Federal government, Air Canada reach deal on relief package that includes customer refunds

The federal government has reached an agreement with Air Canada that will provide the pandemic-battered airline with financial support while committing the airline to refunding customers who saw their flights cancelled last year because of the COVID-19 pandemic.

At a news conference in Toronto on Monday, FinanceMinister Chrystia Freeland and Transport Minister Omar Alghabrasaid the government will provide Air Canadawithup to $5.9 billion through the Large Employer Emergency Financing Facility,a program aimed at supporting large Canadian employers who have lost revenue due toCOVID-19.

Under the deal, the government will extend to the country's largest airlinea variety of low-interest loans worth up to$5.4 billion and take an equity stake in the company by purchasing $500 million in stocks.

In exchange for federal government support, Air Canada has agreed to refund customers who had their flights cancelled last year because of the COVID-19 pandemic.

The airline alsohas agreed to restore flights on nearly all suspendedregional routes,to capcompensation for company executives at $1 million per year and to suspendshare buybacks and the payment of dividends to shareholders during the loan period.

In addition, Air Canada said it would to maintainits workforce at current levels,respect collective bargaining agreementsandprotect workers' pensions. The company currently has 14,859 active Canadian employees, although itemployed over 38,000 employees before lost revenuecaused it to lay off tens of thousands of workers.

"Taxpayers aren't footing the bill. This is a loan facility, and the government of Canada fully expects to be paid back," said Freeland.

"This is a good and fair deal for Canada and Canadians."

Lifeline for a battered industry

Today'sagreement reached after months of negotiations promisesa desperately needed lifeline for an industry that's among those hardest hit byCOVID-19.

Air Canada's passenger numbers declined 73 per cent in 2020 following several years of record growth.During 2020, it reduced staff by more than 20,000, more than half of its pre-COVID total. Then, it cut another 1,700 employees in January.

The company has already collected $554 million from the Canada Emergency Wage Subsidy in 2020 and said it would continue to access the program in 2021.

In February,former Air Canada president and CEO Calin Rovinescu called 2020 the "bleakest year in the history of commercial aviation" when he announced the airline had lost a staggering $1.16 billion in the fourth quarter.

"The additional liquidity program we are announcing today achieves several aligned objectives as it provides a significant layer of insurance forAirCanada, it enables us to better resolve customer refunds of non-refundable tickets, maintain our workforce and re-enter regional markets,"Michael Rousseau, the airline's current president and CEO, said in a statement.

"Most importantly, this program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to theCanadianeconomy through its recovery and for the long term."

Customers who purchased non-refundable fares but did not travel due to COVID-19 since February 2020 will be eligible to receive refunds as of April13, the company said.

Kathleen Fisher, an Air Canada customer fromQuebec who was out $2,000 for flights she and her daughter never took to Jamaica last May, said she was overcome with emotion upon hearing news of the deal.

"It wasn't so much about the money. It was more about being in a pandemic like this we could have used the money backto pay bills or, especially my daughter,she could have used the funds as well," Fisher told CBC.

Freeland said the government is still negotiating potentialaid packages forother airlines, including Calgary-basedWestJet.She said the basic requirements of refunding customers, restoring regional routes, restricting executive compensation and protecting jobs would apply toother potential deals, but that each package would reflect the individual needs of the airline.

In a statement, WestJetspokesperson Morgan Bellconfirmed the company is in talkswith the government over what it called a "safe travel-restart framework." Bell said WestJethas pledged to restore service "at our earliest opportunity" to the 42 airports it served before the pandemic began and that its refund policy is "industry-leading."

"We remain committed to building back even stronger for the betterment of all Canadians. A healthyWestJetwill help lead a stronger recovery, increasing competition and consumer choice while lowering the cost of travel for Canadians," Bellsaid.

'Workers should be happy': union leader

The government said the financing will also allow Air Canada to continue supporting the country's aerospace industry in part by allowing it to complete thepurchase of 33 Airbus A220 aircraft, manufactured at Airbus'facility inMirabel, Que.,and a separate order for40Boeing737 Max aircraft.

Jerry Dias, national president ofUnifor, which represents about15,000 workers in the airline industry, called the agreement a "win-win" for the government, consumers, the industry and airline workers.

"You've got consumers [who] are winning because Air Canada is going to give back their refunds. Taxpayers are winning because these are straight loans, it's not grants. And the federal government will take about $500 million worth of shares orsix per cent ownership," said Diasin an interview on CBC's Power & Politics.

WATCH|Air Canada relief deal offers 'template' for other airlines, says Unifor president:

Air Canada relief deal offers 'template' for other airlines, says Unifor president

3 years ago

Duration 7:37

Unifor president Jerry Dias tells Vassy Kapelos on Power & Politics that the deal the federal government reached with Air Canada will provide a template for deals with other airlines.

"All in all, I think workers should be happy... it's a win-win for everyone."

Dias said Air Canada's commitment to purchaseAirbus and Boeing Max jets will help sustain aerospace industry jobs, particularly in Quebec and Manitoba.

"This protects a heck of a lot of jobs," Dias said.

In a statement released Tuesday, Conservative MPs Stephanie Kusie andSteven Blaneysaid the support package comes too late to help the tens of thousands of airline industry workers who already havelost their jobs.

"The package announced by the Trudeau Liberals is far from the comprehensive relief program the Canadian airline sector needs to restore service in all regions of the country, and does nothing to ensure the sector is healthy and competitive as we recover from the pandemic," the statement said.

NDP Leader Jagmeet Singh said the government should leverage the equity stake it's taking in Air Canadato protect workers and ensure timely refunds for customers.

"The current proposal has some positive signs, but I'm worried, like many people are, about ... making sure it all goes to protecting workers," said Singh. "We have to support sectors that are hard hit, but we have to make sure it actually keeps people employed."

Singh alsosaid he wants to see the constraints on executive and shareholder compensationstringently enforced.

You can watch full episodes of Power & Politics on CBC Gem, the CBC's streaming service.