Ottawa has agreed to financial relief package for Air Canada, sources say

[shawnthesheep]

https://www.cbc.ca/news/politics/air-ca ... 9ySfPU9lNs

Looks like they are loans.

[scdriver]

Nothing for Transat, WJ, Sunwing, etc? Assuming that this is only for AC is that just a big FU to the other carriers or is there a reason that they might have declined financial assistance?

[shawnthesheep]

Nothing for Transat, WJ, Sunwing, etc? Assuming that this is only for AC is that just a big FU to the other carriers or is there a reason that they might have declined financial assistance?

I think it's because even Ed Sims himself said he doesn't need loans to help the bottom line in the latest update video WestJet posted.

[simply_no_one]

Nothing for Transat, WJ, Sunwing, etc? Assuming that this is only for AC is that just a big FU to the other carriers or is there a reason that they might have declined financial assistance?

Calm down. As it's been said already multiple times by the government they are in individual talks with each airline. Just looks like AC was the first to come to an agreement.

[scdriver]

Nothing for Transat, WJ, Sunwing, etc? Assuming that this is only for AC is that just a big FU to the other carriers or is there a reason that they might have declined financial assistance?

Calm down. As it's been said already multiple times by the government they are in individual talks with each airline. Just looks like AC was the first to come to an agreement.

I'm calm, just a legitimate question.

[DanWEC]

Basically LEEFF backed with equity collateral. I wonder if the balloon terms are the same. At first blush this doesn't seem like it's very helpful considering what the gov have put airlines through, but there isn't much info as of yet.

The negotiations are unique to each company, and they're all coming soon. For Trudeaus Liberals, soon is 11000% slower than everyone else.

[boeingboy]

Done through the LEEFF program at significantly better rates than others got. I don't know why no one else is included with this, as we have all agreed to the same conditions the government wants. They sure as hell better come though for the rest of us.....

The financial package provides for fully repayable loans that Air Canada would only draw down as required, as well as an equity investment, and is comprised of:

Gross proceeds of $500 million for Air Canada shares at a price of $23.1793 per share;
$1.5 billion in the form of a secured revolving credit facility at a 1.5% premium to the Canadian Dollar Offered Rate (CDOR); the facility is secured on a first lien basis by the assets of Aeroplan Inc., Air Canada's shares in Aeroplan as well as certain assets of Air Canada, including certain intellectual property relating to the Aeroplan loyalty program;

$2.475 billion in the form of three unsecured non-revolving credit facilities of $825 million each with: the first, five-year tranche at a 1.75% premium to CDOR per annum; the second, six-year tranche at 6.5% per annum (increasing to 7.5% after 5 years); and the third, seven-year tranche at 8.5% per annum (increasing to 9.5% after 5 years);

As part of the financial package, Air Canada issued an aggregate of 14,576,564 warrants exercisable for the purchase of an equal number of Air Canada shares, subject to customary adjustments, at a price of $27.2698 per share during a 10-year term, representing 10% of the total commitment available under the above secured and unsecured credit facilities; 50% of the warrants vested concurrently with the implementation of the credit facilities and the remaining 50% of the warrants will vest on a proportional basis to the amounts that Air Canada may draw under the above unsecured credit facilities;

Up to approximately $1.4 billion in the form of an unsecured credit facility tranche to support customer refunds of non-refundable tickets. The facility will have a seven-year term and carry an annual interest rate of 1.211%.

[BigQ]

Sunwing got into the LEEFF program like a month ago, got up to 350MM in loans

[2112]

Only now that there is a pandemic election on the horizon (that the P.M. claims he doesn't want ) will we see any sort of assistance from these lame ducks.

[boeingboy]

Sunwing got into the LEEFF program like a month ago, got up to 350MM in loans

And? They are shit interest rates. I would hope we could get comparable rates. Maybe some more money.

Everyone else could have got the LEEFF at crap rates too. Why should Sunwing not get what everyone else gets?

['97 Tercel]

Because Montego Bay isnt an essential service to a Canadian community, mon.

[fish4life]

The government is also taking an equity stake in AC, up to 14% of the company.

[altiplano]

AC is being forced back into operating money losing regional routes for political gain.

There had to be some incentive to do it, maybe that's better rates.

[rudder]

AC is being forced back into operating money losing regional routes for political gain.

There had to be some incentive to do it, maybe that's better rates.

AC will sign codeshare with emerging regionals that have backfilled the void. Look for AC to ask for a let from ACPA. They will claim that the alternative is higher costs via CPA with CHR.

MR did a good job of avoiding loading up the balance sheet. There is the potential for a total of over $900 million in equity infusion if all warrants are exercised over time. Stock dilution is the least of AC’s worries. The money borrowed at just over 1% to offer refunds will eliminate that liability and a good portion of the cash refunded will return in future ticket purchases.

AC will likely never draw down the more expensive second and third tranches of the unsecured loans available under LEEFF. The secured loan using Aeroplan assets was at an extremely attractive interest rate.

All in all, AC did fine. It took advantage of leveraging unencumbered assets and the fact that it is a publicly traded company with a C$9B market cap. Others don’t have the same fundamentals.

[hithere]

It would appear some routes must be covered by Jazz while others can be done by codeshare:
From Global News:
Restoring regional service
The agreement with Ottawa also requires Air Canada to restore service to regional connections that were suspended last year and as recently as early 2021.
The airline must restore service no later than June 1 to regional airports in the following cities:
Bathurst, N.B.;
Comox, B.C.;
Fredericton, N.B.;
Gander, Nfld.;
Goose Bay, Nfld.;
Kamloops, B.C.;
North Bay, Ont.;
Penticton, B.C.;
Prince Rupert, B.C.;
Saint John, N.B.;
Sandspit, B.C.;
Sydney, N.S.; and
Yellowknife, N.W.T.

Additionally, Ottawa is requiring Air Canada to reach agreements with other, smaller airlines to help restore routes to regional airports whose services were permanently cancelled due to the pandemic.
Those include the Quebec areas of Gaspé, Baie Comeau, Mont Joli, Val d’Or and the Magdalen Islands, along with Castlegar, B.C., and Wabush, Nfld.
Many of those routes were suspended or cut permanently last summer as Air Canada struggled with plummeting ticket sales due to COVID-19. Service to several additional Atlantic Canada regions and Yellowknife was cancelled this past January.

[TheStig]

So what is the solution for Canada's other carriers? Porter, Sunwing, Westjet and Flair are all privately held so equity stakes and capped executive compensation are probably off the table. Transat, as has been discussed here, may or may not find new ownership, needs funding and restructuring. That's all messy enough before you consider that the Quebec provincial government has already pledged their support.

We can expect the upcoming federal budget to provide subsidies for aviation infrastructure such as the airport authorities and NavCanada to prevent massive hikes in user fees. Also rolled out could be a one size fits all loan program for the aviation industry.

[Kosiw]

It would appear some routes must be covered by Jazz while others can be done by codeshare:
From Global News:
Restoring regional service
The agreement with Ottawa also requires Air Canada to restore service to regional connections that were suspended last year and as recently as early 2021.
The airline must restore service no later than June 1 to regional airports in the following cities:
Bathurst, N.B.;
Comox, B.C.;
Fredericton, N.B.;
Gander, Nfld.;
Goose Bay, Nfld.;
Kamloops, B.C.;
North Bay, Ont.;
Penticton, B.C.;
Prince Rupert, B.C.;
Saint John, N.B.;
Sandspit, B.C.;
Sydney, N.S.; and
Yellowknife, N.W.T.

Additionally, Ottawa is requiring Air Canada to reach agreements with other, smaller airlines to help restore routes to regional airports whose services were permanently cancelled due to the pandemic.
Those include the Quebec areas of Gaspé, Baie Comeau, Mont Joli, Val d’Or and the Magdalen Islands, along with Castlegar, B.C., and Wabush, Nfld.
Many of those routes were suspended or cut permanently last summer as Air Canada struggled with plummeting ticket sales due to COVID-19. Service to several additional Atlantic Canada regions and Yellowknife was cancelled this past January.

Based on many of these routes, I can forsee CMA/PAL and Pascan coming out winners in a code share deal with AC...potentially a loss for Jazz.

[altiplano]

Domestic code share isn't permitted under ACPA's scope. I noted that the minister used the term interlining, which is less clear on it's limits. But either way they will be looking for a let and another term was that AC has to respect collective agreements.

I think AC Pilots have made enough contribution up to this point. In my view, if AC wants a let to allow 3rd parties to operate these routes outside CPA limits they are going to have to begin to restore things that have been taken from the pilots these last number of years... and it's a long list. I'm looking for permanent contract improvements, not temporary bobbles.

[Fanblade]

Domestic code share isn't permitted under ACPA's scope. I noted that the minister used the term interlining, which is less clear on it's limits. But either way they will be looking for a let and another term was that AC has to respect collective agreements.

I think AC Pilots have made enough contribution up to this point. In my view, if AC wants a let to allow 3rd parties to operate these routes outside CPA limits they are going to have to begin to restore things that have been taken from the pilots these last number of years... and it's a long list. I'm looking for permanent contract improvements, not temporary bobbles.

It will be a CPA. The minister just doesn’t understand the terminology. I suspect it will be Jazz unless AC is about to go back on a CPA provider building spree. I doubt it as they just closed SKY

[altiplano]

Perhaps, but I wouldn't be certain of it.

I think Freeland was reading from a script there, and I think words are carefully chosen.

I paraphrase because I can't find the exact quote online, but it was explicitly two different things in the statement: "AC will be required to resume AC regional service to one group of 13 airports where service was suspended, and seek to enter into interline agreements to provide service to another group of 7 airports where service was cancelled."

Meanwhile the ACPA scope chair is flying a 100 hour month on VO...