Air Canada receives CAN $5.9 billion government bailout

posted on 13th April 2021 by Eddie Saunders
Air Canada receives CAN $5.9 billion government bailout

By Edward Robertson

Air Canada has agreed a financial bailout with the Canadian government of CAN $5.879 billion.

The money is being made available through the Large Employer Emergency Financing Facility (LEEFF) programme and comes as the Covid-19 pandemic is well into its second year.

The funding is being made available despite the airline having raised $6.8 billion in liquidity as the aviation largely came to a halt because of the virus.

The cash comes with a number of conditions tied to it by the government, including better refunds for consumers, the resumption of services across much of the country in order to reconnect communities and the restriction of certain expenditures, including restricting dividends, share buybacks and senior executive compensation.

In addition, the airline is obliged to maintain current employment levels and it is expected to complete its acquisition of 33 Airbus A220 aircraft, which will be made in Quebec, as well as completing affirm order for 40 Boeing 737 Max aircraft.

Air Canada and CEO Michael Rousseau said: “Air Canada entered the pandemic more than a year ago with one of the global airline industry’s strongest balance sheets relative to its size.

“We have since raised an additional $6.8 billion in liquidity from our own resources to sustain us through the pandemic, as air traffic ground to a virtual halt in Canada and internationally.

“The additional liquidity program we are announcing today achieves several aligned objectives as it provides a significant layer of insurance for Air Canada, it enables us to better resolve customer refunds of non-refundable tickets, maintain our workforce and re-enter regional markets.

“Most importantly, this program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to the Canadian economy through its recovery and for the long term.

“As vaccine deployments ramp up, we continue to work with the government of Canada on the evolution of safe and science-based test and quarantine relief measures with a view to safely restarting our sector.

“We know that Canadians are looking forward to re-connecting with friends and family and taking those long-awaited vacations and business trips and we will be ready to safely connect Canadians within Canada and Canada to the world.”