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November 22, 2021

Air Canada withdraws from government relief deal as business improves

The carrier used only $949m of the loan facility for refunding customers' non-refundable tickets.

Air Canada has decided to pull out of a financial aid programme from the Canadian Government after a travel rebound boosts its liquidity position.

In April, the government offered C$5.9bn in liquidity to the Canadian flag carrier, which included an interest-bearing loan of $4.25bn (C$5.37bn).

The government also bought an equity stake of 6% in the airline for C$500m and retains this stake.

In exchange for the aid, the carrier also agreed to curbs on share buybacks, dividends and to cap senior executive compensation at C$1m per year.

To date, Air Canada only availed $949m (C$1.2bn) of the loan facility for refunding customers’ non-refundable tickets, while $3.15bn (C$3.98bn) of the loan amount remains unused.

Air Canada president and CEO 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 $5.6bn (C$7.1bn) 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 $4.253bn (C$3.975bn) in facilities that were never accessed and remain unused.”

Rousseau added: “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, recognising 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.”

Last September, Air Canada initiated a voluntary Covid-19 study on international passengers arriving at Toronto Pearson International Airport (YYZ).

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