Air Canada and the Canadian government on Monday agreed on financing that would allow the airline to access as much as C$5.9 billion (US$4.7 billion) to help it recover from the economic damage caused by the COVID-19 pandemic.
Canadian Deputy Prime Minister Chrystia Freeland said that the support includes C$4 billion (US$3.2billion) in loans and C$500 million (US$398 million) in equity that would give Canadians a stake in Air Canada, which is the country’s largest airline.
As part of the financial package, Air Canada has agreed to a number of commitments related to customer refunds, service to regional communities, restrictions on the use of the funds provided, employment and capital expenditures.
In return for aid, the carrier is offering refunds to customers who bought non-refundable fares, but did not travel due to the pandemic.
Also in exchange for the bailout, the airline is resuming service for all regional communities where service was suspended.
Freeland, also the Canadian minister of finance, said that the airline has also guaranteed that there would be no further job losses.
She said that there would also be no stock buybacks or dividends and that executive compensation would be capped at C$1 million for any executive.
“These are hard and unprecedented times for our airline industry and our workers, as well as Canadian travelers,” Freeland said. “The airline industry is a strategic sector.”
Freeland said that the government is also talking with other Canadian airlines to determine what type of assistance they might need.
Air Canada last year lost C$4.6 billion, compared with a profit of C$1.5 billion in 2019.
Organizations supporting Air Canada’s calls for a bailout have included unions such as Unifor and the Canadian Air Traffic Control Association, as well as the National Airlines Council of Canada industry group.
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