Federal Gov't reaches bailout deal for Air Canada

MONTREAL, April 12, 2021 /CNW/ - Air Canada announced today that it has entered into a series of debt and equity financing agreements with the Government of Canada, which will allow Air Canada to access up to $5.879 billion in liquidity through the Large Employer Emergency Financing Facility (LEEFF) program.

https://www.newswire.ca/news-releases/a ... wU-CKP8rgM

Woot!

Let's see the share price moon tomorrow!

What agreement? Beggars can be choosers apparently.
RIP fiscal responsibility.

webworm wrote: ↑ Details to be announced at 7PM this evening on federal govt bailout of Air Canada.
https://www.cbc.ca/news/politics/air-ca ... -1.5984543

Loans.... with conditions
"Airline agrees to restart regional routes and protect jobs in exchange for [u]loans[/u][/b]"

kimchibowl wrote: ↑ Let's see the share price moon tomorrow!

Unfortunately so far it's down. Oh well it will go up long term. Guess everyone was expecting free money or something.

This is a disaster! The government is trying to encourage people traveling, it will be a total disaster for disease control.

webworm wrote: ↑ Details to be announced at 7PM this evening on federal govt bailout of Air Canada.
https://www.cbc.ca/news/politics/air-ca ... -1.5984543

ilovetoyota wrote: ↑ This is a disaster! The government is trying to encourage people traveling, it will be a total disaster for disease control.

Drama Queen LOL

''protect jobs'' .... what a joke, it doesn't protect any job. In fact, this agreement is complete crap.

Crap for whom the Canadian taxpayers or AC shareholders?

mrweather wrote: ↑ Crap for whom the Canadian taxpayers or AC shareholders?

It’s crap for aviation workers.

The industry in general or AC workers?

More corporate welfare. I hope that these "loans" are at least secured with some aircraft.

People in this thread not doing reading the full reports on this. It's a loan to Air Canada, with interest being paid and the federal government taking an equity stake.

The loan is up to $5.9 billion.
The federal government is taking a $500 million equity stake in Air Canada at a price of $23.1793 per share.
For customer refunds it's an up to $1.4 billion loan with interest at prime + 1.211%.
For Aeroplan it's an up to $1.5 billion loan with interest at prime + 1.5%.
For credit facilities it's an up to $2.475 billion loan with interest at prime + tiered rates at 1.75%, 6.5%, 8.5% depending on how much is used, and increases to 7.5% and 9.5% depending on duration.
In the fine print the feds included limits to stock buy backs and executive compensation.

This deal favours the government and Canadians much more than many other countries gave to their airlines that were no strings attached, had no interest to be paid and had no equity involved.
It's in the population's best interest for economic recovery to support at least one national airline because airlines allow for global connectivity. It also keeps flights afloat to serve small communities which otherwise would've been discontinued completely.
The deal includes refunds for already issued travel credit and ecoupon travel vouchers.

Not a fan of government's act of continuously supporting failing for-profit businesses. I would rather see government invest in education and not let a university go under like this one: https://www.cbc.ca/news/canada/sudbury/ ... -1.5984577

zero_ wrote: ↑ I would rather see government invest in education and not let a university go under like this one: https://www.cbc.ca/news/canada/sudbury/ ... -1.5984577

Colleges and universities are the provinces' jurisdiction, not federal. In 2019, the Ford Conservatives reduced tuition fees by 10% without making up for universities' lost revenues through additional funding. Then the Conservatives cut post-secondary institutions' budgets by 4%.

mrweather wrote: ↑ The industry in general or AC workers?

Both.

6060842 wrote: ↑ I hope that these "loans" are at least secured with some aircraft.

approximately two-thirds is unsecured

from Air Canada’s $6 Billion Liquidity Program with Government of Canada

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%.