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Air Canada Reaches Deal with Government for $5.9 Billion in Loans, Equity

Air Canada has announced it has finally reached an agreement with the Canadian federal government for a much-anticipated aid package that will help the airline restore numerous cancelled routes and refund passengers whose flights were cancelled amid the pandemic.

On Monday, Air Canada said it had reached a deal with the Liberal government for a combination of equity and loans to the tune of nearly $5.9 billion. The Canadian airline will sell millions of warrants and $500 million in shares to the government, in exchange for five credit facilities that have a combined value of $5.38 billion. The government will also receive voting rights in Air Canada, which will not exceed 20%. The loans are fully repayable, and will be tapped into as required.

In the meantime, Air Canada has agreed to curb share buybacks and cut back executive pay, as well as keep employment numbers at April 1 levels. In addition, the airline has also agreed to continue with a deal to purchase 33 new Airbus A220s, as well as issue refunds to travellers who had their flights cancelled as a result of the pandemic. “Protecting Canadian customers is important. And maintaining a competitive Canadian air sector, Canadian airlines, and the thousands of good jobs in this sector is a priority,” Finance Minister Chrystia Freeland stated.

Previously, Air Canada complained that the federal government was the only one among the Group of Seven Members that had not provided specific aid to its airline sector. However, the company did take advantage of government wage subsidies that were made available to all industries affected by the pandemic.


Information for this briefing was found via Air Canada. Thee author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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