Air Canada plans to complete the acquisition of 33 Airbus A220s and 40 Boeing 737 Max narrowbodies thanks to a C$5.879 billion ($4.682 billion) financing commitment by the government of Canada under its Large Employer Emergency Financing Facility (LEEFF) program, the airline said late Monday.
The package provides for fully repayable loans that Air Canada would draw down only as required, as well as an equity investment. It includes a government purchase of C$500 million worth of shares of the airline, meaning Ottawa will again own a part of the Canadian flag carrier.
“The additional liquidity program we are announcing today achieves several aligned objectives as it provides a significant layer of insurance for Air Canada, it enables us to better resolve customer refunds of non-refundable tickets, maintain our workforce and re-enter regional markets,” said Air Canada CEO Michael Rousseau. “Most importantly, this program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to the Canadian economy through its recovery and for the long term.”
In return for the government aid, Air Canada has committed to provisions related to customer refunds, service to regional communities, restrictions on the use of the funds provided, employment, and capital expenditures.
Under the agreement, Air Canada must maintain employment levels no lower than those in place on April 1. Beginning April 13, the airline began offering the option of a refund in the original form of payment to eligible customers who purchased non-refundable fares for Feb. 1, 2020 or later but did not travel due to Covid-19. It also committed to resuming service or “access” to Air Canada’s network for nearly all regional communities that saw service suspended because of Covid-19 through direct services or new interline agreements with third-party regional carriers. Finally, the airline agreed to restrict certain expenditures and restrict dividends, share buybacks, and senior executive pay.