Aer Lingus expected to move more planes to UK as IAG looks to minimise cash burn
Aer Lingus recently received a €150m three-year loan from the NTMA-run Ireland Strategic Investment Fund
Aer Lingus is expected to move more planes to UK airports as its owner IAG looks to minimise cash burn and Britain gears up to reopen its skies more quickly than Ireland.
One analyst said IAG is sure to be looking at ways to deploy all of its assets as efficiently as possible in order to lower its cash-burn levels.
They said that could result in more Aer Lingus planes being moved from the Republic to UK airports like Manchester, with Britain expected to be largely open by the summer while Ireland remains largely closed.
A spokesperson for IAG — which also owns British Airways and Spanish carriers Iberia, Vueling, and Air Europa — declined to comment, with the group currently in a closed period.
IAG is due to publish annual results on Friday.
It came to light before Christmas that Aer Lingus has been seeking slots at Manchester Airport and plans to shift largely grounded planes from the Republic — or use planes originally meant for Ireland — to the UK to facilitate its transatlantic offering.
Aer Lingus has established a new UK subsidiary — Aer Lingus (UK) Ltd — which has applied to the US for a permit to fly there from Britain.
Aer Lingus is looking to fly from Manchester to Boston, New York, and Orlando with four planes, two of which are usually based in Ireland and two which will be newly-bought deliveries.
Last week, Tánaiste Leo Varadkar said the Government will not allow Aer Lingus to fail, while confirming that the airline is in talks over further financial support from the Government.
The airline, which is already a recipient of the State’s wage subsidy scheme, recently received a €150m three-year loan from the NTMA-run Ireland Strategic Investment Fund (ISIF).
Mr Varadkar said discussions are under way to ensure money is there should Aer Lingus need it again.
Meanwhile, IAG has confirmed that it has boosted British Airways’ liquidity by £2.45bn (€2.8bn) in order to help it survive the pandemic.
The money includes a £2bn five-year term loan backed by the British government and underwritten by a syndicate of banks. This is expected to be drawn down before the end of this month.
In addition, British Airways has reached agreement to defer £450m of pension deficit contributions due between last October and next September.
British Airways will not pay any dividend to IAG before the end of 2023 and the airline has agreed to provide property assets as security against the new financing. This will remain until it has repaid the deferred pension contributions.
"This is positive, in terms of managing cash, although not new news," said Goodbody analyst Mark Simpson.
"Regarding the dividend restrictions, this highlights the fact that IAG will be managing debt not distributions to shareholders for at least the next two years, which could be seen as reinforcing a negative," he said.
IAG shares — down by more than 50% over the past 12 months — rose by 7% on the liquidity news.
IAG said it also continues to explore other debt initiatives to further improve British Airways' liquidity.
