British Airways Aims to Raise Funds through Bonds

British Airways, a UK-based airline company, is looking for investors to input around £250 million, by purchasing its secured debt instruments.

The airline is offering corporate bonds to raise funds, and the instruments will be secured against some of its London Heathrow Airport slots.

International Airlines Group (IAG), the UK-based parent company of British Airways, has previously reported that it is planning to spend €1.6 billion in 2012 on proposed developments, and €4.95 billion on renewing its fleet, including taking delivery of its first Airbus 380 and Boeing Dreamliner B787 aircraft in 2013.

In its statement, IAG, said, ‘The final terms and timing of the issuance will be based on investor feedback and market conditions following an investor road show.

Bond holders will have the benefit of security over the shares and assets of a wholly owned subsidiary of British Airways called British Airways (BA) Limited. The assets include up to 31 daily slot pairs at London Heathrow airport.

British Airways (BA) Limited has been established as the licensed operator of scheduled services between London City airport and New York JFK airport. It has entered into a joint operation with British Airways with respect to sales, booking, ticketing and slots at London City and London Heathrow airports.

It is proposed that the bonds will be issued through a special purpose entity incorporated for this purpose.’

The issue will be arranged by France-based banking institution, BNP Paribas, and the 31 slots owned by the airline at London Heathrow Airport have been valued at around £454 million by corporate financial ratings agency, Moody’s.