easyJet has announced the signing of a new five-year loan facility worth over £1.4 billion.

The deal is underwritten by a syndicate of banks and is partially supported by UK Export Finance under its Export Development Guarantee scheme. 

The program for commercial loans is available to qualifying UK companies, does not carry preferential rates or require state aid approval, but does contain some restrictive covenants including around dividend payments.

However, the restrictions are compatible with its existing dividend policy, the low-cost carrier said.

This five-year facility will be secured on aircraft upon drawing and will significantly extend and improve debt maturity profiles and strengthen the balance sheet by increasing the level of available liquidity, a statement added.

easyJet added that, during the first quarter of the year, it will repay and cancel part of its shorter-term debt, namely a fully drawn revolving credit facility of $500 million and loans worth around £400 million.

This will free up a number of aircraft assets to further strengthen the balance sheet, the carrier said.

Johan Lundgren, easyJet chief executive, said: “This facility will significantly extend and improve easyJet’s debt maturity profile and increase the level of liquidity available.

“easyJet has taken swift and decisive action, having now secured more than £4.5 million in liquidity since the beginning of the pandemic.

“The loan facility, provided on commercial terms, reflects constructive and collaborative work between easyJet, multiple banks and UK Export Finance.”

He added: “With our unmatched short haul network and trusted brand, easyJet is well positioned as customers return to the skies in 2021.”

British Airways secured a similar loan, valued at £2 billion, earlier this month.