Air Canada Stock – After nearly a year of negotiations, Air Canada receives $ 5.9 billion in aid from the government
After a long period of negotiation, the government in Ottawa agreed to aid the airline Air Canada in the amount of $ 5.9 billion in loans and equity co-financing.
Through this deal, Air Canada must reimburse passengers whose flights have been cancelled due to the Covid-19 pandemic and must restore air traffic to regional airports.
Aid to Air Canada entails an entry into the state’s airline share of 6%.
The aid to Air Canada takes the form of a commercial loan that will have to be repaid.
The government’s agreement with Air Canada provides refunds for unused tickets to passengers in the coming weeks and months. The loan was granted for a period of up to seven years.
According to the Canadian Union of Public Employees, which represents 10,000 flight attendants the deal is “a betrayal of a government commitment to support airline workers affected by the pandemic.” “We had an agreement with the Trudeau government that any aid money to the airline sector would go directly to workers and that commitment is not being honoured in this agreement,” said CUPE president Mark Hancock.
Air Canada recorded 73% fewer passengers in 2020 after record-breaking multi-year increases. In 2020, Air Canada laid off 20,000 personnel.
At the end of 2020, Air Canada posted a loss of $ 4.6 billion, compared to a profit of $ 1.5 billion a year earlier.
Aid granted by the state makes it impossible to pay dividends until it is returned.
Ottawa invests $ 500 million in Air Canada stocks at $ 23.18 per share. The government’s investment in the major Canadian airline carrier’s stock, however, pales in comparison to the German government’s 20% stake in Lufthansa at US $ 9.8 billion announced in May, a year ago.
Air Canada has agreed to resume service at 13 regional airports and seven others through the so-called “interline agreements” with regional carriers. It also confirmed the purchase of 33 Airbus A220s made at the Mirabel plant in Quebec, thus securing employment for the factory workers. The carrier also confirmed that it will continue the contract for the purchase of 40 Boeing 737 Max aircraft.
In early April, Air Canada withdrew from the $ 190 million dollar deal for Air Transat, citing the European Union’s reluctance to the deal, which forced them to pay Air Transat $ 12.5 million in compensation.
Organizations that have supported Air Canada with its government bailout include Unifor, the Canadian Air Traffic Control Association, and the National Airlines Council of Canada.