Breakingviews – Capital Calls: British Airways hits up pensioners

People board a British Airways airplane, as Croatia struggles with more cases of coronavirus disease (COVID-19), at the airport in Split, Croatia August 20, 2020.

LONDON (Reuters Breakingviews) – Concise insights on global finance in the Covid-19 era.

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PENSION SHOT. After flogging the family art collection and in-flight silverware, British Airways is leaning on its pensioners for financial support. The carrier, part of 8 billion pound International Airlines Group, said on Monday it had reached a deal with trustees to defer pension payments worth 450 million pounds over 12 months. With prospects of a summer travel revival waning, IAG Chief Executive Luis Gallego will welcome any extra pennies he can find. IAG shareholders have less reason to rejoice: however quickly flights resume, the company’s biggest earner now won’t pay any dividends to its parent until at least 2024.

That’s arguably a hefty price to pay for a relatively paltry sum. The deferment amounts to only 2% of IAG’s annual operating costs before the pandemic, saving just 1.2 million pounds per day. In June, when British Airways auctioned art by luminaries like Damien Hirst and Bridget Riley, IAG was incinerating more than 20 times that. (By Ed Cropley)

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source: reuters.com