Air Canada Exits Government of Canada Financial Support
Due to an improved liquidity position and the ongoing industry recovery, Air Canada will withdraw from further financial support from the Government of Canada. The support package announced in April 2021 provided loans of up to $5.375 billion.
On Friday (November 19, 2021), Air Canada announced that they are withdrawing from any further financial support from the Government of Canada. The support package, which was announced in April 2021, provided the airline with interest bearing loans of up to $5.375 billion through several separate credit facilities. Since that time, Air Canada has only accessed the facility for the purpose of refunding customers’ non-refundable tickets, while other facilities totaling $3.975 billion remain undrawn. The withdrawal has been made possible due to the company’s improved liquidity position and the ongoing industry recovery.
In Friday’s announcement, Air Canada’s President and Chief Executive Officer, Michael Rousseau, said,
“Air Canada's recovery from COVID-19 continues. We are recalling employees, adding new routes and frequencies to our network, and restoring services, and, last quarter, we completed a $7.1-billion financing. Today, in another convincing sign of our progress, we are announcing our withdrawal from the major funding provisions of our support agreement with the Government of Canada for the $3.975 billion in facilities that were never accessed and remain unused.
“We deeply appreciate the Government of Canada's support as this helped maintain a level playing field at a time when governments around the world, recognizing the importance of air travel to their economies, were also assisting their national carriers in the face of the unprecedented downturn caused by COVID-19. In addition to helping preserve thousands of jobs and travel choice for Canadians, the assistance offered to Air Canada importantly served as an extra level of insurance that enabled us to raise additional liquidity on our own to manage the pandemic and give us sufficient resources to effectively compete in the post-pandemic marketplace.”
During the third quarter of 2021, Air Canada completed a series of financing transactions which generated gross proceeds of approximately $7.1 billion, providing substantial liquidity and extending debt maturities out until near the end of the decade. At September 30, 2021, the carrier had unrestricted liquidity of approximately $14.4 billion, including roughly $9.5 billion in cash, cash equivalents, short-term and long-term investments, and available undrawn credit facilities of around $4.9 billion (including the $3.975 billion in unused government facilities canceled today).
Air Canada is Canada’s largest domestic and international airline. The Canadian flag carrier is a founding member of the Star Alliance and the only international network carrier in North America to receive a Four-Star ranking from Skytrax. For the last two years Air Canada was also named Global Traveler’s ‘Best Airline in North America.’ Additionally, Air Canada has committed to a net zero emissions goal from all global operations by 2050.
Source: Air Canada