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Ottawa’s financial relief deal for Air Canada: what it means for customers

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Ottawa’s financial relief deal for Air Canada: what it means for customers

The federal govt’s almost $6 billion financial reinforce kit for Air Canada introduced Monday involves billions of bucks to support the struggling airline rebuild from the effects of the COVID-19 pandemic.

Among the many conditions within the deal are guaranteed refunds for flights cancelled as a result of pandemic, alongside with the restoration of regional routes that had been beforehand suspended and job safety for the airline’s last workers.

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Here’s what travellers favor to learn about the kit.

Refunds for cancelled flights

As portion of the deal, the Canada Accomplishing Emergency Funding Corporation is offering a mortgage facility of as a lot as $1.4 billion to enable Air Canada to refund travellers whose flights had been cancelled as a result of pandemic.

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Air Canada says customers can observe for these refunds beginning April 13.

Below the settlement, refunds will be on hand for flights purchased on or before Mar. 22, 2020, for roam after Feb. 1, 2020, that had been cancelled by either the consumer or the airline.

Refunds can even be on hand for flights purchased after Mar. 22, 2020, that had been later cancelled by the airline.


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Stride agents who purchased tickets on customers’ behalf might possibly help course of these refunds, constant with the settlement. However, these agents will restful fetch to defend the commissions they tranquil from these purchases.

Air Canada told International Information in an email that the refunds can even be on hand for travellers who historical vouchers or Aeroplan sides to steal their tickets.

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The airline has been given seven years to repay any loans borrowed from the government refund facility, at an annual ardour price of 1.211 per cent.

In maintaining with twelve months-quit financial results for 2020, Air Canada revamped $2.3 billion upfront tag gross sales, including cancelled flights.


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Restoring regional provider

The settlement with Ottawa also requires Air Canada to revive provider to regional connections that had been suspended final twelve months and as at this time as early 2021.

The airline must restore provider no later than June 1 to regional airports within the next 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.

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Additionally, Ottawa is requiring Air Canada to be triumphant in agreements with diverse, smaller airways to support restore routes to regional airports whose providers and products had been completely cancelled as a result of pandemic.

Those embody the Quebec areas of Gaspé, Baie Comeau, Mont Joli, Val d’Or and the Magdalen Islands, alongside with Castlegar, B.C., and Wabush, Nfld.

Heaps of these routes had been suspended or decrease completely final summer season as Air Canada struggled with plummeting tag gross sales due to COVID-19. Provider to several additional Atlantic Canada areas and Yellowknife was cancelled this past January.


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Job safety

Air Canada has also agreed to no longer decrease to any extent additional jobs amid the pandemic, maintaining its present workforce of 14,859 filled with life Canadian workers.

The airline has slashed roughly 25,000 jobs since COVID-19 first started to rep an affect on air roam around the globe.

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A pair of of these workforce rep restful been paid by the federal govt’s Emergency Wage Subsidy. Air Canada says it bought a spoiled subsidy of $656 million in 2020, including $586 million in money funds bought.

What about WestJet and diverse airways?

Deputy Prime Minister and Finance Minister Chrystia Freeland said for the duration of Monday’s announcement that conversations between the government and diverse airways for the same relief programs are ongoing.

However, she said the $1.4 billion mortgage facility for refunds will be made on hand to all airways “if they would esteem to work with us to refund their passengers.”

Freeland said tiny print on subsequent deals with diverse airways will be introduced once negotiations are completed.


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Is taxpayer money being historical to bail out Air Canada?

Freeland was mercurial to show that the relief kit just isn’t any longer a taxpayer-funded bail-out when requested straight Monday.

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Reasonably, the kit involves roughly $4 billion in loans that Air Canada ought to pay help within five to seven years, reckoning on the credit facility.

Ardour charges vary from 1.5 per cent to 8.5 per cent, the latter of which increases to 9.5 per cent after five years.

Additionally, the Canada Accomplishing Emergency Funding Corporation has made an equity investment of $500 million in Air Canada stock, with shares purchased at a 15 per cent decrease value — giving the government a stake within the airline for the first time since it went non-public in 1989.

“Taxpayers aren’t footing the invoice,” Freeland told journalists. “Here’s a mortgage facility and the government of Canada completely expects to be paid help.”

Air Canada said in its announcement of the settlement that it has raised an additional $6.8 billion in liquidity since the pandemic started final spring.

The airline reported an working lack of virtually $3.8 billion in 2020, with a $13.3 billion decline in earnings when compared to 2019.

© 2021 International Information, a division of Corus Entertainment Inc.

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Ottawa’s financial relief deal for Air Canada: what it means for customers