A £1.4 billion state-backed bailout has been secured by EasyJet to help the budget airline survive the Covid pandemic.

The five-year loan had been underwritten by a group of banks and part-guaranteed by UK Export Finance, a government agency.

It will help EasyJet navigate tough travel restrictions across Europe, including the third UK lockdown.

The bailout was agreed shortly after British Airways owner International Airlines Group struck a similar deal with banks, which was also part-guaranteed by the government.

EasyJet said the loan, which has been secured against aircraft, eased pressure on its balance sheet and freed up cash available.

It means that  it will reduce its £369 million overdraft and another loan of £400 million in the first three months of the year.

This will free up a number of aircraft assets to further strengthen easyJet’s balance sheet, the airline said.

Chief executive Johan Lundgren 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 billion 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. 

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

Rival Ryanair said last week it would run “few, if any” flights from the UK and may only carry 500,000 passengers in February and March.