Federal government, Air Canada reach deal on relief package that includes customer refunds


The federal government has reached an agreement with Air Canada that will provide the pandemic-battered airline with financial support — while committing the airline to refunding customers who saw their flights cancelled last year because of the COVID-19 pandemic.

Under the deal, the country’s largest airline will be able to access up to $5.8 billion in liquidity through a mixture of low-interest loans and equity financing. 

In exchange for federal government support, Air Canada has agreed to refund customers who had their flights cancelled last year because of the COVID-19 pandemic. Customers who purchased non-refundable fares but did not travel due to COVID-19 since February 2020 will be eligible to receive refunds as of Apr. 13, the company said. 

The airline also has agreed to restore flights on nearly all suspended regional routes and to place limits on compensation for company executives, share buybacks and the payment of dividends to shareholders.

In addition, Air Canada has agreed to maintain its workforce at current levels, to respect collective bargaining agreements and to protect workers’ pensions, the federal government said in a news release. The company currently has 14,859 active Canadian employees.

The government said the financing will ensure Air Canada to continue supporting the country’s aerospace industry — in part by allowing it to complete the purchase of 33 Airbus A220 aircraft, manufactured at Airbus’ facility in Mirabel, Quebec.

Travel restrictions introduced in Canada and other countries to reduce the spread of COVID-19 have led to a massive reduction in domestic and international travel. In February,  former Air Canada president and CEO Calin Rovinescu called 2020 the “bleakest year ever” for commercial aviation.

The agreement — reached after months of negotiations — promises a desperately-needed lifeline for an industry that’s among those hardest hit by the COVID-19.

At a press conference in Ottawa, Deputy Prime Minister Chrystia Freeland said compensation for Air Canada executives will be capped at $1 million for the entirety of the loan period and that share buybacks and the payment of dividends won’t be allowed during that time.

“This is a good and fair deal for Canada and Canadians,” said Freeland.

More to come …

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