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Government Protects Canadian Air Travellers, Jobs, and Airline Sector

In a country as vast as Canada, it is essential we maintain connections between people and our communities.

To that end, today the Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, and the Minister of Transport, the Honourable Omar Alghabra, announced financial support for Air Canada.

As a condition to receiving this support, Air Canada will ensure that:

  1. Regional communities retain air connections to the rest of Canada through the restart of service at airports temporarily suspended by Air Canada;
  2. Any customer of Air Canada who wants a refund will receive one for certain pandemic-related cancelations;
  3. Airline jobs, pensions, and collective agreements are protected; and
  4. Air Canada remains a customer for Canada’s aerospace sector.

The Government of Canada remains committed to supporting people who work in the air sector and Canadian airlines during this unprecedented and difficult time for the industry. The government is also committed to supporting the gradual return of commercial activity in the aviation sector in Canada in a way that continues to prioritize the health, safety, and security of all Canadians.

Negotiations continue with other Canadian carriers on financial support and any agreement reached in those negotiations will include a requirement that the airline also refund pandemic related-cancelations. In the event that an airline does not need liquidity support from the government, the government remains open to helping all airlines provide voucher refunds to their customers. 

This financial support announced today, in the form of repayable loans and an equity investment, will help Air Canada weather the current economic downturn and will protect thousands of Canadian jobs.

 

Backgrounder

The government’s financial support to Air Canada is being provided under the Large Employer Emergency Financing Facility (LEEFF). The Canada Enterprise Emergency Funding Corporation (CEEFC) has committed to provide $4 billion in repayable loans and an equity investment in Air Canada of $500 million in newly-issued Class B Voting Shares at a 15 per cent discount to their recent trading price. CEEFC will also receive warrants on Air Canada stock in an amount equal to 10 per cent of the loan commitments (CEEFC’s news release contains detailed information regarding the warrants).

As a condition of its agreement with CEEFC, Air Canada has made a number of commitments as outlined below.

Refunds for Canadians

The agreement with Air Canada ensures that customers who had their flights cancelled, or took action to cancel a flight because of the pandemic, are not financially disadvantaged. Under the terms of the financing agreement, Air Canada has committed to offer refunds to any passenger who wants a refund for certain pandemic-related cancelations by the carrier that CEEFC will finance. Air Canada has committed to providing customers with their refunds as soon as possible – beginning April 30, 2021 at the latest. CEEFC will provide additional loan financing of up to $1.4 billion for Air Canada to provide these refunds. Travel agents may assist in the processing of refunds for tickets the travel agents sold but will not be required to refund their commission to Air Canada.

Protecting Jobs

As a condition of the agreement with CEEFC, Air Canada has committed to maintain jobs at current levels, to respect collective bargaining agreements, and protect workers’ pensions. Air Canada currently has 14,859 active Canadian employees.

As required more generally under LEEFF, Air Canada has also agreed to restrictions on dividends, buying back shares, and executive compensation. The company will also provide climate-related financial disclosures, including how its future operations will support environmental sustainability and national climate goals.

Restarting Vital Domestic Air Services

The terms of the financial support will ensure that Canadians and communities retain air connections to the rest of Canada, through the restart of service at airports temporarily suspended by Air Canada. For seven airports where Air Canada had permanently canceled service, the airline will seek interline agreements with other carriers with a view to ensure those Canadians continue to have convenient access to their preferred airports and the flights they need.

Service will resume by no later than June 1, 2021, at the following suspended airports based on public health advice:

  • Bathurst
  • Comox
  • Fredericton
  • Gander
  • Goose Bay
  • Kamloops
  • North Bay
  • Penticton
  • Prince Rupert
  • Saint John
  • Sandspit
  • Sydney
  • Yellowknife

Supporting Jobs in Canada’s Aerospace Industry

The aerospace industry supported 235,000 Canadian jobs and contributed over $28 billion in gross domestic product to the Canadian economy in 2019.

This financing agreement will allow Air Canada to continue to be a vital customer of the Canadian aerospace industry by completing its planned purchase of aircraft as set out in its business plan, which includes aircraft built in Canada, such as the Airbus A220. Aerospace is one of the most innovative and export-driven industries in Canada. The negative impact of the pandemic on the bottom line of airlines has put the relationship between airlines and the aerospace industry at risk, threatening job security in the sector. Ensuring that Air Canada maintains its status as a key customer of Canada’s aerospace industry is important to ensuring the long term success of the sector and the thousands of jobs it supports.

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