Whilst British Airways suffers Spain’s Government is likely to underwrite €1 billion loan to support Iberia and Vueling

IAG (International Airlines Group) which owns Aer Lingus, British Airways, Iberia and Vueling as well as a number of smaller airlines is struggling financially following the outbreak of the coronavirus Covid-19 pandemic.

It has already warned that it may need to lose 12,000 staff from British Airways unless the British government gives it financial support which seems unlikely at the time of writing.

It should be remembered that British Airways was actually owned by the British government for decades and prior to privatisation in 1987 it had shed some 23,000 staff and in one year alone lost £545 million to the cost of the taxpayer, but to the benefit of those purchasing the shares.

There are a number of top Spanish executives running the different airlines and IAG has announced that it expects to borrow a total of €1.01 billion (€750 million for Iberia and €260 million for Vueling) to allow it to support Iberia and Vueling during the crisis.

The loans from a consortium of lenders will only be made, if they are backed by Spain’s State Instituto de Crédito Oficial which is perfectly possible under legal frameworks set up by the Spanish government to mitigate the economic impact of Covid-19.

The loans are repayable at any time over five years and will include restrictions which will not allow IAG to use any of the financing to support other parts of the business including British Airways.

The company is confident that it will receive the necessary Spanish guarantees otherwise it would not have made this information public.