British Airways boosts cash reserves by £2.45bn to weather COVID turbulence

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The owner of British Airways has announced a new round of funding for its flagship airline amid continuing coronavirus crisis disruption to global travel.

International Airlines Group (IAG) said a loan and deal on deferred pension contributions had boosted BA's liquidity by £2.45bn as the industry burns through cash due to COVID-19 restrictions.

Under the pension scheme agreement, worth £450m, the airline will no pay dividends to IAG before the end of 2023 in return for delaying deficit contributions due between October 2020 and September 2021.

Dividend restrictions are also a condition of the £2bn five-year loan, which is partially guaranteed by the government's UK Export Finance unit.

"In addition to these arrangements, IAG continues to explore other debt initiatives to improve further its liquidity," IAG said.

The company, which also owns Iberia and Vueling in Spain and Ireland's Aer Lingus, scrapped its dividend to shareholders last April and raised £2.4bn from investors to help it survive.

The pause in the dividend from BA, its largest and most profitable airline, on top of its growing debt pile means it is unlikely that IAG shareholders will enjoy payments again for some time.

IAG does not expect passenger numbers to return to 2019 levels until at least 2023 while some industry forecasts paint an even darker picture as much of the world remains mired by travel restrictions to curb the spread of the disease.