Market: IAG lifts as it halts British Airways Gatwick flights and adds to credit buffer

Mark Shapland
AFP via Getty Images

In a sign of just how bad things have become for the airline industry since coronavirus hit, British Airways today stopped flying from Gatwick Airport.

The decision - which comes just one day after EasyJet grounded its carriers for two months - was taken as air travel has all but dried up at the UK's second largest airport with only a dozen commercial flights due to take off from Gatwick each day this week.

IAG owned British Airways hopes that by suspending operations at Gatwick it can cut costs as the company battles the industry’s worst crisis in decades.

The airline is still running flights to and from Heathrow and will keep equipment for essential functions at Gatwick, such as maintenance, towing and cleaning, to enable it to restart operations quickly.

It comes as yesterday IAG said it had extended a £1.09 billion credit buffer by a year to June 2021. This means it has access to £8 billion in cash which it can use to get through the crisis.

Shares rose - up 16.2p at 218p - as investors believe these recent measures show the airline is unlikely to require a government bailout.

IAG helped push the FTSE 100 up 8.84 points at 5572.57. The index was also buoyed by fresh stats out of China which showed official manufacturing PMI data rose to 52, ahead of the 45 forecast and well up from the coronavirus-impacted 35.7 in February, which was a record low.

Cigarette makers Imperial Brands and British American Tobacco were higher after they said there had been no impact on their businesses from coronavirus.

Like the booze industry, being stuck indoors is only likely to make people smoke more rather than less.

Imperial Brands also secured a new £3.13 billion credit line, while British American Tobacco said it had arranged a fresh £1.9 billion facility.

Shares in Imperial rose 123p at 1454p and British American Tobacco added 41p at 2680p.

There was a rise too in Burford Capital shares – up 7.4p at 404p – after analysts at Jefferies said the litigation financier might be about to embark on a share buyback programme.

Julian Roberts, analyst at the broker, said: “Burford has commented that it sees investment in new litigation assets as the best use of capital. But with the share price at the lows of August, or 2016, we think a buyback must be realistic.”

Burford shares fell heavily in August last year after the company came under attack from short seller Carson Block and his firm Muddy Waters who questioned the litigation financier’s accounting practises.