Air Canada (AC, Montreal Trudeau) withdrew from any further financial support from the government citing an improvement in liquidity of C $ 14.4 billion (US $ 11.3 billion) and an ongoing recovery from the pandemic .
The support program, announced in April 2021, enabled the carrier to access interest-bearing loans of CAD 5.375 billion ($ 4.251 billion) through several separate credit facilities. To date, the airline has accessed approximately CAD 1.2 billion (USD 949 million) for consumer refunds, while all other remaining facilities totaling CAD 3.975 billion (USD 3.144 billion) have not been used, the airline said in a statement.
“Air Canada’s recovery from COVID-19 continues. We are recalling employees, adding new routes and frequencies to our network, and restoring services, and in the last quarter we completed a refinancing of CAD 7.1 billion ($ 5.6 billion), ”said The President and CEO Michael Rousseau said the airline’s withdrawal from key funding arrangements was a “compelling sign of our progress.”
“In addition to helping to preserve thousands of jobs and travel choices for Canadians, the assistance provided to Air Canada has primarily served as an additional layer of assurance that has enabled us to leverage additional cash from us- same to manage the pandemic and give us sufficient resources to effectively compete in the post-pandemic market, ”he said.
Ottawa’s assistance was provided under Canada’s Large Employers Emergency Funding Mechanism and provided access to up to C $ 5.375 billion in interest-bearing loans and C $ 500 million (C $ 395 million US dollars) in equity for a total of 5.875 billion Canadian dollars (4.647 billion US dollars). in liquidity. It consisted of several elements, including:
- A secured revolving facility of CAD 1.5 billion ($ 1.1 billion) and three separate unsecured revolving credit facilities of CAD 825 million ($ 652 million). The airline said none of the C $ 3.975 billion available under these facilities was ever drawn down and, under its agreement with the government, Air Canada had the right to terminate them at any time without penalty and had it done.
- An unsecured facility of 1.4 billion CAD (1.1 billion USD) dedicated solely to the repayment of the notes. About 58% of eligible customers had requested refunds, including those not covered by the government facility, with the balance voluntarily retaining future flight credits with the carrier. Of this amount, CAD 1.2 billion went directly to passengers. The money would be repaid under the terms of the agreement with interest paid quarterly.
- The government purchased CAD 500 million of Air Canada common stock at CAD 23.18 per share ($ 18.33) representing approximately 6% of the current free float, which it continues to hold.
- Air Canada also issued approximately 14.6 million 10-year warrants to the government to purchase an equal number of Air Canada shares, priced at approximately CAD 27.27 ($ 21.57 ) per share. With the termination of the operating credit facilities, half of these bonds, which have not yet been acquired by the government, were immediately canceled. Subject to the approval of the Toronto Stock Exchange, Air Canada intends to call the balance of the acquired warrants for cancellation in accordance with their terms at fair market value.
In the third quarter of 2021, Air Canada completed a series of financing transactions generating gross proceeds of approximately C $ 7.1 billion. These financing operations provided substantial liquidity and extended debt maturities until the end of the decade.
With the release of its third-quarter results on November 2, 2021, the carrier reported that as of September 30, 2021, its unrestricted cash was around CAD 14.4 billion ($ 11.3 billion) and consisted of approximately CAD 9.5 billion (USD 7 0.5 billion) in cash and cash equivalents, short and long-term investments, and approximately CAD 4.9 billion (USD 3.8 billion) in available credit facilities unused, including CAD 3.975 billion of unused government facilities being canceled.