Feds May Yet Come Out on Top in Air Canada Aid Deal
Aug 19, 2021 By MarketDepth
Despite coming to an agreement with Ottawa on an aid package worth approximately $5.9 billion, the Company has failed to fully utilize the package and now, the Parliamentary Budget Officer says the federal government could make about $177 million over ten years from the deal.
Government Offers Billions in Credit
The government’s package included $500 million for 6% of the Company, $1.5 billion in secured credit, $2.475 billion in unsecured credit, and an additional $1.4 billion in unsecured credit intended to refund travellers impacted by COVID-19. In order to benefit from the financial aid, Air Canada had to agree to abide by several conditions, such as reimbursing customers whose tickets were canceled by the carrier due to the pandemic, according to MSN.
Refunds Due to Covid-19
The deal with Ottawa required that Air Canada refund passengers whose flights were cancelled due to COVID-19, yet the Company has only used about $1.2 billion of the funds intended to refund travellers. Air Canada had said that it would keep the government credit as insurance while going ahead with other refinancing options, and recently completed a $7.1-billion refinancing transaction.