Ottawa grants C$270.5mn lifeline to Porter Airlines

Cash-stricken Porter Airlines (PD, Toronto City Centre) will be able to restart operations later this summer after having been granted a loan of CAD270.5 million Canadian dollars (USD218.4 million) from the Canada Enterprise Emergency Funding Corporation (CEEFC), says president and chief executive Michael Deluce.

“Porter is using this money primarily as a capital reserve during the pandemic recovery period,” Deluce said in a statement. “We intend to draw on these funds as required in support of re-establishing operations through an uncertain period of travel demand. Our immediate focus is on being ready to fly again as soon as public health conditions allow and governments modify travel restrictions. We look forward to returning to flying this summer and welcoming passengers back onboard our planes.”

As a loan condition, Porter has agreed to provide refunds for pandemic-related flight cancellations to eligible customers. A separate loan of CAD20 million (USD16.1 million), repayable over seven years, will be provided to Porter for this purpose, the CEEFC said in a separate statement.

The funds are being made available under Ottawa’s Large Employer Emergency Financing Facility (LEEFF), which provides bridge financing to large employers whose needs during the pandemic are not met through private market financing.

As a loan condition, Porter has committed to maintaining jobs and honouring collective labour agreements and pension benefits. Porter has also agreed to place restrictions on executive compensation, dividends, and share buybacks.

Meanwhile, the airline would start processing refunds immediately for all flights booked by June 30, 2021, for travel as of February 1, 2020. Online submissions could be made until August 29, 2021.

Porter Airlines has been grounded since March 2020 due to travel restrictions imposed due to the pandemic and high slot fees charged at Toronto City Centre, which it said made it unviable for it to operate.

It has filed legal charges against Nieuport Aviation, the company that manages the terminal at the airport, seeking CAD20 million (USD16.5 million) for breach of contract plus CAD1 million (USD829,000) in damages and legal fees.

As reported earlier, the federal government has already provided loans to Air Canada (AC, Montréal Trudeau), Air Transat (TS, Montréal Trudeau), and Sunwing Airlines (WG, Toronto Pearson) under the LEEFF scheme.