British Airways today launched a $927 million (£600 million) publicly traded bond issue, using 14 of its new planes as collateral.
The flag carrier, owned by International Airlines Group, said it was issuing two classes of certificates, backed by a pool of six new Boeing 787-8 aircraft, two new 777-300 jets and six new Airbus 320-200 planes, all due for delivery between now and June 2014.
The form of aircraft financing is commonly used by US airlines but has not previously been launched in this country. BA said the Class A certificates, raising $721.6 million, had an annual coupon of 4.63%, payable quarterly, while the Class B certificates, worth $205.4 million and also paid quarterly, have an annual coupon of 5.63%.
“This transaction marks a strategic milestone as we diversify our sources of funding,” IAG chief financial officer Enrique Dupuy said. IAG hired bankers at Citi to co-ordinate the deal.
IAG last year cancelled a debt issue backed by take-off and landing slots at Heathrow, London City and New York’s JFK airports, which was to have raised £250 million, because of lack of demand. Earlier this year, however, it raised €390 million (£331 million) through a convertible bond to help to fund the purchase of Spanish airline Vueling.
