Aer Lingus and British Airways-owner IAG said today it had raised total liquidity by £2.45 billion by deferring pension contributions and finalising a loan, which will help it survive the travel slump for longer. 

IAG said it continued to explore other debt opportunities to improve its finances, which have been battered by the pandemic. 

The group will report quarterly results on Friday, which analysts expect to show a €1.25 billion loss for the three months from October to December. 

In order to clinch the deferral of the £450m worth of pension deficit contributions due between October 2020 and September 2021, BA agreed not to pay any dividends to parent company IAG before the end of 2023. 

Like all airlines, IAG has been burning through cash, around €205m a week, after operating for nearly 12 months with minimal revenues.

It scrapped its dividend last April, and then raised €2.74 billion in October from shareholders to ride out the crisis. 

Countries around the world have tightened travel restrictions over the last two months in response to new variants of the coronavirus.

It is unclear when travel will restart, putting further pressure on airlines' finances. 

"In addition to these arrangements, IAG continues to explore other debt initiatives to improve further its liquidity," IAG said in a statement. The group also owns the airlines Iberia and Vueling in Spain. 

Shares in IAG are trading down 55% from where they were this time last year, but news of the extra liquidity helped them rise 1.1% in London trade today. 

BA said it reached a final agreement for a new £2 billion five-year loan, which is partially guaranteed by Britain through its UK Export Finance unit, and would draw down the facility by the end of this month. 

That facility was secured in December and also includes restrictions on BA making dividend payments to IAG. 

Pension trustees also agreed to BA deferring monthly contributions of £37.5m, in a deal which included putting up property assets as security, and a suspension of BA dividends to parent company IAG until the end of 2023. 

BA is IAG's biggest and most profitable airline and the pause in dividends from it means it could be years before IAG shareholders see payments again. 

That is unlikely to be a surprise for shareholders, given new debts taken on by the airline group, and the fact that travel is not expected to reach 2019 levels until 2024. 

"This highlights the fact that IAG will be managing debt not distributions to shareholders for at least the next two years, which could be seen as reinforcing a negative," Goodbody analysts said in a note.