Sunwing Gets $375 Million Loan From Trudeau Govt. to Protect Airline Worker Jobs

Sunwing Gets $375 Million Loan From Trudeau Govt. to Protect Airline Worker Jobs

February 1, 2021 Jim Byers

Well, that didn’t take long.

A day after Sunwing and three other Canadian airlines agreed to suspend all flights to the Caribbean and Mexico for three months, the federal government announced that Sunwing will get access to a $375 million loan to protect Canadian jobs.

The Canada Enterprise Emergency Funding Corp. (CEEFC) announced a new loan under the Large Employer Emergency Financing Facility (LEEFF). The agreement gives Sunwing Vacations Inc. and Sunwing Airlines Inc. access to $375 million of liquidity to protect jobs in Canada’s airline sector.

Sunwing Airlines and Sunwing Vacations together provide almost 3,000 Canadians with full-time jobs.

Canadian airlines have been crying for help for months, pointing out that other countries with strong aviation sectors had been given sector-specific government help while they stood on the sidelines. Canadian airlines did receive help in the form of wage subsidies, but many critics said that wasn’t enough.

Ottawa began talks with the airlines on November 8, nearly four months ago.

When he announced the flight suspensions on Friday, as well as new testing and quarantine rules, Prime Minister Justin Trudeau heaped praise on the airlines as valuable partners in the fight against COVID-19, a clear indication that the two sides had found some kind of common ground.

Transport Minister Omar Alghabra on Sunday said he hoped to be able to help Canadian airlines soon. As it turns out, it was soon, indeed.

The press release from the government says Sunwing “has agreed to maintain an account with money received from customers for travel that was cancelled due to the COVID-19 pandemic. This account will be maintained until the government’s broader discussions with the airline industry conclude and a policy is established for the treatment of these prepaid amounts.“

LEEFF loans provide bridge financing to Canada’s largest employers whose needs during the pandemic are not being met through private market financing. It provides large Canadian employers with access to credit to preserve jobs and continue operations during this challenging period.

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.

Air Canada officials told Canadian Travel News they have no similar announcement to report. A spokesman for Air Transat said the same thing.

WestJet officials could not be reached for immediate comment.

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

Key terms of the LEEFF loan facility 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 a loan through LEEFF are required to commit to publish 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 a lender of last resort, applicants may be concurrently examining other financing opportunities. Applicant information is disclosed only if LEEFF loans are approved.