Air Canada gets $4.7b in loans, equity from Trudeau

Air Canada said it reached a deal with the Canadian government for loans and equity worth nearly C$5.9b ($4.7b), a package that will see the airline restore many routes it canceled because of the pandemic. The state, which sold off its ownership of the airline in the 1980s, will once again take a stake, buying C$500m of shares at a discount. PM Justin Trudeau’s government will also receive warrants as part of a financing agreement that makes Air Canada eligible for five new credit facilities totaling C$5.38b. In return, Air Canada agreed to restrict share buybacks and dividends, keep employment at April 1 levels and follow through on a deal to buy 33 Airbus A220s made at a factory in Quebec. Executives won’t be allowed to earn more than C$1m. The government’s voting rights in the company will be capped at just below 20%. The long-anticipated announcement will ease tensions between the industry and Trudeau’s government, which since last March has barred most foreign travelers from entering the country and recently made the rules even tougher. Air Canada had repeatedly complained that its home country was the only Group of Seven member without an aid plan specifically for the sector -- although the company has used federal wage subsidies available to all industries hit by the pandemic. Air Canada also committed to paying back customers who bought non-refundable flights that they didn’t take because of Covid-19. One of the credit facilities, worth C$1.4b, is dedicated to financing those refunds.<br/>