MONTREAL — Transat has secured an additional $100 million in liquidity from the Canada Enterprise Emergency Funding Corporation (CEEFC).
The extra funds are in addition to initial financing that was secured on April 29, 2021, through the Large Employer Emergency Financing Facility (LEEFF), to help the airline overcome the effects of the pandemic. On March 10, 2022, Transat also received an additional $43.3 million for traveller refunds and negotiated favourable 20-month deferrals for certain terms of the unsecured LEEFF financing agreement.
In this final LEEFF loan, Transat will receive up to $150 million to protect Canadian jobs and ensure operations can continue, despite the company’s ongoing capital operating challenges as a result of the pandemic. The amount consists of $100 million up front in LEEFF loans, and another $50 million loan contingent on Transat raising third-party funding (matched dollar for dollar up to $50 million).
In connection with the establishment of this latest additional funding, through the LEEFF, Transat has reached an agreement with all lenders to defer the April 2023 maturities to April 2024, as well as to defer from October 2022 to October 2023 the date by which it must meet certain financial covenants.
“This complementary financing and the changes to the existing agreements strengthen our treasury position and reinforce our financial resilience,” says Annick Guérard, President and CEO. “This important financing milestone, combined with sales that have been doing well in recent months, will give us the financial flexibility to deploy our strategic plan with optimism and confidence.”
As of today, July 29, CEEFC has stopped accepting new LEEFF applications, reflecting Canada’s strong economic recovery from the pandemic. No new applications for LEEFF loans – except for Transat – have been received from Canadian companies over the last year.
As a result of the first LEEFF loan to Transat in April 2021, thousands of Canadian jobs have been protected and the company has been able to maintain its operations. In its Q2 results, Transat’s revenue reached $358.2 million compared with just $7.6 million in the same quarter in 2021. Its net loss for the quarter amounted to $98.3 million. In Q1 2022, Transat reported a total revenue of $202.4 million and a $114.3 million loss.
LEEFF recipients, including Transat, must commit to protecting jobs and sustaining their domestic business activities, and must demonstrate that funding under LEEFF forms part of their overall plan to return to financial stability.