Air Canada is pulling out of from the federal government’s $5.375 billion aid program as its business rebounds from the COVID-19 pandemic.
The company has used the aid package to refund customers’ non-refundable tickets, the airline said Friday. Out of the total aid available, $3.975 billion was not used.
“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,” said Michael Rousseau, president and CEO of Air Canada, in a statement.
“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.”
Rousseau added the government’s aid preserved thousands of jobs, and helped Air Canada raise additional liquidity on its own to manage the pandemic and plan for the post-pandemic market.
In April, the federal government announced it would be supporting Air Canada with a multi-billion dollar deal to help cope with massive financial losses and millions in customer refunds for cancelled trip because of the pandemic.
The agreement with the government provided access to up to $5.375 billion in interest bearing loans and $500 million in equity for a total of $5.875 billion in liquidity, Air Canada said.
Roughly 58 per cent of eligible customers requested refunds, and the airline used $1.2 out of the $1.4 billion available for customer refunds.
As part of the deal, the government purchased $500 million worth of shares at $23.18 per share, representing about a six per cent equity stake in the company. It gave the government a stake in the airline for the first time since its privatization in 1989, and it continues to hold those shares, Air Canada said.
With $3.975 billion not used, Air Canada said it was entitled to terminate the deal at any time without penalty under the terms of the agreement.