Air Canada, Ottawa agree to aid worth up to $5.9B

After months of negotiations, Ottawa has reached a deal with Air Canada that will allow the battered airline to access as much as $5.9 billion in loans and equity financing from the public purse.

Under the agreement, Air Canada must refund passengers whose flights were cancelled due to the COVID-19 pandemic, cap executive compensation at $1 million and restore service to regional airports.

The package, which gives Canada a six-per-cent stake in the country’s biggest airline, also requires the Montreal-based carrier to maintain employment at current levels or higher.

“Taxpayers aren’t footing the bill. This is a loan facility, and the government of Canada fully expects to be paid back,” Finance Minister Chrystia Freeland said Monday night, referring to the $5.4 billion in available credit.

Some $1.4 billion of that is earmarked to help reimburse the thousands of customers who paid for tickets but remained in the lurch at the end of 2020.

“We have agreed with Air Canada that refunds should be issued as soon as possible, beginning in the coming weeks and months,” said Transport Minister Omar Alghabra, though Air Canada has up to seven years to draw on the low-interest loan.

Refunds will be available for flights purchased on or before March 22, 2020, for travel after Feb. 1 of last year, regardless of whether they were cancelled by the passenger or the airline, Freeland said.

Tickets purchased after March 22, 2020, where the flight was subsequently cancelled by the airline will also be refundable, she said.

Air Canada confirmed that customers who accepted flight credit or Aeroplan points as well as those who declined both will be eligible for reimbursement.

The Canadian Union of Public Employees, which represents 10,000 Air Canada flight attendants, decried the deal, saying it “betrays the government’s commitment to support airline workers affected by the pandemic.”

“We had a commitment from the Trudeau government that any relief money for the airline sector would flow directly to support workers, and that commitment is not reflected in this agreement,” CUPE president Mark Hancock said in a statement.

“This deal is exactly what we feared a deal cooked up behind closed doors would look like: it’s a year late, no transparency, and not nearly enough to support the thousands of flight attendants still reeling from the impacts of the pandemic.”

Travel restrictions introduced through the beginning of the pandemic have been catastrophic for the airline industry.

Air Canada’s passenger numbers declined 73 per cent in 2020.