Transport for London (TfL) has secured £1.6 billion in emergency funding to keep Tube and bus services running until September.
Under the bailout’s terms, London mayor Sadiq Khan is expected to restore a full Underground service as soon as possible.
He has also agreed to increase bus and Tube fares by 1% above inflation. Mr Khan had urged the government to provide support or risk TfL running out of money.
TfL said a financial forecast predicted a 1.9bn funding gap in the half-year to the end of October that would widen to £3bn in the full-year to the end of March.
The BBC had been told a £500m loan agreed with the Department for Transport forms part of the total.
London’s Transport Commissioner Mike Brown, said: “We have worked closely with the government and mayor as part of the national effort to fight the virus, rapidly reducing passenger numbers to levels not seen for 100 years.
“Enormous challenges remain, including agreeing longer term sustainable funding for transport in the capital.
“In the meantime, we will continue to do everything in our power to help deliver a successful recovery for our great city.”
Manuel Cortes, general secretary of the TSSA transport union, said the funding would prevent services “coming to a halt”.
Mick Whelan, general secretary of the train driver’s union Aslef, said: “It would have been a disaster for the capital, and the country, if the Tube network – and London buses – had stopped running.”
Mayor of London Sadiq Khan tweeted his reaction to the bailout, criticising the Government for “forcing Londoners to pay a very heavy price for doing the right thing on COVID-19.”
He said: “I want to be completely honest and upfront with Londoners – this is not the deal I wanted. But it was the only deal the Government put on the table and I had no choice but to accept it to keep the Tube and buses running.”
Mr Khan said fares will increase as fares income has fallen by 90% in the last two months because “Londoners have done the right thing and stayed at home – there isn’t enough money coming in to pay for our services”.
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