The Canadian government approved a loan and equity deal for Air Canada that is worth C$5.9 billion ($4.7 billion) after negotiations and pleas from the airline. These funds will allow Air Canada to restore routes that it had canceled because of the pandemic.
As part of the deal, the federal government will again own a stake in the airline that is worth C$500 million after it had sold its ownership in the 1980s. However, the government’s voting rights will be capped at just below 20%. In return, Air Canada will restrict share buybacks and dividends and keep employment at April 1 levels. Executives will not be allowed to earn more than C$1 million.
This long-anticipated deal with Air Canada eases the tension between the industry and the government, which made stricter regulations on the industry as the pandemic progressed.
The airline is also committed to paying back customers who bought non-refundable flights that they didn’t take because of COVID-19.
In a statement on Monday, Finance Minister Freeland said that talks are ongoing with other airlines, including WestJet Airlines Ltd.
References:
1) Rastello, S., & Bolongaro, K. (2021, April 12). Air Canada Gets $4.7 Billion in Loans, Equity From Trudeau. Retrieved April 12, 2021, from https://www.bloomberg.com/news/articles/2021-04-12/trudeau-agrees-to-air-canada-aid-package-media-reports-say
Comments