Canada’s WestJet drops talks with Ottawa over COVID relief

WestJet (WS, Calgary) has confirmed it is no longer pursuing Canadian government financial support to help weather the COVID-19 crisis but instead is gearing up for the announced reopening of borders to fully vaccinated travellers.

“The WestJet Group confirms it is not actively pursuing financial support from the federal government. Given encouraging vaccination rates across the country, both parties have mutually agreed to shift focus from these negotiations, and away from taxpayer-funded support, to leading the safe restart of the travel and tourism sector,” the airline said in a statement. This follows after Ottawa announced that Canadian borders would open to fully vaccinated US travellers from August and other international travellers from September.

The airline said it had had “constructive discussions” over the last several months with the government and that both parties remained open to resuming financial support discussions in the future.

The decision sets WestJet apart from Canadian airlines such as Air Canada (AC, Montréal Trudeau), Air Transat (TS, Montréal Trudeau), and Porter Airlines (PD, Toronto City Centre), which have been cumulatively granted access to more than CAD6.8 billion Canadian dollars (USD5.4 billion) in federal government support through the Large Employer Emergency Financing Facility (LEEFF) programme.

By June 29, 2021, Air Canada was granted the lion share of CAD5.879 billion (USD4.679 billion), including CAD500 million (USD397 million) million in equity investment, CAD3.975 billion (USD3.176 billion) in approved loan amounts, and CAD1.404 billion (USD1.117 billion) in approved voucher facility. By the same date, Air Transat had received CAD700 million (USD557 million) in loans and voucher facilities, while Porter Aviation contracted loans of CAD270.5 million (USD215.2 million), according to the Canada Enterprise Emergency Funding Corporation.

The Canadian government funding came with strings attached. While the LEEFF scheme grants short-term liquidity assistance in the form of interest-bearing term loans, the terms of the loans include restrictions on the payment of dividends, repurchases of stock, limits on executive compensation, restrictions on the use of the loans, and a commitment by carriers to offer refunds rather than credits. Borrowers are also required to produce an annual climate-related financial disclosure report.

“Throughout the pandemic, we have provided substantial support to Canada’s airlines and the tens of thousands of good, middle-class jobs that this sector supports across the country,” Finance Ministry spokesperson Katherine Cuplinskas told FR24 News. She said the government assistance had included CAD2 billion (USD1.5 billion) in wage subsidies and CAD1 billion (USD795 million) for airports and small airlines.

“At this time, the federal government and WestJet have mutually agreed to suspend constructive discussions regarding additional federal support for the airline. Should the need arise in the future, we remain open to reopening our discussions,” Cuplinskas said.