MONTREAL — ********** says it is withdrawing from further financial support from the federal government, thanks to its improved liquidity position and ongoing recovery from the ********.
On April 12, 2021 ********** and the Canadian government announced their agreement on a $5.9 billion financial assistance package consisting of loans and credit for the ******* amid the ******** ********, including $1.4 billion earmarked for refunds for passengers out-of-pocket in the wake of ******** cancellations.
********** only tapped the funds dedicated to refunding customers’ non-refundable tickets.
President and CEO Michael Rousseau says **********’s recovery from ******** continues. “We are recalling employees, adding new routes and frequencies to our network, and restoring services, and, last quarter, we completed a $7.1-billion financing.”
Rousseau added: “We deeply appreciate the Government of Canada’s support as this helped maintain a level playing field at a time when governments around the *****, recognizing the importance of air travel to their economies, were also assisting their national carriers in the face of the unprecedented downturn caused by ********. In addition to helping preserve thousands of jobs and travel choice for Canadians, the assistance offered to ********** importantly served as an extra level of insurance that enabled us to raise additional liquidity on our own to manage the ******** and give us sufficient resources to effectively compete in the post-******** marketplace.”
To date ********** has accessed about $1.2 billion of the provisions, with the money going directly to customers. Some 58% of eligible ********** customers requested refunds, including those not covered by the government provisions. The money used for refunding the non-refundable tickets will be repaid as per the terms of the agreement with interest paid quarterly by **********.
Also part of the April 2021 agreement, the government purchased $500 million worth of ********** common shares, representing about 6% of the current public float. ********** also issued to the government about 14.6 million 10-year warrants for the purchase of an equal number of ********** shares. With the termination of the operating credit facilities, half of these warrants, which have not yet vested with the government, have been cancelled immediately, says **********. And subject to TSX approval, ********** intends to call the balance of the vested warrants for cancellation as per their terms at fair market value.
Rousseau says that in Q3 2021 ********** completed a series of financing transactions generating gross proceeds of about $7.1 billion. These financing transactions provided substantial liquidity to ********** and extended debt maturities out until near the end of the decade. As of September 30, 2021, **********’s unrestricted liquidity was approximately $14.4 billion.
