BA owner rethinks fundraising move

The owner of British Airways has aborted an innovative fundraising move that would have seen up to 31 of its Heathrow take-off and landing slots used as security.

International Consolidated Airlines Group (IAG), which owns BA and Spanish airline Iberia, said it had cancelled the launch of a bond designed to cover the costs of its recent BMI takeover.

IAG, which was issuing the bond through its BA subsidiary, said there was a lack of demand "at a price which would compare with other financing alternatives".

This was despite a move by ratings agency Standard & Poor's to up its credit rating on BA on Thursday.

The bond launch was the first such move by a group outside of the US to use take-off and landing slots as security.

BA's Heathrow slots are particularly valuable, with the group controlling around half of the daily slots at the airport - the world's busiest international airport.

But IAG shrugged off the lack of demand in its bond, saying it would look to raise money through other financial transactions. A spokeswoman said BA and Iberia had been very "successful" in finding ways to raise cash in the past.

Shares in the group fell 2% on Friday.

IAG, which was formed last year from the merger of BA and Iberia, completed its takeover of BMI in April.

It said it received a "significant price reduction" on its agreed £172.5 million purchase price, as it also took on the BMI Baby and BMI regional airlines, which were not part of its original deal.