The Government of Canada came to the aid of the country’s main airline, Air Canada, with an aid package of US $ 4.7 billion, which includes a loan and a participation of up to almost 20%. The assistance responds to the need to comply with all refunds for canceled tickets during 2020 and continue to guarantee connectivity and jobs.
The country injected capital into the privatized company in 1998 and will now be able to refund all canceled tickets
This Tuesday, April 13, Air Canada confirmed that it will finally refund all the tickets that were canceled due to the pandemic, thanks to a strong aid package from the State of Canada, for a total of US $ 4.7 billion.
Indeed, the main airline in the country assured that it will return the money to all those customers who purchased non-refundable tickets for flights scheduled for after February 1, 2020. Since March 2020, it has already returned more than US $ 955 million to those customers with refundable tickets.
Of those US $ 4,700 million, about US $ 1,114 million correspond to a loan, with an interest rate of 1,211%, with the objective that the company can return to its customers the money of the flights canceled as a result of the pandemic.
Meanwhile, almost US $ 3,184 million will be part of another loan with which the State increases its participation in the stock package, with the purchase of 21.6 million shares (representing an investment of US $ 400 million). In addition, the Government will have the right to acquire another 14 million shares, but its voting capacity will be limited to just under 20%.
In 2020, advance ticket sales brought Air Canada revenues of US $ 1.83 billion, and now Air Canada will have up to seven years to repay the loan for the return of these tickets.
This is reportedly the first time that the Canadian government has entered Air Canada’s share package since the company was privatized in 1989. The airline had even resisted the aid package including the government’s entry into its shareholders. But the crisis was stronger, and the country needs to guarantee its connectivity and the company’s almost 15,000 jobs, which is ensured in the contract for this assistance itself.