The federal government says it will be supporting Air Canada with a multi-billion dollar aid deal to help cope with massive financial losses and millions in customer refunds for cancelled trips amid the COVID-19 pandemic.
Speaking at press conference Monday evening, Deputy Prime Minister Chrystia Freeland announced the government’s decision to “step in to support Air Canada, its nearly 15,000 active employees and its customers.”
According to Freeland, the support will be in the form of a $4 billion loan as well as $500 million in equity — giving the government a stake in the airline for the first time since its privatization in 1989.
A separate $1.4 billion loan will also be used as a “voucher refund facility” for Air Canada. Freeland said that all Canadian airlines are also eligible to to receive these loans in order to refund their customers.
An earlier statement from the federal government confirmed the deal ahead of its announcement, but also stated several conditions which the airline promised to uphold.
These promises include:
- Maintained air connections between regional communities, such as Bathurst, Fredericton, Yellowknife and Kamloops, to the rest of Canada.
- A guarantee that all Air Canada jobs, pensions and collective agreements are protected.
- The airline remains a customer in Canada’s aerospace sector.
Lastly, the agreement promises that any Air Canada customers who want a refund over “pandemic-related cancelations” will be able to get one.
According to Freeland, the process for refunds will begin no later than April 30 and will be available for tickets purchased on or before Mar. 22, 2020 and for tickets after Feb. 1, 2020 that were either cancelled by the passenger or the airline.
Refunds for tickets bought after Mar. 22, 2020 will also be available if the flight was later cancelled by Air Canada.
The aid package also restricts dividends and share buybacks in the company, with Freeland adding that airline executive compensation will be capped at $1 million annually.
“So this announcement tonight marks a great milestone in our effort to help Canadians and our economy weather the impact of the global pandemic and build back better,” said Transport Minister Omar Alghabra.
“But rest assured, we continue to have active discussions with other airlines as well.”
Global News learned earlier that the relief package — first reported by CBC News this afternoon — had a focus on customers and consumers.
A source familiar with the package’s details told Global News then that the agreement would not be a straight bail-out for the airline.
The package’s confirmation also comes as airlines were made to bear much of the brunt the COVID-19 pandemic wrought on the Canadian economy. Many airlines including both Air Canada and WestJet were either forced to cancel or refund their flights due to the virus.
In March, Global News confirmed comments from Unifor President Jerry Dias, who said then that Air Canada had “absolutely agreed to Ottawa’s demands that the airline repay customers who weren’t reimbursed for their plane tickets.”
Speaking with Global News, Dias also clarified then that a poised agreement between the airline and Ottawa — which would focus on customer refunds or exchanges — would be in exchange for a loan, not a bail-out.
He also said then that the loan they were originally going to take would be that of $7 billion that would be paid back on a one per cent interest rate per year over 10 years, but later added that the $7 billion “should now be the floor — not the ceiling.”
More to come…
— With files from Global News Mercedes Stephenson, Hannah Jackson and Emerald Bensadoun
© 2021 Global News, a division of Corus Entertainment Inc.
