The owner of British Airways, International Airlines Group (IAG), has stated that American Express will be paying it £750 million (€823 million) to renew their partnership, during a time where money is extremely limited.
Ever since travel restrictions were eased and flying has resumed, airlines’ outlook has improved, yet there is still a significant amount of pressure on airline companies such as IAG as travel is still at a level where it is less than half of the levels before the pandemic, with there being numerous restrictions for several destinations as well as general consumer fears.
IAG have had their finances strained by the pandemic, leading to reports that there might need to be a new equity raised.
IAG stated at the end of April that it had around €10 billion of liquidity, but its costs amounted to around €200 million every week.
The deal which was announced on Friday could help the company give it some much needed breathing space.
Irish analyst company, Goodbody, said that the news was positive, as it gave the company another month’s worth of cash to burn.
As a result of the deteriorated income, shares in IAG went down by 1.7%, reaching a total decrease of 67% in value since the start of 2020.
IAG claimed that the multi-year renewal agreement would allow it to extend the commercial partnership with the payments company, with American Express paying IAG to pre-purchase Avios points, with such points being used by members of rewards programmes in order to buy flights, encouraging even more travel.
Second quarter results for IAG, who also owns Iberia, Vueling and Aer Lingus, are set to be published on July 31.