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IAG's Spanish airlines secure $1.1 billion of state-backed loans

FILE PHOTO: An Airbus A319-100 aircraft, operated by Iberia, lands at Orly Airport near Paris, France, September 6, 2019. REUTERS/Benoit Tessier/File Photo

MADRID (Reuters) - International Consolidated Airlines Group's (IAG) Spanish airlines Iberia and Vueling have secured 1 billion euros ($1.1 billion) of government-backed loans to cope with the fallout from the coronavirus pandemic, IAG ICAG.L said on Friday.

Iberia, Spain’s flagship airline, has borrowed 750 million euros and Vueling, a low-cost carrier, 260 million euros, IAG’s Chief Financial Officer Stephen Gunning said in a statement.

The five-year loans will be channelled via a syndication of banks, he added.

“The agreement is part of the legal framework established by the Spanish government to mitigate the COVID-19 economic impact,” Gunning said.

Europe’s airlines have been forced to ground most of their planes as travel restrictions have been introduced across the region to tackle the pandemic.

IAG's competitors, such as Franco-Dutch Air France-KLM AIRF.PA and Germany's Lufthansa LHAG.DE, have secured billions of euros in government rescue packages.

IAG, long a critic of state support for airlines, has so far not sought a government rescue, but has announced thousands of job cuts at its main British Airways business and also said it would take up government furlough and loan schemes.

Reporting by Inti Landauro; Editing by Mark Potter