Air Canada has agreed on a billion-dollar government support package
Air Canada has sold a stake to the Canadian government and has agreed to a number of commitments, including returning customers, maintaining jobs and limiting executive compensation for $ 1 billion in federal aid.
The national carrier said in a statement Monday afternoon that it would be allowed access to up to $ 5.988 billion ($ 4.69 billion) by the Trudeau government through a short-term loan program to help large Canadian entrepreneurs.
The agreement ends the month-long negotiations between the government and Air Canada over a coronavirus aid package, but more than a year has passed since the US offered its aid airline industry. Transport Minister Omar Alghabra said in a press conference that discussions with potential Canadian carriers are continuing.
The package consists of a number of debt and equity agreements, including a $ 500 billion stake in the government-listed carrier in Toronto, which had a market capitalization of about $ 9 billion on Monday.
In exchange for government loans, Air Canada has agreed on a number of commitments, including providing refunds to customers who have canceled tickets due to the pandemic. Up to C $ 1.4 billion has been made available as an unsecured credit facility to help pay for these repayments.
The airline said it also agreed to “reduce certain expenses and limit dividends, buying shares and compensating senior executives.”
Air Canada is also committed to maintaining “employment at levels no lower than April 1, 2021,” and has agreed to respect collective agreements and protect employee pensions. The company has nearly 15,000 active employees.
Under the terms of the package, the airline will restart the service or provide access to the carrier’s network for almost all communities in the regions that were disrupted by the pandemic. The company has also agreed to purchase a planned 33 Airbus A220 aircraft, manufactured in Quebec, and to place a strong order on the existing Boeing 737 Max 40 aircraft.
Michael Rousseau, CEO, said the liquidity program announced today would provide the airline with a “significant layer of insurance” and “better fix the return of non-refundable ticket customers, maintain our workforce and re-enter regional markets.” Previously, it had secured $ 6.8 billion in liquidity from its resources to “sustain itself through the pandemic,” he said.