Air Canada reports $1.3 billion Q1 loss compared with $1B loss a year ago

Commissions protected and Ottawa’s getting an equity stake: All the details about the federal govt.’s financial assistance package for Air Canada

OTTAWA — Air Canada’s commitment to offer refunds to all eligible passengers who purchased non-refundable fares but did not travel due to COVID-19 since February 2020 – a key part of the airline’s financial assistance package announced tonight – also includes a commitment to protect travel agent commission.

“Beginning April 13, 2021, offering eligible customers who purchased non-refundable fares but did not travel due to COVID-19 since February 2020, the option of a refund to the original form of payment,” says Air Canada in a statement.

“In support of its travel agency partners, Air Canada will not retract agency sales commissions on refunded fares.”

Transport Minister Omar Alghabra and Deputy Prime Minister and Finance Minister Chrystia Freeland, April 12, 2021

Deputy Prime Minister and Finance Minister Chrystia Freeland and Transport Minister Omar Alghabra tonight announced the federal government’s financial assistance package for Air Canada, providing details in a live briefing.

The key points are:

  •  Refunds for passengers impacted by COVID-19 cancellations
  •  Protection for travel agent commission
  •  Restoration of regional connectivity
  •  Access to loans worth up to $5.9 billion through the Large Employer Emergency Financing Facility program, with loans paid back over 5 – 7 years
  •  The federal government will take an equity investment in Air Canada

Asked why tonight’s announcement was so long in coming, Freeland said: “We have been discussing an agreement with the airlines for some time. For the federal government the important thing was to have a good agreement for Canada, and Canadians, and for the airline industry. For us it was crucial to have an agreement that would refund passengers, protect workers and protect the airline’s purchasing of new planes. And that would also protect travellers at regional airports. So it was important for us to hold talks that were quite complicated, quite difficult. And it was important to the federal government to reach an agreement with airlines.”

She added: “Getting a good deal can sometimes take a little time.”

“This is a loan facility and the government fully expects to be paid back,” said Freeland. The loan facility is $1.4 billion and this is open to all of Canada’s airlines, she added.

Asked about the government’s equity stake in Air Canada – something that Air Canada’s former CEO Calin Rovinescu was strongly opposed to – Freeland said: “It was very important for us to get a good and fair deal for Canada and Canadians. And for Canadians to take part in any upside [in this support for Air Canada].”


Freeland said that the refunds will be offered to passengers who booked their tickets on or before March 22, 2020, for travel after Feb. 1, 2020, cancelled by either the passenger or Air Canada. Passengers will also be offered refunds for tickets booked after March 22, 2020 for flights cancelled by Air Canada.

“Significantly, travel agents who were paid a commission will not be asked to repay that commission,” said Freeland.

She said talks are ongoing with other airlines. “We are still talking with the other airlines, including WestJet, with whom we are now having constructive discussions.”

“This is a good and fair deal for Canada and Canadians,” said Freeland.

Transport Minister Omar Alghabra made sure to include travel agents in his statement tonight as well.

“Commissions for travel agents will be protected,” said Alghabra.

The financial assistance package for Air Canada “is a significant and historic agreement,” he added.



Air Canada’s financial assistance package from the federal government is valued at $5.879 billion.

As part of the package, Air Canada has entered into a series of debt and equity financing agreements with the government of Canada, which will allow it to access up to $5.879 billion in liquidity through the Large Employer Emergency Financing Facility (LEEFF) program.

The package, first announced by then-Minister of Transport Marc Garneau in November 2020, was confirmed today by Alghabra and Freeland. It provides for fully repayable loans that Air Canada would only draw down as required, as well as an equity investment, and is comprised of the following:

  •  Gross proceeds of $500 million for Air Canada shares at a price of $23.1793 per share;
  •  $1.5 billion in the form of a secured revolving credit facility at a 1.5% premium to the Canadian Dollar Offered Rate (CDOR); the facility is secured on a first lien basis by the assets of Aeroplan Inc., Air Canada’s shares in Aeroplan as well as certain assets of Air Canada, including certain intellectual property relating to the Aeroplan loyalty program;
  •  $2.475 billion in the form of three unsecured non-revolving credit facilities of $825 million each with: the first, five-year tranche at a 1.75% premium to CDOR per annum; the second, six-year tranche at 6.5% per annum (increasing to 7.5% after 5 years); and the third, seven-year tranche at 8.5% per annum (increasing to 9.5% after 5 years);
  •  As part of the financial package, Air Canada issued an aggregate of 14,576,564 warrants exercisable for the purchase of an equal number of Air Canada shares, subject to customary adjustments, at a price of $27.2698 per share during a 10-year term, representing 10% of the total commitment available under the above secured and unsecured credit facilities; 50% of the warrants vested concurrently with the implementation of the credit facilities and the remaining 50% of the warrants will vest on a proportional basis to the amounts that Air Canada may draw under the above unsecured credit facilities;

Up to approximately $1.4 billion in the form of an unsecured credit facility tranche to support customer refunds of non-refundable tickets. The facility will have a seven-year term and carry an annual interest rate of 1.211%.

In addition to providing customer refunds, Air Canada will ensure the following as a condition to receiving the financial package:

  •  The resumption of service or access to Air Canada’s network for nearly all regional communities where service was suspended because of COVID-19’s impact on travel, through direct services or new interline agreements with third party regional carriers;
  •  Restricting certain expenditures, and restricting dividends, share buybacks and senior executive compensation;
  •  Obligations to maintain employment at levels which are no lower than those at April 1, 2021; and
  •  The completion of the airline’s acquisition of 33 Airbus A220 aircraft, manufactured at Airbus’ Mirabel, Quebec facility. Air Canada has also agreed to complete its existing firm order of 40 Boeing 737 Max aircraft. Completion of these orders remains subject to the terms and conditions of the applicable purchase agreements.

“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.

“As vaccine deployments ramp up, we continue to work with the Government of Canada on the evolution of safe and science-based test and quarantine relief measures with a view to safely restarting our sector. We know that Canadians are looking forward to re-connecting with friends and family and taking those long-awaited vacations and business trips and we will be ready to safely connect Canadians within Canada and Canada to the world,” added Rousseau.

In an official statement from the Department of Finance Canada, Minister Alghabra said: “For our economic recovery and to build back better, we need a strong Canadian air sector that creates good jobs, grows the economy and helps connect communities across Canada. Today’s announcement with Air Canada is another important step in that direction.”

Freeland added: “From coast to coast to coast, it is essential we maintain connections between people and our communities, large and small. Protecting Canadian customers is important. And maintaining a competitive Canadian air sector, Canadian airlines, and the thousands of good jobs in this sector is a priority. This is what today’s announcement with Air Canada guarantees.”

The statement reiterated that 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.


Minutes after Freeland and Alghabra finished their live briefing, WestJet sent out the following statement:

“The WestJet Group 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.

“We remain committed to building back even stronger for the betterment of all Canadians. A healthy WestJet will help lead a stronger recovery, increasing competition and consumer choice while lowering the cost of travel for Canadians, all while anchoring Canada’s vital air travel and tourism sectors.

“The WestJet Group of Companies continues discussions with the Government of Canada on a safe travel-restart framework. We remain focused on a long-term solution that will serve the best interests of Canadians.

“We will provide updates on our discussions with the Government of Canada at the appropriate time.”