, according to local media.