On April 12, 2021, Air Canada (ADH2) reached an agreement with the country’s government to enter into a debt and equity financing deal, a move that would help the flag carrier navigate through the COVID-19 pandemic.
As part of a financial deal, Air Canada (ADH2) will be granted access to a relief package worth up to C$5.9 billion ($4.6 billion) in liquidity through the Large Employer Emergency Financing Facility (LEEFF) program.
In return for the government support, Air Canada (ADH2) agreed to restrict share buybacks and dividends, maintain the airline’s employment to current levels and proceed with the acquisition of 33 Airbus A220 and 40 Boeing 737 MAX aircraft. In addition, the airline’s senior executives would not be allowed to earn more than C$1 million ($794,485).
The agreement over the long-awaited relief package between the government and Canada’s flag carrier came after the authorities were targeted by a wave of criticism from the aviation industry leaders for not supporting the cash-strapped sector.
The chief executive of Air Canada Michael Rousseau said the government’s relief package provides a “significant layer of insurance” for the airline, which since the beginning of the pandemic raised C$6.8 billion ($5.4 billion) in liquidity from their own resources.
“The [government – ed.note] 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,” said Rousseau.
Jerry Dias, the president of the private sector union, Unifor, described the relief deal for Air Canada (ADH2) as a good “template” for other Canadian airlines that are struggling with the setbacks of the COVID-19 pandemic.
Air Canada (ADH2) relief deal offers ‘template’ for other airlines, says @UnifortheUnion president @JerryPDias. More on what’s in the federal relief package here: https://t.co/vc83GfExwt #cdnpoli pic.twitter.com/b1ejsxmAyG— Power & Politics (@PnPCBC) April 13, 2021
Canada’s Ministry of Finance, Chrystia Freeland, added that “maintaining a competitive Canadian air sector, Canadian airlines, and the thousands of good jobs in this sector is a priority.”