Aer Lingus has agreed a new €200 million debt facility with the State-backed lender Irish Strategic Investment Fund (ISIF).
The three-year facility is the second agreed between the ISIF and the airline, and brings its total borrowings from the fund to €350 million. Both tranches of funding have come from ISIF’s Pandemic Stabilisation and Recovery Fund, which was established during 2020 to support medium and large-scale enterprises operating in sectors materially impacted by the pandemic.
The agreement is intended to support the airline as it tries to recover from Covid-19 restrictions curbs that have left it with losses of €700 million. It is designed to complement ongoing support provided by Aer Lingus's parent company, International Airlines Group (IAG), to the Irish airline.
"The pandemic has had a very damaging impact on Aer Lingus's business, causing operating losses of €347 million in 2021 and €361 million in 2020," said Elizabeth Haun, the airline's chief financial officer.
“The increase in the available facility from ISIF to €350 million provides additional resilience and, together with the airline’s focus on improving our cost efficiency and competitiveness, it is an important element as we plan our recovery.”
The news comes after ISIF agreed a €6 million debt facility with recently established regional airline Emerald Airlines, which operates the Aer Lingus Regional franchise. This will support its launch and scale-up over the coming months, as it proposes to fly more than 430 flights a week across 18 routes from Dublin and Belfast, with further new routes to be announced in the future.
"Providing debt funding to the Irish aviation sector, through Aer Lingus and Emerald, will also help Ireland's hospitality and leisure sectors by supporting a rebound in tourist traffic into Ireland and bringing more customers to these businesses," said Nick Ashmore, ISIF director.
“Through these commercial arrangements, we intend to generate significant economic benefits for Ireland in addition to a commercial return, in line with our unique ‘double bottom line’ mandate.”
The debt investments were also welcomed by Minister For Finance, Paschal Donohoe.
“Aer Lingus is a significant contributor to the Irish economy, both as an employer and as a vital link for Irish businesses exporting to global markets, for foreign direct investment into Ireland, and for our tourism and hospitality industries,” he said.
“ISIF’s debt investment in Emerald Airlines will help support vital regional connectivity with the UK and beyond, along with the related employment and wider economic benefits, including in terms of the tourism and hospitality sector.”