British Airways & easyJet: UK Export Finance's new form of state aid

On 31-Dec-2020 IAG announced that its subsidiary British Airways had received commitments for a GBP 2 billion five-year term loan facility underwritten by a syndicate of banks. On 8-Jan-2021 easyJet announced a GBP1.4 billion five year facility, also underwritten by a syndicate of banks.

The unusual feature in both loans is that they are partially guaranteed by UK Export Finance (UKEF), an arm of the UK government.

Such loan guarantees to UK exporters mark a strategic shift for the UK's export credit agency towards more direct support. In the past, its support has typically been indirect, through guarantees provided to foreign buyers of UK-produced goods and services, with direct support to UK exporters generally focused on smaller businesses.

UKEF has long supported the UK aerospace sector's exports through credit guarantees and loans to foreign airlines buying from UK exporters. Loan guarantees to UK airlines are an innovation, offering BA and easyJet a new way to benefit from indirect state support.