Sunwing Receives $375M Federal Emergency Loan to Preserve Jobs
Canada’s airline sector was dealt yet another blow, following Prime Minister Justin Trudeau’s latest ban on outgoing flights to warm destinations over fears of new Covid-19 strains. As a result of the additional constraints on air travel demand, Sunwing is one the first airlines to tap into the federal government’s emergency loan program.
According to government documents released Monday, Sunwing Airlines Inc, and Sunwing Vacations Inc, will have access to an additional $375 million in liquidity via the Large Employer Emergency Financing Facility (LEEFF) that is expected to go towards preserving jobs. The airline has already drawn $50 million from the facility, and has agreed to set aside cash already received from customers that had their flights cancelled as a result of the pandemic. However, it has yet to be determined what will happen to those prepaid amounts, as negotiations with the federal government are still ongoing.
The LEEFF program was first unveiled by the federal government in 2020 as a means of providing emergency liquidity to large Canadian companies that otherwise do not have access to traditional means of financing. The program offers loans over $60 million, and is available to employers that generate more than $300 million in revenue annually. The program has also been subject to criticism, given the relatively high interest rate, which starts at 5% annually, and then increases to 8% after one year. In addition, companies that receive the emergency funding must also disclose how their future operations align with national climate change goals.
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