ISIF extends support for Aer Lingus with new €200m debt facility

ISIF extends support for Aer Lingus with new €200m debt facility

Tuesday 22 March 2022

The Ireland Strategic Investment Fund (ISIF), part of the National Treasury Management Agency (NTMA), has agreed a new €200m three-year debt facility with Aer Lingus.

This is the second facility agreed between ISIF and Aer Lingus, building on a €150m debt facility agreed in December 2020, and brings ISIF’s total funding commitment to the airline to €350m.

Both facilities have used ISIF’s Pandemic Stabilisation and Recovery Fund (PSRF), established during 2020 to make debt or equity investments on a commercial basis in medium and large scale enterprises operating in sectors materially impacted by the pandemic.

The purpose of these facilities is to support the airline in its recovery from the impact of the pandemic on air travel and to enhance Ireland’s connectivity as passenger and freight traffic rebounds.

This in turn is expected to generate significant benefits for the wider economy by making it easier for Irish exporters to access global markets, for Foreign Direct Investment to access Ireland, and for sectors that depend heavily on inbound tourism such as hospitality and leisure.

ISIF and Aer Lingus have agreed commercial terms on the structure, pricing and repayment of the loan that are consistent with ISIF’s 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 provided by ISIF is designed to complement ongoing support provided by Aer Lingus’s parent company, International Airlines Group (IAG), to the airline.

ISIF also recently agreed a €6m debt facility with Emerald Airlines, Ireland's newest regional airline and exclusive operator of the Aer Lingus Regional franchise, delivering air connectivity in Ireland, the UK and beyond. This facility will support its launch and scale-up over the coming months. When fully operational, Emerald Airlines is expected to bring over 500,000 tourists to the island every year, as well as supporting over 400 Irish-based staff and over 250 indirect jobs.

The Minister For Finance, Paschal Donohoe TD, said:

“I welcome 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."

Nick Ashmore, ISIF Director, said:

“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.

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.”

Elizabeth Haun, Aer Lingus Chief Financial Officer, said:

“Aer Lingus welcomes the deepening of the commercial relationship with ISIF. The pandemic has had a very damaging impact on Aer Lingus’s business, causing operating losses of €347m in 2021 and €361m in 2020.

The increase in the available facility from ISIF to €350m 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.”

Conor McCarthy, Chief Executive of Emerald Airlines, said:

"We are very grateful for ISIF's support for Ireland’s newest Regional Airline. At Emerald Airlines. Our key objective as the exclusive operator of the Aer Lingus Regional network is to provide convenience and great value air travel within Ireland, to and from the UK and beyond, all while delivering the highest quality of customer service.

Emerald Airlines will soon be flying over 430 flights per week across 18 routes from Dublin and Belfast, with ambitious growth plans and further new routes to be announced in the future. Over the next number of months, we will continue to offer choice, convenience, and great value for both regional and transatlantic air travel. We continue to recruit new staff to join our great team."