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The Canadian Government reaches out to Air Canada through a million-dollar pandemic relief plan

2021-04-13T21:40:47.721Z

The agreement, for about 4.7 billion dollars, will be a point of support for the main airline of the country



Air Canada planes at Vancouver airport, in a file image.Ben Nelms / Reuters

After months of requests, the Canadian government has finally moved a token to financially support airlines due to the ravages of the pandemic.

Ottawa announced on Monday that it has agreed a plan for some 5.9 billion Canadian dollars (4.7 billion US dollars) to Air Canada, the largest company in the field in the country.

Other firms, such as WestJet and Air Transat, are in negotiations with federal authorities to receive similar packages.

Canada was the only G7 member that had not yet concluded direct support programs with its domestic airlines.

In 2020, Air Canada posted losses of C $ 4.6 billion (C $ 3.65 billion);

its number of passengers decreased 73% in that period.

It had to lay off about 20,000 employees (more than half of its workforce before COVID-19) and made a further cut of 1,700 people in February.

Michael Rousseau, president and CEO of the company, stated that "when the pandemic struck more than a year ago, Air Canada had, given its size, one of the strongest balance sheets in the global airline industry."

For Rousseau, the relief plan provides above all the additional liquidity that the company might need "for the benefit of all stakeholders and in order to continue to make a significant contribution to the Canadian economy during the recovery and in the long term."

Michael Sabia, Federal Deputy Minister of Finance, was in charge of negotiating with Air Canada this aid plan for $ 5.9 billion.

About 4,000 million are available to the airline through four lines of credit, Ottawa injects 500 million in shares of the company (23.18 dollars for each title) and the remaining 1,400 million consist of a fund - also in credit facilities - for the reimbursement to passengers of tickets canceled by the pandemic as of February 2020.

Ottawa imposed several conditions for the approval of this financial support plan.

One was precisely the refund of the canceled tickets.

Also, Air Canada will have the obligation to maintain an employment rate that is not lower than that registered on April 1, 2021, it will again offer - no later than June 1 - different regional flights canceled due to the health crisis, it will impose restrictions in terms of repurchase of shares and remuneration to its senior executives and, in the same way, it will conclude the purchase of 33 A220 aircraft from the Airbus firm built at the Mirabel plant (Quebec).

Chrystia Freeland, Minister of Finance of Canada, expressed at a press conference in Toronto that it was very important to have a "good and fair" agreement for Canadians and their government.

Air Canada had already raised $ 554 million in 2020 through the federal Emergency Wage Subsidy Program.

It is expected that this year he will continue to receive this aid.

It should be remembered that Canadian airlines - at the request of the Government - agreed at the end of January to suspend their direct flights to Mexico and the Caribbean, as part of their efforts to stop the spread of covid-19.

These services are scheduled to return to operation in May, unless health authorities recommend otherwise.

Likewise, Air Canada and other companies reduced their flights to other countries due to the considerable decrease in passenger demand.

Ottawa imposed since February 22 a PCR test and isolation for a maximum of three days in hotels to people arriving by plane to Canada.

Both the test and the stay must be covered by the passengers' wallets.

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Source: elparis

All business articles on 2021-04-13

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