As business improves, Air Canada pulls from a federal aid program

Key Takeaways:

• As its business recovers from the COVID-19 outbreak, Air Canada is pulling from the federal government’s $5.375 billion bailout package.
• The airline said Friday that it had used the aid package to repay passengers who had purchased non-refundable tickets.

However, $3.975 billion of the total help provided was not used. “We are recalling workers, expanding our network with new flights and frequencies, and restoring services, and we completed a $7.1 billion financing last quarter,” said Michael Rousseau, president, and CEO of Air Canada.

Appreciative to the Government of Canada for its support in maintaining a level playing field when governments worldwide recognize the importance of air travel to their economies. Were also assisting their national carriers in the face of the unprecedented downturn caused by COVID-19.”

Rousseau added that the government’s assistance helped Air Canada raise additional liquidity on its own to manage the pandemic and plan for the post-pandemic market. In April, the federal government announced a multibillion-dollar deal to assist Air Canada in dealing with massive financial losses and millions of dollars in customer refunds for canceled flights due to the pandemic.

According to Air Canada, the agreement with the government provided access to up to $5.375 billion in interest-bearing loans and $500 million in equity, for a total of $5.875 billion in liquidity. In addition, approximately 58% of eligible customers requested refunds, and the airline used $1.2 billion of the $1.4 billion available for refunds.

The government purchased $500 million in shares at $23.18 per share as part of the agreement, representing about a 6% equity stake in the company. Air Canada gave the government a stake in the airline for the first time since its privatization in 1989, and the government still owns those shares.

With $3.975 billion remaining unutilized, Air Canada stated that it was free to terminate the agreement at any time without penalty under the terms of the contract.

Source: Global News

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