British Airways has received commitments for a five-year term-loan Export Development Guarantee Facility of £2 billion.

The funds are underwritten by a syndicate of banks, partially guaranteed by UK Export Finance (UKEF).

The carrier said it expects to drawdown the facility in January subject to agreement of final terms with the lenders and UKEF.

UKEF is the export credit agency and provides the guarantee to support the working capital and capital expenditure needs of UK exporters that meet certain criteria.

British Airways is entitled to repay the loan at any time on notice.

The arrangement contains some non-financial covenants, including restrictions on dividend payments by the airline to owner International Airlines Group.

The proceeds from the UKEF facility will be used to enhance liquidity and provide British Airways with the operational and strategic flexibility to take advantage of a partial recovery in demand for air travel in 2021 as Covid-19 vaccines are distributed worldwide.

IAG continues to have strong liquidity with cash and undrawn facilities of €8 billion as at November 30th, excluding the UKEF facility.

In addition to the UKEF facility, the group said it was exploring other debt initiatives to improve further its liquidity and will update the market in due course.