British Airways (BA, London Heathrow) has secured a GBP2 billion pound (USD2.74 billion) loan partially guaranteed by the United Kingdom's export credit agency.

In a statement, IAG International Airlines Group said its UK subsidiary had received commitments for a five-year term-loan Export Development Guarantee Facility underwritten by a syndicate of banks and partially guaranteed by UK Export Finance (UKEF).

British Airways expects to drawdown the facility this month subject to the agreement of final terms with the lenders and the UKEF. Once agreed to, the UKEF facility's proceeds will be used to enhance liquidity and provide British Airways with the operational and strategic flexibility needed to exploit a partial recovery in demand for air travel in 2021 as COVID-19 vaccines are distributed worldwide.

In terms of repayment, British Airways is entitled to repay the loan at any time on notice. However, the arrangement contains some non-financial covenants, including restrictions on dividend payments by the airline to IAG.

IAG said that as of November 30, excluding the UKEF facility, the group had liquidity of EUR8.0 billion euro (USD9.7 billion) in cash and undrawn facilities. Aside from the UKEF facility, the Group is exploring other debt initiatives to improve its liquidity further and will update the market in due course.