The Ireland Strategic Investment Fund (ISIF) has loaned IAG-owned Aer Lingus another €200m, after agreeing to a debt facility of €150m in December 2020 as the aviation industry remained at a standstill due to the pandemic.
The three-year debt facility brings ISIF's total funding commitment to the Irish airline to €350m, with both loans secured through ISIFT's Pandemic Stabilisation and Recovery Fund for debt or equity investments in medium or large enterprises operating in sectors materially impacted by the pandemic.
ISIF said the purpose of the facility was to support the airline in its recovery and to enhance Ireland's connectivity as passenger and freight traffic rebounds to make it easier for exports, foreign direct investment and tourism-dependent businesses.
Aer Lingus made a loss of €347m last year while international travel was essentially prohibited under public health restrictions worldwide, although the result was a slight improvement from the €361m loss in 2020.
Elizabeth Han, chief financial officer of Aer Lingus, welcomed the "deepening of [the company's] commercial relationship with ISIF" in light of its losses, saying the facility would provide "additional resilience" as the airline plots its recovery.
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The investment fund added that the commercial terms agreed on the structure, pricing and repayment of the loan were consistent with its statutory "double bottom line" mandate to invest in businesses and projects on a commercial basis in a manner designed to support economic activity and employment in Ireland.
The facility is intended to complement financial support for Aer Lingus from its parent company IAG and comes after ISIF agreed a €6m debt facility with Emerald Airlines, the newly announced operator of Aer Lingus Regional Services.
"Our Aer Lingus facility will help the airline to enhance Ireland’s global links and make it easier for Irish businesses to access export markets and connect with international customers and investors," Nick Ashmore, ISIF director, said.
"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.
"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."
Conor McCarthy, CEO of Emerald Airlines, expressed gratitude for ISIF's support and said the company would soon be operating 430 lights per week across 18 routes from Dublin and Belfast.
Minister for Finance Paschal Donohoe, meanwhile, welcomed "both of these debt investments by ISIF in support of the aviation sector.
"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.
"The facility with Aer Lingus is an excellent example of the effectiveness of ISIF’s Pandemic Stabilisation and Recovery Fund, which the Government announced in May 2020. It matches ISIF’s investment capacity with a strong business that can use ISIF capital as a platform to continue to rebuild post-Covid, supporting jobs in Ireland, maintaining vital connectivity and supporting the return to regular economic activity.
"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."
