The Ireland Strategic Investment Fund has agreed a new €200m three-year debt facility with Aer Lingus.
The ISIF is part of the National Treasury Management Agency.
The new debt deal is the second facility agreed between ISIF and Aer Lingus and follows a €150m debt facility agreed in December 2020.
It brings ISIF's total funding commitment to the airline to €350m and complements the ongoing support provided by the airline's owner IAG.
The facility aims to support the airline in its recovery from the impact of the Covid-19 pandemic on air travel and to enhance the country's connectivity as passenger and freight traffic rebounds.
ISIF and Aer Lingus have agreed commercial terms on the structure, pricing and repayment of the loan.
The terms 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.
ISIF also recently agreed a €6m debt facility with Emerald Airlines, which operates the Aer Lingus Regional services.
This new facility will support the new airline's 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.
Nick Ashmore, ISIF Director, said the Aer Lingus facility will help the airline 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," Mr Ashmore said.
"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," he added.
Elizabeth Haun, Aer Lingus Chief Financial Officer, said 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," she added.
Minister For Finance Paschal Donohoe noted that 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 the country's 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," Mr Donohoe said.
"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," 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", the Minister added.
