IAG to sell bonds backed by airport slots to pay for BMI purchase

IAG, the owner of BA plans to raise money from the bond market, using up to 31 of its lucrative Heathrow slots as security. It wants up to £250 million. This is to pay for the BMI acquisition. The bonds will be offered by British Airways Limited, whose assets include up to 31 daily slot pairs at Heathrow, and half of the joint venture route it runs between London City airport and New York JFK airport. It has not yet announcing the timing and terms of the offer. Secondary trading of Heathrow slots has happened for some time but the European Commission only sanctioned it this year, opening the door for European airlines to diversify their debt funding.


BA bonds plan to cover cost of bmi acquisition

10.7.2012 (Independent)

The owner of British Airways yesterday set out plans to raise money from the bond market, using up to 31 of its lucrative Heathrow slots as security.

International Consolidated Airlines Group said BA was issuing bonds to raise money for costs relating to its bmi acquisition.

The airline completed its takeover of bmi from Germany’s Lufthansa this spring, receiving a “significant price reduction” on its agreed £172.5m purchase price as it took on the BMI Baby brand too.

Yesterday BA said the bonds will be offered by one of its subsidiaries, British Airways Limited, whose assets include up to 31 daily slot pairs at Heathrow, and half of the joint venture route it runs between London City airport and New York JFK airport.

BA said it will wait for feedback from investors at a roadshow before announcing the timing and terms of the offer.

The carrier has announced a string of new routes since its bmi takeover, including relaunching services between Northern Ireland and Heathrow after an 11-year gap.

Some of its other new routes include London City Airport to Aberdeen, and Heathrow to Leeds Bradford, Seoul in South Korea and Zagreb in Croatia.

http://www.independent.co.uk/news/business/news/ba-bonds-plan-to-cover-cost-of-bmi-acquisition-7925048.html

 


 

9.7.2012

IAG to sell bonds backed by airport slots

By Rose Jacobs (Financial Times)

Full article in the FT at http://www.ft.com/cms/s/0/46fc1330-c9db-11e1-a5e2-00144feabdc0.html#axzz207nlofwn

Some extracts :

International Airlines Group, the parent of British Airways, is launching its first bond backed by Heathrow take-off and landing slots in a test of whether European airlines can follow US peers in using airport access to secure debt.

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Moody’s, the rating agency, said that this was the first time it had assigned a rating to a bond backed by airport slots. It gave the security an A3 grade and put a value of about £454m on up to 31 paired take-off and landing slots, assuming that £250m of bonds are issued.

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The other assets backing this bond are two leased A319 narrow-body aircraft and BA’s routes between London City Airport and JFK in New York. It is being issued by a newly created subsidiary of British Airways, called British Airways Limited.

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Full article in the FT at http://www.ft.com/cms/s/0/46fc1330-c9db-11e1-a5e2-00144feabdc0.html#axzz207nlofwn