Government of Canada and Air Canada reach deal on relief package

Air Canada has entered into a series of debt and equity financing agreements with the Government of Canada, which will allow Air Canada to access up to CA$5.879 billion in liquidity through the Large Employer Emergency Financing Facility (LEEFF) program. The financial package provides for fully repayable loans that Air Canada would only draw down as required, as well as an equity investment, and is comprised of: Gross proceeds of CA$500 million for Air Canada shares at a price of CA$23.1793 per share.

As part of the financial package, Air Canada has agreed to a number of commitments related to customer refunds, service to regional communities, restrictions on the use of the funds provided, employment, and capital expenditures. In detail:

• Beginning April 13, 2021, Air Canada will be 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. In support of its travel agency partners, Air Canada will not retract agency sales commissions on refunded fares.
• 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.