Federal government and Air Canada reach agreement on relief package that includes customer reimbursements
The federal government has reached a deal with Air Canada that will provide financial support for the airline affected by the pandemic – while also committing to reimburse customers who had their flights canceled last year due to the COVID pandemic -19.
At a press conference in Toronto on Monday, Finance Minister Chrystia Freeland and Transport Minister Omar Alghabra said the government would provide Air Canada with up to $ 5.9 billion through the DC funding mechanism. Emergency for Large Employers, a program to support large Canadian employers who have lost income. due to COVID-19.
As part of the deal, the government will provide the country’s largest airline with a variety of low-interest loans worth up to $ 5.4 billion and take a stake in the company by purchasing $ 500 million in stocks.
In return for federal government support, Air Canada has agreed to reimburse customers whose flights were canceled last year due to the COVID-19 pandemic.
The airline has also agreed to restore flights on nearly all of the suspended regional routes, cap compensation for company executives at $ 1 million per year, and suspend share buybacks and dividend payments to companies. shareholders during the loan period.
In addition, Air Canada has said it will maintain its workforce at current levels, respect collective agreements and protect workers’ pensions. The company currently has 14,859 active Canadian employees, although it employed more than 38,000 before the loss of earnings forced it to lay off tens of thousands of workers.
“Taxpayers are not footing the bill. This is a loan facility, and the Government of Canada fully expects it to be repaid, ”said Freeland.
“This is a good and fair deal for Canada and Canadians.
Lifeline for a struggling industry
Today’s deal – reached after months of negotiations – promises a desperately needed lifeline for an industry that is among the hardest hit by COVID-19.
Air Canada passenger numbers declined 73% in 2020 after several years of record growth. In 2020, it cut its workforce by more than 20,000, more than half of its pre-COVID total. Then it cut 1,700 other employees in January.
The company has already raised $ 554 million from the Canada Emergency Wage Subsidy in 2020 and has said it will continue to access the program in 2021.
In February, former Air Canada president and CEO Calin Rovinescu called 2020 the “darkest year in commercial aviation history” when he announced that the airline had lost $ 1.16 billion in the fourth quarter.
“The additional liquidity program that we are announcing today achieves several aligned objectives as it provides an important layer of assurance for Air Canada, it allows us to better resolve customer refunds for non-refundable tickets, to maintain our workforce. work and re-enter regional markets. Michael Rousseau, the current president and CEO of the airline, said in a statement.
“Most importantly, this program provides additional liquidity, if needed, to rebuild our business for the benefit of all stakeholders and to remain a significant contributor to the Canadian economy throughout its recovery and for the long term.”
Customers who have purchased non-refundable fares but have not traveled due to COVID-19 since February 2020 will be eligible to receive refunds from April 13, the company said.
Kathleen Fisher, an Air Canada customer from Quebec who lost $ 2,000 on flights she and her daughter never took to Jamaica last May, said she was overwhelmed by the emotion on hearing the news of the agreement.
“It wasn’t so much about the money. It was more about – being in a pandemic like this – we could have used the money to pay bills or, especially my daughter, she would have. also was able to use the funds, ”Fisher said. told CBC.
Freeland said the government is still negotiating potential aid plans for other airlines, including Calgary-based WestJet. She said the basic requirements of reimbursing customers, restoring regional roads, restricting executive pay and protecting jobs would apply to other potential deals, but each package would reflect the individual airline needs.
In a statement, WestJet spokesman Morgan Bell confirmed the company was in talks with the government over what he called a “safe travel restart framework.” Bell said WestJet is committed to restoring service “at the earliest opportunity” at the 42 airports it served before the pandemic began and that its reimbursement policy was “the best in the industry.”
“We remain committed to building even stronger for the betterment of all Canadians. A healthy WestJet will contribute to a stronger recovery, increasing competition and consumer choice while lowering the cost of travel for Canadians, ”said Bell.
“Workers should be happy”: union leader
The government said the funding will also allow Air Canada to continue supporting the country’s aerospace industry – in part by allowing it to complete the purchase of 33 Airbus A220 aircraft, manufactured at Airbus facilities in Mirabel, in Quebec, and a separate order for 40 Boeing 737 Max.
Jerry Dias, National President of Unifor, which represents approximately 15,000 workers in the airline industry, called the deal a “win-win” for government, consumers, industry and airline workers. .
“You have consumers [who] win because Air Canada will reimburse their refunds. Taxpayers win because these are simple loans, not grants. And the federal government will take about $ 500 million in stock or six percent of the ownership, ”Dias said in a CBC interview. Power and politics.
WATCH | Air Canada’s relief deal offers a “model” for other airlines, the Unifor president said:
“Overall, I think workers should be happy… it’s a win-win for everyone.”
Dias said Air Canada’s commitment to purchase Airbus and Boeing Max jets will help maintain jobs in the aerospace industry, particularly in Quebec and Manitoba.
“It protects a lot of jobs,” Dias said.
In a statement on Tuesday, Conservative MPs Stephanie Kusie and Steven Blaney said the support plan came too late to help the tens of thousands of workers in the airline industry who have already lost their jobs.
“The plan announced by the Trudeau Liberals falls short of the comprehensive aid package the Canadian airline industry needs to restore service to all parts of the country, and does nothing to ensure the industry is healthy and competitive as we recover from the pandemic, ”he added. said the statement.
NDP Leader Jagmeet Singh said the government should leverage its stake in Air Canada to protect workers and ensure quick refunds to customers.
“The current proposal is showing positive signs, but I am worried, like many people, about… making sure all is well with worker protection,” Singh said. “We have to support the sectors that are hit hard, but we have to make sure that this really keeps people in jobs.”
Singh also said he wanted the constraints on executive and shareholder compensation to be strictly enforced.
You can watch full episodes of Power and politics to CBC Gem, CBC’s streaming service.