Ottawa takes equity in Air Canada for C$5.9bn in aid

Air Canada (AC, Montréal Trudeau) and the Canadian government have agreed on a financial aid package that gives the flag carrier access to CAD5.9 billion Canadian dollars (USD4.7 billion) in exchange for compensating ticket holders and restoring suspended regional services. The financial support takes the form of CAD4 billion (USD3.2billion) in repayable loans and a CAD500 million (USD398 million) equity investment that will give the Canadian government a 6% stake in the country’s biggest airline, according to a statement issued by Deputy Prime Minister and Finance Minister Chrystia Freeland and Transport Minister Omar Alghabra. The financial support is being provided under the Large Employer Emergency Financing Facility (LEEFF), through the Canada Enterprise Emergency Funding Corporation (CEEFC), which will provide the CAD4 billion in repayable loans and the equity investment in Air Canada in the form of newly-issued Class B Voting Shares at a 15% discount to their recent trading price. CEEFC will also receive warrants on Air Canada stock in an amount equal to 10% of the loan commitments. In exchange, Air Canada has committed to providing customers with their refunds as soon as possible – beginning April 30, 2021, at the latest. CEEFC will provide additional loan financing of up to CAD1.4 billion (USD1.1 billion) for Air Canada to provide these refunds. “Taxpayers aren’t footing the bill. This is a loan facility, and the government of Canada fully expects to be paid back,” Freeland said. “We have agreed with Air Canada that refunds should be issued as soon as possible, beginning in the coming weeks and months,” said Alghabra, though Air Canada has up to seven years to draw on the low-interest loan. The government said negotiations continued with other Canadian carriers on financial support and any agreement reached in those negotiations would include a requirement that those airlines also refund pandemic related-cancellations. In the event that an airline does not need liquidity support from the government, the government remained open to helping all airlines provide voucher refunds to their customers. Both Goldy Hyder, Chief Executive Officer of the Business Council of Canada, and Canadian Labour Congress president Hassan Yussuff expressed approval of the rescue package, the Candian Press reports. However, the Canadian Union of Public Employees, which represents 10,000 Air Canada flight attendants, decried the deal, saying it “betrays the government’s commitment to supporting airline workers affected by the pandemic”. “We had a commitment from the Trudeau government that any relief money for the airline sector would flow directly to support workers, and that commitment is not reflected in this agreement,” CUPE president Mark Hancock said in a statement.