British Airways Cancels Fundraising through Bonds

British Airways, the UK based airline company, has cancelled its plans to raise funds through secured debt instruments.

The company had earlier announced its GBP250 million secured debt issue, through corporate bonds that were to be secured against some of its London Heathrow Airport slots.

International Airlines Group (IAG), the UK-based parent company of British Airways, had previously reported plans to spend EUR1.6 billion in 2012, and an additional EUR4.95 billion on renewing its fleet, including taking delivery of its first Airbus A380 and Boeing Dreamliner B787 aircraft in 2013. The proposed debt issue was originally intended to raise funds for these developments.

IAG has posted a report on its website, which states that, ‘Despite this week’s improvement in the underlying credit rating of British Airways, there was a lack of demand for this bond at a price which would compare with other financing alternatives. IAG has therefore decided not to progress with the bond issue.’

With further reference to the debt issue, the company further commented that, ‘This was subject to investor feedback and market conditions.’

Earlier, ratings agency, Standard & Poor’s, had announced that it had upgraded the credit rating of the debt issue, saying that the airline has performed better than their expectations.

Standard & Poor’s report stated that, ‘The upgrade reflects British Airways’ performance in the first half of 2012, which was better than our forecast. This was mainly due to higher growth of revenue passenger kilometres (RPKs) than we anticipated, and higher average ticket prices.’