Air Canada Getting $5.9 Billion Relief Package From Ottawa; Customer Refunds Coming

Air Canada Getting $5.9 Billion Relief Package From Ottawa; Customer Refunds Coming

April 12, 2021 Jim Byers

Air Canada is getting a $5.9 billion relief package from the federal government. But customers will get refunds for flights cancelled due to COVID-19 and suspended routes across Canada are being restored.

The federal government and Canada’s largest airline tonight (Monday, April 12) announced a long-awaited package to help Air Canada recover from the global pandemic. One surprising part of the deal was that Ottawa, meaning Canadian taxpayers, are taking a $500 million stake in the company.

There also are restrictions on executive compensation for Air Canada executives.

“This support comes with strict conditions to protect Canadian travellers, Canadians’ tax dollars, and Air Canada’s workers,” Deputy Prime Minister Chrystia Freeland said in a virtual press conference.

“The first condition is that regional communities must regain their connections to other parts of Canada no later than June 1. That includes the resumption of previously suspended service in Bathurst, N.B., Comox, Fredericton, Gander, Goose Bay, Kamloops, North Bay, Penticton, Prince Rupert, Saint John, Sandspit, Sydney and Yellowknife. For the airports where Air Canada had permanently cancelled service, the company will endeavour to reach agreements with other carriers to ensure Canadians can continue to have ready access to their preferred airports and to the flights they need. This includes Baie Comeau, Castlegar B.C., Gaspe, The Magdalen Islands, Mont Joli, Val d’Or and Wabush.

“Second, any customer of Air Canada who wants a refund for certain pandemic related cancellations, will receive one as soon as reasonably possible. The process for refunds will begin no later than April 30, 2021. Refunds will be available for travel purchased on or before March 22, 2020 for travel after Feb. 1, 2020 that was cancelled by either the passenger or the airline. Refunds will also be available for flights purchased after March 22, 2020 where the flight was subsequently cancelled by the airline.

“Significantly, travel agents who were paid a commission for booking airline tickets will not be asked to repay that commission.”

“Third, Air Canada workers’ jobs, pensions and collective agreements will be protected. We also have a guarantee that there will be no further job losses. At the same time, dividends and buybacks will be restricted, and executive compensation will be capped.”

“This is a good and fair deal for Canada, and Canadians,” Freeland said. “The airline industry is a strategic sector that generates good jobs for middle class Canadians.”

The package comes in the form of $4 billion in repayable loans and an equity invesmtnet in the airline by the government of $500 million. Freeland said loans will have to be repaid by Air Canada over the next five to seven years.

As part of the deal, the federal government also will provide a separate, $1.4 billion loan to help repay for cancelled flights. Freeland said all Canadian airlines are eligible to receive a similar “voucher refund loan facility” to refund their customers.

“Air Canada entered the pandemic more than a year ago with one of the global airline industry’s strongest balance sheets relative to its size. We have since raised an additional $6.8 billion in liquidity from our own resources to sustain us through the pandemic, as air traffic ground to a virtual halt in Canada and internationally,” said Michael Rousseau, President and Chief Executive Officer of Air Canada.

“The additional liquidity program we are announcing today achieves several aligned objectives as it provides a significant layer of insurance for Air Canada, it enables us to better resolve customer refunds of non-refundable tickets, maintain our workforce and re-enter regional markets. Most importantly, this 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.

Freeland said the Trudeau government is talking with other airlines and that talks with WestJet have been “constructive.”

WestJet tonight put out a statement saying that it “continues to operate self-sufficiently with the exception of the Canada Emergency Wage Subsidy (CEWS), which flows through directly to our employees. We have already communicated we will restore service to all 42 airports that we served pre-COVID and did so at our earliest opportunity. Since October 2020, WestJet’s refund policy has been industry-leading in Canada, and consistent with the U.S., UK and EU.”

There was no news about Air Transat in tonight’s announcement. A spokesman for Transat told Canadian Travel News last week that talks with Ottawa were at an advanced stage.

The Trudeau government earlier this year announced a $375 million package for Sunwing.

New federal measures aimed at bolstering Air Canada will help protect good jobs and is an important step on the road to economic recovery, the Unifor union said following the announcement.

“Today’s announcement by the federal government is a recognition that aviation workers are pivotal to the Canadian economy,” said Jerry Dias, Unifor National President. “The relief package provides a good balance of certainty for communities large and small, the company, and its workers.”