British Airways has launched a £454 million ($704 million) financing package backed by slot pairs at London Heathrow airport, which will be transferred to its new wholly-owned transatlantic subsidiary British Airways Limited.
The package includes a £250 million bond issue and a £204 million equity loan secured against the subsidiary but backed by payments from BA on an unspecified number of slot pairs, according to a Moody's pre-sale report. Bealine, a special purpose vehicle created for the deal, will issue the debt that matures in 2025.
The flag carrier says it will study feedback from an investor roadshow to determine pricing and when to close the financing.
The deal would be the first airport slot-backed financing package in the UK, if it closes.
BNP Paribas is sole swap arranger and HSBC is providing contingency liquidity through three facilities to the subsidiary.
The slots will be drawn from 31 potential pairs owned by British Airways that are commercially attractive for flights to Africa, Asia, the Middle East and North America, says Moody's. They will be transferred to the subsidiary at close.
Principle payments on the bonds will be drawn from the equity loan, while British Airways will make interest and costs payments to the subsidiary. Moody's rates the bonds A3 provisional.
British Airways Limited operates premium flights from London City airport to New York's JFK airport, utilising a fleet of two Airbus A318s wet leased from its parent company.