Air Transat Gets $700 Million Federal Loan; Refunds for COVID Cancellations Must Be Paid

Air Transat Gets $700 Million Federal Loan; Refunds for COVID Cancellations Must Be Paid

April 29, 2021 Jim Byers

Air Transat is getting a $700 million loan from the Trudeau government, on the condition that refunds will be provided to customers with flights cancelled due to COVID-19

Officials issued a press release this morning, just ahead of a Transat shareholders meeting, to say the Montreal-based airline will receive loan financing through the Large Employer Emergency Financing Facility (“LEEFF”) totaling $700 million. As a condition of the loan agreement, Transat has agreed to provide refunds for all pandemic-related cancellations to eligible customers—$310 million of the total financing will be a repayable loan to finance these refunds.

Customers will be able to request their refunds by May 31, 2021 at the latest. Transat has also committed to maintaining active jobs as well as honouring collective agreements and pension benefits.

Transat is pleased to announce that a funding agreement with the Canada Enterprise Emergency Funding Corporation (CEEFC) now allows it to offer refunds to travellers who were issued a travel credit due to COVID-19 for a trip scheduled to start on or after February 1, 2020. This policy applies to flights and packages booked by April 29, 2021. Going forward, should Transat make changes to its flight program, affected customers would also be eligible for a refund.

“We’ve been impatiently waiting for this moment, and we know our customers have been, too,” says Annick Guérard, Chief Operating Officer of Transat. “Now that a funding agreement has been reached and the eligibility criteria have been established by the Government of Canada, we are delighted to be able to provide our customers with this long-awaited aid.”

Among the parameters set by government authorities, those who have a travel credit must submit their refund request to Transat by August 26, 2021. This is why they are invited to complete the request form available at airtransat.com/refunds as soon as possible. If they originally booked with a travel agent or online travel agency, they should contact them directly.

“Travel agents have shown unwavering resilience and support since the crisis began,” adds Guérard. “That’s why we’re pleased to confirm that commissions earned by agents will not be recalled if their customers opt for a refund.”

Customers and travel agents are invited to visit airtransat.com/refunds to consult our frequently asked questions or learn about the refund eligibility criteria.

The federal government used the LEEFF program to provide Sunwing with $375 million in loans earlier this year. Air Canada recently was given up to $5.9 billion, also with the use of the LEEFF plan.

The deal for Transat leaves WestJet and Porter Airlines as the only two major airlines in Canada without a federal aid package.

LEEFF loans provide bridge financing to Canada’s largest employers whose needs during the pandemic are not being met through private market financing. The program provides large Canadian employers with access to credit to preserve jobs and continue operations during this challenging period. Among other key principles, the terms of LEEFF, including the financing provided to Transat, impose limits on executive compensation and restricts the payment of dividends and other distributions by a recipient.

Other applications for LEEFF financing are currently under consideration. To protect the financial interests of taxpayers, rigorous due diligence and the collaboration of existing lenders is required.

CEEFC maintains an updated list of approved LEEFF financing, which can be found at https://www.ceefc-cfuec.ca/approved-loans/.

Key terms of LEEFF can be found at https://www.ceefc-cfuec.ca/leeff-factsheet/.

Quick facts

LEEFF is open to all large, for-profit Canadian employers who have a significant impact on Canada’s economy and provide millions of jobs to Canadians. Companies in the financial sector are not eligible for LEEFF. In order to qualify for LEEFF, a company must have more than $300 million of annual revenues and require a loan of at least $60 million.
Certain not-for-profit enterprises, such as airports, may also be eligible. Any company that has been found guilty of tax evasion is not eligible.
Companies that receive financing through LEEFF are required to commit to publishing annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, including how their future operations will support environmental sustainability and national climate goals.
Companies must agree to sustain their domestic operations, make reasonable commercial efforts to minimize the loss of jobs, and demonstrate a clear plan to return to financial stability. They must also agree to place restrictions on executive compensation, dividends, and share buybacks.
As this program is intended to be financing of last resort, applicants may be concurrently examining other financing opportunities. Applicant information is disclosed only if LEEFF financing is approved