Air Canada has sold an equity stake to the Canadian government and agreed to a series of commitments including refunds to customers, maintaining jobs and a cap on senior executive compensation in exchange for a multi-billion dollar federal aid package.
The national carrier said in a statement on Monday evening it would be allowed access to up to C$5.89bn ($4.69bn) in liquidity through the short-term loans programme set up by the Trudeau government to assist large Canadian employers.
The agreement ends months of negotiations between the government and Air Canada over a coronavirus aid package. Discussions with rival domestic carriers are continuing, transport minister Omar Alghabra said during a press conference.
The package is composed of a series of debt and equity agreements, including the government taking a C$500m stake in the Toronto-listed carrier.
In exchange for the government loans, Air Canada has agreed to several commitments including offering refunds to customers whose tickets were cancelled due to the pandemic. Up to C$1.4bn in the form of an unsecured credit facility has been made available to support paying those refunds.
The airline said it had also agreed to “restricting certain expenditures, and restricting dividends, share buybacks and senior executive compensation.”
Air Canada has also committed to maintaining “employment at levels which are not lower than those at April 1, 2021” and agreed to respect collective bargaining agreements and protect workers’ pensions. The company has almost 15,000 active employees.
The airline is also to resume service, or access to the carrier’s network, for nearly all regional communities where service had been suspended due to the pandemic.
Michael Rousseau, chief executive, said the liquidity programme announced today provided “a significant layer of insurance” for the airline and would enable it to “better resolve customer refunds of non-refundable tickets, maintain our workforce and re-enter regional markets.” The airline had previously raised C$6.8bn in liquidity from its own resources “to sustain us through the pandemic”, he said.