Air Canada withdraws from federal aid deal as financial position improves

Air India flight 187 from New Delhi lands at Pearson Airport in Toronto on Friday April 23, 2021. THE CANADIAN PRESS/Frank Gunn

MONTREAL -

Air Canada says it is withdrawing from further federal government financial support as its financial position has improved.

The airline says its recovery from the COVID-19 pandemic is continuing and that it's able to make the move due to its improved liquidity.

Air Canada reached a $5.9-billion deal with Ottawa in April for an aid package that made loans available to the airline, but also capped executive compensation and made commitments to restore service to some regional airports.

The airline says it borrowed about $1.2 billion under a credit facility dedicated to refunding customers, while other loans available under the package were not used. Air Canada says the money used for refunding the non-refundable tickets will be repaid under terms of the agreement.

The aid package also saw the federal government buy $500 million worth of Air Canada shares that Air Canada says Ottawa continues to hold.

Air Canada also agreed to issue share purchase warrants to the government. It says with the termination of the operating credit facilities, half of these warrants, which have not yet vested, have been cancelled and it plans to call the vested warrants for cancellation at fair market value.

- This report by The Canadian Press was first published Nov. 19, 2021.