British Airways receives a £2 billion loan guaranteed by the UK Government

British Airways snuck out an announcement to the Stock Exchange on New Years Eve. This is normally when companies bury bad news, knowing that the financial press will have forgotten about it when people are back at their desks, but this one is positive.

The airline announced that it has secured a £2.0 billion five year loan. For clarity, this money is ring-fenced for BA and is not for broader IAG purposes.

This is a soft loan which carries a UK Government guarantee.

Technically, it is a 5-year Export Development Guarantee Facility, partially underwritten by UK Export Finance. This means that it will be priced very low – how low depends on what percentage of the loan is covered.

British Airways will borrow the money as usual from a group of banks, but the Government is on the hook for the bulk of it if British Airways fails to make repayments.

Back in the days when I worked in Project & Export Finance you would typically find around 80% of the loan covered. This means that, if BA defaulted on the entire £2 billion, the Government would reimburse the banks £1.6 billion.

The airline has committed to restricting dividend payments to its Spanish parent, International Consolidated Airlines Group, whilst the loan is outstanding.

UK Export Finance is the UK’s export credit agency and “provides the Export Development Guarantee to support the working capital and capital expenditure needs of UK exporters that meet certain criteria”.

You may be wondering why British Airways, as a company which doesn’t “export” anything, qualifies for such a taxpayer guarantee.

Such guarantees exist because exporting is good for UK jobs and the balance of payments. Exporting can be risky, however, because of the difficulty of enforcing payment and banks may be unwilling to provide working capital.

These guarantees are usually given to companies such as Rolls-Royce who need, for example, to fund a contract to sell engines made in the UK to an overseas airline which has credit risks.

Cynics could see this as a way for the Government to quietly prop up the airline. British Airways will use the money to:

“enhance liquidity and provide British Airways with the operational and strategic flexibility to take advantage of a partial recovery in demand for air travel in 2021”

The broader International Airlines Group is currently sitting on €8 billion of cash and undrawn bank loans, before adding in this additional £2 billion. Further loans are currently under discussion.

The official Stock Exchange announcement is here.

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How to earn Avios from UK credit cards (April 2025)

As a reminder, there are various ways of earning Avios points from UK credit cards.  Many cards also have generous sign-up bonuses!

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus Mastercard

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Barclaycard Avios Mastercard

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There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways American Express Premium Plus

30,000 Avios and the famous annual 2-4-1 voucher Read our full review

British Airways American Express

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You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points. These points convert at 1:1 into Avios.

SPECIAL OFFER: Until 27th May 2025, the sign-up bonus on the ‘free for a year’ American Express Preferred Rewards Gold card is increased from 20,000 Membership Rewards points to 30,000 points. Points convert 1:1 into Avios (30,000 Avios!) and many other programmes. Some people may see even higher personalised offers. Click here to apply.

SPECIAL OFFER: Until 27th May 2025, the sign-up bonus on American Express Platinum is increased from 50,000 Membership Rewards points to a huge 80,000 points. Points convert 1:1 into Avios (80,000 Avios!) and many other programmes. Some people may see even higher personalised offers. Click here to apply.

American Express Preferred Rewards Gold

Your best beginner’s card – 30,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express

80,000 bonus points and great travel benefits – for a large fee Read our full review

Run your own business?

We recommend Capital on Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, and the standard card is FREE. Capital on Tap cards also have no FX fees.

Capital on Tap Visa

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Capital on Tap Pro Visa

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There is also a British Airways American Express card for small businesses:

British Airways American Express Accelerating Business

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There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.

American Express Business Platinum

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American Express Business Gold

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Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.