BA mortgages 48 aircraft to raise US$750m

Old May 27, 20, 9:56 am
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BA mortgages 48 aircraft to raise US$750m

Reported on London Air Travel

According to filing submitted to Companies House in the UK on Tuesday 26 May 2020, BA has entered into a $750m facility agreement arranged by Citigroup Global Markets Inc.

To obtain these funds, BA has mortgaged 40 short-haul and 8 long-haul aircraft, with Citibank acting as a security trustee.

These are detailed in Schedule 1 of the document and include:
https://londonairtravel.com/2020/05/...ages-aircraft/

2 x Airbus A318
G-EUNA, EUNB

4 x Airbus A319
G-EUPW, EUOE, EUOF, EUOG

24 x Airbus A320
G-MIDT, EUUL, EUUD, EUUE, EUUN, EUUO, MIDO, EUUP, EUUR, EUUS, EUUT, EUUV, EUUW, EUUX, EUUY, EUUZ, EUYA, EUYB, EUYC, EUYD, EUYE, EUYF, EUYG

10 x Airbus A321
G- MEDJ, EUXC, EUXD, EUXE, EUXF, EUXG, EUXH, EUXI, EUXJ, MEDU

5 x Boeing 777-200ER
G-YMMJ, YMMK, YMML, YMMP, YMMR

2 x Boeing 777-300ER
G-STBI, STBJ

1 x Boeing 787-9
G-ZBKI
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Last edited by Prospero; May 27, 20 at 10:13 am
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Old May 27, 20, 10:07 am
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Will this affect what aircraft are retired when?

Also, interesting to see that they still ‘own’ both A318s
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Old May 27, 20, 10:42 am
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Originally Posted by BAeuro View Post
Will this affect what aircraft are retired when?

Also, interesting to see that they still ‘own’ both A318s
Indeed as one of the A318's (G-EUNB) is operated by Titan Airways

https://simpleflying.com/titan-a318-relief-st-helena/
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Old May 27, 20, 11:15 am
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Gearing, gearing and more gearing.

Sign of the times. Great to have the assets in the first place.
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Old May 27, 20, 11:39 am
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Originally Posted by Will100 View Post
Gearing, gearing and more gearing.

Sign of the times. Great to have the assets in the first place.
well, IAG’s gearing ratio was good to start with. A long, long way of Norwegian’s, just to name one.
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Old May 27, 20, 12:50 pm
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Originally Posted by 13901 View Post
well, IAG’s gearing ratio was good to start with. A long, long way of Norwegian’s, just to name one.
That was my point, great if you have the house to borrow against
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Old May 27, 20, 1:39 pm
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Are fares on all these aircraft now half price?
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Old May 27, 20, 2:15 pm
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Originally Posted by Fraser View Post
Are fares on all these aircraft now half price?
Payments subbed from dividends 2022-2040 & the airline survives the test. Lost in time. Capitalism marches on.

Great for shareholders, not so much employees
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Old May 27, 20, 2:26 pm
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Not being a money person I don’t understand and would like a simple explanation. As I read it BA is running short of cash so flogs aeroplanes to someone very cheap to get the cash. The people putting up the cash have loadsamoney and hope the aero-industry picks up quicker than BA anticipate and can then flog the ‘planes for more than they paid.

But I guess it’s more sophisticated than that!
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Old May 27, 20, 2:40 pm
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Originally Posted by Greenpen View Post
Not being a money person I don’t understand and would like a simple explanation. As I read it BA is running short of cash so flogs aeroplanes to someone very cheap to get the cash. The people putting up the cash have loadsamoney and hope the aero-industry picks up quicker than BA anticipate and can then flog the ‘planes for more than they paid.

But I guess it’s more sophisticated than that!
I don’t think they are short of cash as such, but I guess it’s more akin to a remortgaging situation. More of short to med term cash injection as I understand it.

You borrow against assets that you own and in turn get giving an amount for those assets but will clearly have to repay that amount in some way. But the details of the exact terms, I doubt, will be known. Is this type of deal made public?

I assume it can be found somewhere eventually to understand the exact structure.

It’s an interesting move vs the state bailouts we are seeing.


PS: I have just realised there is a Companies House web link in the article in the OP post. Clicking through to the Companies House website, provides details of the agreement.
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Last edited by rockflyertalk; May 28, 20 at 3:06 am
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Old May 27, 20, 3:43 pm
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Originally Posted by Greenpen View Post
Not being a money person I don’t understand and would like a simple explanation. As I read it BA is running short of cash so flogs aeroplanes to someone very cheap to get the cash. The people putting up the cash have loadsamoney and hope the aero-industry picks up quicker than BA anticipate and can then flog the ‘planes for more than they paid.

But I guess it’s more sophisticated than that!
Akin to releasing a hundred grand of equity from your home.

Great but you’ve got to repay a bit more for the term of your mortgage, it may however save your business.
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Old May 27, 20, 3:55 pm
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Originally Posted by Greenpen View Post
Not being a money person I don’t understand and would like a simple explanation. As I read it BA is running short of cash so flogs aeroplanes to someone very cheap to get the cash. The people putting up the cash have loadsamoney and hope the aero-industry picks up quicker than BA anticipate and can then flog the ‘planes for more than they paid.

But I guess it’s more sophisticated than that!
It’s a $750M loan, where BA has put up 48 aircraft as collateral against that loan. Citi and any other parties to the loan have no interest in owning aircraft. Their only interest in the aircraft is as an asset on which the loan is secured. This gives Citi et al assurance that they can recover the loan amount if BA defaults, and on BA’s side will lower the interest payable on the loan.
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Old May 27, 20, 4:01 pm
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Maybe I’m being too cynical here but it’s also a very efficient way to trim 48 aircraft from the fleet, in current circumstances, without having to go to the expense of doing so oneself.

Take the money, run and say, “Sorry lender we can’t afford to pay our mortgages on those planes, you’d best come and repossess them”
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Old May 27, 20, 4:06 pm
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Originally Posted by SHT88T View Post
Maybe I’m being too cynical here but it’s also a very efficient way to trim 48 aircraft from the fleet, in current circumstances, without having to go to the expense of doing so oneself.

Take the money, run and say, “Sorry lender we can’t afford to pay our mortgages on those planes, you’d best come and repossess them”
Amusing to contemplate but highly unlikely. It’s not a good idea to deliberately antagonise your banker(s). They might need another credit facility in the future 🙂.
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Old May 27, 20, 4:06 pm
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Originally Posted by SHT88T View Post
Maybe I’m being too cynical here but it’s also a very efficient way to trim 48 aircraft from the fleet, in current circumstances, without having to go to the expense of doing so oneself.

Take the money, run and say, “Sorry lender we can’t afford to pay our mortgages on those planes, you’d best come and repossess them”
Which would be an excellent way of never being able to borrow money ever again.
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