Ottawa grants Sunwing C$100mn loan for COVID refunds

The Canadian federal government will lend CAD100 million Canadian dollars (USD81.2 million) to Sunwing Airlines (WG, Toronto Pearson) parent Sunwing Travel Group to provide COVID-19 customer refunds.

The state-owned Canada Enterprise Emergency Funding Corp. (CEEFC) and Sunwing Travel Group, in separate statements, on June 25 announced they had reached an agreement under which terms the CEEFC would provide a repayable loan under the Large Employer Emergency Financing Facility (LEEFF) to enable Sunwing to provide refunds to eligible customers.

This repayable loan was separate from an existing LEEFF loan, agreed to in February 2021. CEEFC is making CAD348 million (USD282.5 million) of liquidity available to Sunwing Vacations Inc. and budget carrier Sunwing Airlines to protect jobs in Canada’s airline sector.

Under the latest agreement, Sunwing would expand its refund policy to provide refunds to eligible customers who were issued a travel credit due to cancellations resulting from the COVID-19 pandemic. This would apply to eligible flights, hotels, and vacation packages booked on or before June 25, 2021, for scheduled travel on or after February 1, 2020. Sunwing would launch an online portal for customers to request refunds, who would have until August 27, 2021, to request refunds under these updated terms.

LEEFF provides bridge financing to Canada’s largest employers whose needs during the pandemic are not being met through private market financing. In line with key LEEFF principles, Sunwing has agreed to place restrictions on executive compensation, dividends, and share buybacks, the CEEF said.

Ottawa has already provided loans to Air Canada (AC, Montréal Trudeau) and Air Transat (TS, Montréal Trudeau) for operational purposes and customer refunds. Debt talks for refunds are also underway with WestJet (WS, Calgary) and Porter Airlines (PD, Toronto City Centre). This comes after the airline sector repeatedly criticised Ottawa for not providing sector-specific financial aid last year.

In April, Air Canada was granted access to CAD4 billion (USD3.2 billion) in loans through LEEFF, under which the CEEFC purchased CAD500 million (USD405.5 million) of newly issued shares in the airline. Air Transat will receive loan financing through LEEFF totalling CAD700 million (USD567 million), of which CAD310 million (USD251 million) will be a repayable loan to finance COVID-19 refunds.

One of the largest integrated travel companies in North America, Sunwing Travel Group comprises Sunwing Vacations and Vacation Express, two leisure tour operators in North America; Sunwing Airlines; SunwingJets (Toronto Pearson), a luxury private jet charter service; and travel retail businesses SellOffVacations.com and Luxe Destination Weddings. Blue Diamond Resorts is the Group’s hotel management company; while NexusTours is a full-service destination management company. The Group is 51% owned by the Hunter family, while TUI Group owns 49%.