Air Canada indicators C$5.9 billion authorities assist bundle, agrees to purchase Airbus, Boeing jets By Reuters

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© Reuters. FILE PHOTO: FILE PHOTO: Air Canada airplanes are pictured at Vancouver’s worldwide airport in Richmond,

By David Ljunggren and Allison Lampert

OTTAWA/MONTREAL (Reuters) -Air Canada, combating a collapse in site visitors because of the COVID-19 pandemic, reached a deal on Monday on a long-awaited assist bundle with the federal authorities that may permit it to entry as much as C$5.9 billion ($4.69 billion) in funds.

The settlement – the biggest particular person coronavirus-related mortgage that Ottawa has organized with an organization – was introduced after the airline business criticized Prime Minister Justin Trudeau’s Liberal authorities for dawdling. The US and France acted rather more shortly to assist main carriers.

Canada’s largest provider, which final 12 months minimize over half its workforce, or 20,000 jobs, and different airways have been negotiating with the federal government for months on a coronavirus assist bundle.

In February, Air Canada reported a internet loss for 2020 of C$4.65 billion, in contrast with a 2019 revenue of C$1.48 billion.

As a part of the deal, Air Canada agreed to ban share buybacks and dividends, cap annual compensation for senior executives at C$1 million a 12 months and protect jobs on the present degree, which is 14,859.

It would additionally proceed with deliberate purchases of 33 Airbus SE (OTC:) 220 airliners and 40 Boeing (NYSE:) Co 737 MAX airliners.

Chris Murray, managing director, fairness analysis at ATB Capital Markets, mentioned the deal took under consideration the “particular wants of Air Canada within the quick and medium time period with out being overly onerous.”

He added: “It offers them some flexibility in drawing down extra liquidity as wanted.”

Transport Minister Omar Alghabra mentioned the federal government was nonetheless in negotiations with different airways about attainable assist.

Canada, the world’s second-largest nation by space, relies upon closely on civil aviation to maintain distant communities linked.

Opposition politicians fretted that additional delays in asserting assist may lead to everlasting harm to the nation.

Air Canada mentioned it will resume providers on practically all the routes it had suspended due to COVID-19.

‘SIGNIFICANT LAYER OF INSURANCE’

The deal removes a possible political problem for the Liberals, who insiders say are set to set off an election later this 12 months.

The federal government has agreed to purchase C$500 million value of shares within the airline, at C$23.1793 every, or a 14.2% low cost to Monday’s shut, a roughly 6% stake.

“Sustaining a aggressive airline sector and good jobs is crucially vital,” Finance Minister Chrystia Freeland instructed reporters, including the fairness stake would permit taxpayers to profit when the airline’s fortunes recovered.

The Canadian authorities beforehand permitted related loans for 4 different firms value as much as C$1.billion, together with as much as C$375 million to low-cost airline Sunwing Holidays Inc. The federal government has paid out C$73.47 billion beneath its wage subsidy program and C$46.11 billion in loans to hard-hit small companies.

Michael Rousseau, Air Canada’s president and chief government officer, mentioned the liquidity “gives a major layer of insurance coverage for Air Canada.”

Jerry Dias, head of the Unifor private-sector union, described the announcement as “a great deal for everyone.”

Unifor represents greater than 16,000 members working within the air transportation sector.

However the Canadian Union of Public Workers, which represents roughly 10,000 Air Canada flight attendants, mentioned the bundle protected the roles of present staff fairly than the 7,500 members of its union who had been let go by the provider.

($1=1.2567 Canadian {dollars})





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