AirCanada News / Jazz News / Rouge News

[Specs]

Why is it called a bailout? 

How about calling it compensation or an economic recovery investment. 

[runaway]

25 minutes ago, Specs said:

Why is it called a bailout? 

How about calling it compensation or an economic recovery investment. 

It doesn't fit the narrative! Media loves to inflame the public by using "bailout". That's what they do!

[mrlupin]

I wonder how the financial "help" will be given?

Will the Fed get equity in the carriers? (like in the Lufthansa case) Will they find a way to lower operating cost through subsidies of airport infrastructure? maybe a reduction of NavCanada fees? What other strings will be attached?

There isn't much information right now...

[AIP]

1 hour ago, mrlupin said:

I wonder how the financial "help" will be given?

Will the Fed get equity in the carriers? (like in the Lufthansa case) Will they find a way to lower operating cost through subsidies of airport infrastructure? maybe a reduction of NavCanada fees? What other strings will be attached?

There isn't much information right now...

There is no way AC agrees to the government with a equity stake.

 

[mrlupin]

1 hour ago, AIP said:

There is no way AC agrees to the government with a equity stake.

 

What's wrong with Equity in the company? Isn't it a better arrangement (for Canadian citizens) than a corporate welfare "handout"?

[Innuendo]

Quote

What's wrong with Equity in the company?

The risk of some in Government seeing it as their opportunity to expand the Golden Trough for appointments and interference based more on political rather than business considerations.

A certain unsuccessful  political candidate from the past comes to mind. 

 

Edited March 4, 2021 by Innuendo

[rudder]

https://www.cbc.ca/news/politics/airlines-air-canada-westjet-pandemic-covid-unifor-1.5936739

[mrlupin]

4 hours ago, Innuendo said:

The risk of some in Government seeing it as their opportunity to expand the Golden Trough for appointments and interference based more on political rather than business considerations.

A certain unsuccessful  political candidate from the past comes to mind. 

 

Condition free funds worked wonders for Bombardier...

[conehead]

Journalists should stop talking about a "bailout". According to Dias, they're negotiating a loan.

[vanishing point]

“Negotiating a loan” isn’t as sensational as “bailout” when it comes to the press...

[st27]

Getting tired of the airline bashing, greedy CEO’s etc........Can anybody confirm just how many tickets purchased were the bargain basement , last minute sell offs, non refundable type?? I understand AC took care of the top tier, full fare customers. 
 

[Airband]

1 hour ago, st27 said:

 just how many tickets purchased were the bargain basement , last minute sell offs, non refundable type?

About 65% were non-refundable fares

[Specs]

I went to Check airline fare rules and came across this on the CTA site (Canadian Transportation Agency)

Flight Delays and Cancellations: A Guide | Canadian Transportation Agency (otc-cta.gc.ca)

 

5. Obligations: Situations outside the airline's control

If an airline delays or cancels a flight for reasons outside its control, it does not have to compensate affected passengers, and the minimum standards of treatment do not apply. However, the airline must follow the communication requirements described in Situations within the airline's control, above. It must also make alternate travel arrangements for passengers as follows.

Alternate travel arrangements

In situations outside its control, the airline operating the flight must ensure that the passengers complete their journey. If a flight is cancelled or once a flight delay has reached three hours, the airline must offer to make alternate travel arrangements for passengers free of charge. The aim is to get passengers to their destination as soon as possible.

Large Airlines

Large airlines must book passengers on the next available flight operated by them or an airline with which they have a commercial agreement. The new flight:

• May take any reasonable route from the airport where the passenger is located to the passenger's destination; and
• Must depart within 48 hours of the end of the event that caused the delay or cancellation.

If the airline cannot meet this obligation, they must book the passenger as soon as possible on a flight operated by any airline on any reasonable route out of the same airport to the passenger's destination. This may mean buying a ticket for the passenger on a competing airline.

If the airline cannot provide this reservation on a flight from the same airport, the airline must book the passenger as soon as possible on a flight from a nearby airport and transport the passenger to that airport, free of charge.

Small Airlines

Small airlines.....

Refunds

There is no refund requirement for flight delays or cancellations outside the airline's control. If an airline's tariff allows passengers to seek a full or partial refund, the airline must provide this refund.

 

 

[boestar]

I have been saying this for months.  The cancellations were outside the airlines control.  You had a non refundable ticket (as per the tariffs) and you goit a voucher.  consider yourself lucky.

 

[IFG]

My own family was caught up in this last year, with a FL trip. We took the offered credit, not expecting it all to drag on for a year or more, but - some time late last year we were offered a refund (unsolicited BTW), and took it. I don't recall the details of it now, but I do wonder why there are still people out of pocket.

For those that are and seek redress - Specs, you kinda cherry-picked what to highlight in that CTA extract. Reading the entire section makes clear that it's addressing obligations in a flight disruption situation, and not an extended shutdown of operations. From your quote, some airline obligations in those situations:

12 hours ago, Specs said:

Alternate travel arrangements

In situations outside its control, the airline operating the flight must ensure that the passengers complete their journey. If a flight is cancelled or once a flight delay has reached three hours, the airline must offer to make alternate travel arrangements for passengers free of charge. The aim is to get passengers to their destination as soon as possible.

Large Airlines

Large airlines must book passengers on the next available flight operated by them or an airline with which they have a commercial agreement. The new flight:

• May take any reasonable route from the airport where the passenger is located to the passenger's destination; and
• Must depart within 48 hours of the end of the event that caused the delay or cancellation.

If the airline cannot meet this obligation, they must book the passenger as soon as possible on a flight operated by any airline on any reasonable route out of the same airport to the passenger's destination. This may mean buying a ticket for the passenger on a competing airline.

If the airline cannot provide this reservation on a flight from the same airport, the airline must book the passenger as soon as possible on a flight from a nearby airport and transport the passenger to that airport, free of charge.

The "non-refundable" ticket is an injunction on the pax to show up for their booked flight or forfeit the airfare, not a get-out-of-jail-free card for the airline to take the money and run. The airline's obligation was to complete the itinerary, as the CTA makes clear above. That obligation has gone unfulfilled (for obvious reasons). A voucher may not even be sufficient to cover the cost of a more-than-a-year-later trip if fares are higher, and that's IF it's really reasonable to demand that pax change plans over year later (FFS, some of them are probably dead!) "Lucky" to have a voucher indeed  A few people here might ease up on the customer-bashing/hatred.

Pax should get their money back. As a practical matter, if not just for 'fairness', airlines should get assistance, because this whole mess is not their fault, and they'll probably be financially crippled or fail completely without it, which benefits nobody. Hopefully this happens soon, shouldn't take this long.

Cheers - IFG 

Edited March 6, 2021 by IFG

[Airband]

Jazz Pilot Leadership Approves Agreement to Secure all Air Canada Express Flying

Mon Mar 15, 2021 -  Air Line Pilots Association, Int’l

KINGSTON, ON— Sunday night, pilot leaders of Jazz Aviation, represented by the Air Line Pilots Association, Int’l (ALPA) finalized an agreement with their management that enables the company to become the exclusive express operator for Air Canada.

The pilots agreed to terms which enable revision of the capacity purchase agreement (CPA) between Jazz Aviation LP, and Air Canada. Under the agreement, Jazz pilots will fly all 70+ seat aircraft under the Air Canada Express banner until 2025. Jazz will add 25 Embraer 175s (76-seat aircraft) transferred from Sky Regional, while 19 Dash 8-300s will be removed from their fleet guarantee. Jazz Aviation LP had to reach an agreement with its pilots as a prerequisite for the capacity purchase agreement revisions.

“A long-term goal of Jazz pilots has been to reach consecutive agreements with airline management to facilitate the consolidation of Air Canada Express flying at Jazz. We look forward to welcoming our colleagues from Sky Regional and are pleased to deliver an agreement that provides additional job security to our pilots,” said Capt. Claude Buraglia, chairman of the Jazz chapter of ALPA. “Jazz pilots are proud to become the sole operator of Air Canada Express, and we are prepared to support Air Canada’s recovery through the pandemic and into the future.”

As part of the agreement reached between Jazz Aviation LP and the Air Line Pilots Association, Sky Regional pilots will be offered employment at Jazz. Capt. Cam Hill, chairman of the Sky Regional chapter of ALPA said, “Sky Regional Pilots are happy to become part of Jazz pilots’ 90-year history; however, we will miss our Sky Regional colleagues from other employee groups who are unable to join us. By joining Jazz, Sky Regional pilots will have the opportunity to continue their careers while working under Jazz’s mature Collective Agreement that provides pilots with significant job security through 2035.”

The CPA is retroactive January 1, 2021.

[dagger]

One of the oddities of the current situation is that AC stock is now at $30.50 this morning. The airline is barely operating and the stock is soaring, entirely on speculation about pent up demand once restrictions are eased. Transat's stock price is a lot more restrained, around $5.50 even though at the conversion price, it would be closer to  $9 if there wasn't a significant risk that the merger with AC might not happen.  I doubt Onex's stock price benefits from this trend; Onex is just to diversified, but it might tempt the company to float the airline at some point. 

Edited March 15, 2021 by dagger

[AIP]

Do the Sky Regional Pilots come over to Jazz still flying the E-175 ???

Seniority integration ??  Fences ??

[vanishing point]

Don’t know yet.  The announcement was only made late last night.  Details to follow.

[Guest1]

cargo.one to welcome Air Canada Cargo as its first North American carrier

 

[Airband]

 

Quote

The federal government has reached an agreement with Air Canada to provide the pandemic-battered airline with financial support in exchange for refunds for customers who had their flights cancelled last year because of the COVID-19 pandemic.The measures will be announced at a press conference later this evening, according to sources with knowledge of the matter. CBC News is not naming the sources because they are not authorized to speak publicly about the issue.The government also has a plan to create a pool of funds that will allow passengers who saw flights cancelled with other airlines last year to receive refunds as well, the sources said.

Ottawa has agreed to financial relief package for Air Canada, sources say

Edited April 12, 2021 by Airband
update

[dagger]

News Releases

Air Canada and Government of Canada Conclude Agreements on Liquidity Program

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• Financial package makes available repayable loans and equity

MONTREAL, April 12, 2021 /CNW/ - Air Canada announced today that it has entered into a series of debt and equity financing agreements with the Government of Canada, which will allow Air Canada to access up to $5.879 billion in liquidity through the Large Employer Emergency Financing Facility (LEEFF) program.

"Air Canada entered the pandemic more than a year ago with one of the global airline industry's strongest balance sheets relative to its size. We have since raised an additional $6.8 billion in liquidity from our own resources to sustain us through the pandemic, as air traffic ground to a virtual halt in Canada and internationally," said Michael Rousseau, President and Chief Executive Officer of Air Canada.  

"The additional liquidity program we are announcing today achieves several aligned objectives as it provides a significant layer of insurance for Air Canada, it enables us to better resolve customer refunds of non-refundable tickets, maintain our workforce and re-enter regional markets. 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 the Canadian economy through its recovery and for the long term.

"As vaccine deployments ramp up, we continue to work with the Government of Canada on the evolution of safe and science-based test and quarantine relief measures with a view to safely restarting our sector. We know that Canadians are looking forward to re-connecting with friends and family and taking those long-awaited vacations and business trips and we will be ready to safely connect Canadians within Canada and Canada to the world," said Mr. Rousseau.

The financial package provides for fully repayable loans that Air Canada would only draw down as required, as well as an equity investment, and is comprised of:

• Gross proceeds of $500 million for Air Canada shares at a price of $23.1793 per share; 
• $1.5 billion in the form of a secured revolving credit facility at a 1.5% premium to the Canadian Dollar Offered Rate (CDOR); the facility is secured on a first lien basis by the assets of Aeroplan Inc., Air Canada's shares in Aeroplan as well as certain assets of Air Canada, including certain intellectual property relating to the Aeroplan loyalty program; 
• $2.475 billion in the form of three unsecured non-revolving credit facilities of $825 million each with: the first, five-year tranche at a 1.75% premium to CDOR per annum; the second, six-year tranche at 6.5% per annum (increasing to 7.5% after 5 years); and the third, seven-year tranche at 8.5% per annum (increasing to 9.5% after 5 years); 
• As part of the financial package, Air Canada issued an aggregate of 14,576,564 warrants exercisable for the purchase of an equal number of Air Canada shares, subject to customary adjustments, at a price of $27.2698 per share during a 10-year term, representing 10% of the total commitment available under the above secured and unsecured credit facilities; 50% of the warrants vested concurrently with the implementation of the credit facilities and the remaining 50% of the warrants will vest on a proportional basis to the amounts that Air Canada may draw under the above unsecured credit facilities; 
• Up to approximately $1.4 billion in the form of an unsecured credit facility tranche to support customer refunds of non-refundable tickets. The facility will have a seven-year term and carry an annual interest rate of 1.211%.

As part of the financial package, Air Canada has agreed to a number of commitments related to customer refunds, service to regional communities, restrictions on the use of the funds provided, employment and capital expenditures. These include:

• Beginning April 13, 2021, offering eligible customers who purchased non-refundable fares but did not travel due to COVID-19 since February 2020, the option of a refund to the original form of payment. In support of its travel agency partners, Air Canada will not retract agency sales commissions on refunded fares; 
• The resumption of service or access to Air Canada's network for nearly all regional communities where service was suspended because of COVID-19's impact on travel, through direct services or new interline agreements with third party regional carriers; 
• Restricting certain expenditures, and restricting dividends, share buybacks and senior executive compensation; 
• Obligations to maintain employment at levels which are no lower than those at April 1, 2021; and 
• The completion of the airline's acquisition of 33 Airbus A220 aircraft, manufactured at Airbus' Mirabel, Quebec facility. Air Canada has also agreed to complete its existing firm order of 40 Boeing 737 Max aircraft. Completion of these orders remains subject to the terms and conditions of the applicable purchase agreements.

In connection with the Government's equity investment, Air Canada has agreed to provide customary registration rights. The Air Canada shares and warrants issued to the Government are subject to certain transfer restrictions as well as an exercise cap which limits the Government's aggregate voting rights from the shares acquired pursuant to this investment (including upon any exercise of the warrants) to 19.99%.

 

 

[dagger]

https://www.newswire.ca/news-releases/ceefc-announces-financial-assistance-to-air-canada-832198478.html

CEEFC announces financial assistance to Air Canada 

---

 

Assistance will protect Canadian air travellers, jobs, and regional service

TORONTO, April 12, 2021 /CNW/ - Today, the Canada Enterprise Emergency Funding Corporation (CEEFC), a subsidiary of Canada Development Investment Corporation (CDEV), announced that it will enter into agreements with Air Canada to provide financial support to the airline to protect jobs and to ensure vital national and international connectivity for Canadians and Canadian businesses. 

Under the terms of the agreements, Air Canada will have access to approximately $4 billion in loans (including $1.5 billion as a secured loan and $2.475 billion in unsecured loans) through the Large Employer Emergency Financing Facility's (LEEFF) financial support for the airline industry. Under LEEFF, CEEFC is also purchasing $500 million of newly-issued Class B Voting Shares from Air Canada at a 15% discount to their recent trading price. CEEFC will also receive warrants to purchase Air Canada shares in conjunction with its loan commitments.

Air Canada – Canada's largest domestic and international carrier – is one of the world's 20 largest airlines. The company currently has 14,859 active Canadian employees. As a condition of its agreement with CEEFC, Air Canada has committed to maintaining jobs, resuming air service, and refunding customers for flights cancelled during the pandemic. CEEFC will make an additional approximately $1.4 billion available to Air Canada, in the form of a repayable loan, to finance refunds to eligible customers.

Additionally, the financial assistance will ensure that Air Canada remains a key customer of Canada's aerospace industry. The company will move forward with the planned purchase of more environmentally friendly aircraft. 

LEEFF provides large Canadian employers with access to financing to preserve jobs and continue operations during this challenging period.

Lazard acted as sole financial advisor to CEEFC for the transaction. Davies Ward Phillips & Vineberg LLP acted as legal advisor to CEEFC.

Additional Disclosure

CEEFC is purchasing 21,570,942 Class B voting shares of Air Canada (each a "Share"), at a price of $23.17933 per Share for a total purchase price of $500 million. Air Canada also issued to CEEFC 14,576,564 warrants (each a "Warrant") as consideration for CEEFC making the $2.475 billionunsecured loan (the "Unsecured Loan Facilities") and the $1.5 billion secured loan available to Air Canada (the issuance of Warrants, together with the issuance of the Shares, the "Investment"). Immediately prior to the Investments, CEEFC and its affiliates owned no voting or equity securities in the capital of Air Canada. Immediately following the Investment, CEEFC and its affiliates held 21,570,942 Shares and 14,576,564 Warrants (the "Purchased Securities"). 

On exercise, each Warrant initially entitles CEEFC to purchase one Share (the "Share Rate") at an initial exercise price of $27.2698 per Share (the "Exercise Price"). At the option of CEEFC, the Exercise Price may be satisfied by way of cash payment or, in lieu of making a cash payment, by way of cashless exercise. Warrants may be exercised, in whole or in part, at any time prior to April 12, 2031. However, CEEFC may only exercise vested Warrants. Half (or 7,288,282) of the Warrants will vest immediately upon issuance of the Warrants (the "Initially Vested Warrants"). The other half (or 7,288,282) of the Warrants (the "Unvested Warrants") will vest in the same proportion and at the same time as advances, if any, are made under the Unsecured Loan Facilities.

If CEEFC exercised all of the Initially Vested Warrants by way of cash payment at the initial Exercise Price of $27.2698 and applying the initial Share Rate, CEEFC and its affiliates would own 28,859,224 Shares, representing approximately 7.91% of the outstanding voting securities of Air Canada (or 11.59% of the outstanding Class B voting shares) on a partially diluted basis after giving effect to such exercise. If CEEFC was entitled to, and did, exercise all of the Warrants (including all of the Unvested Warrants), applying the same initial Exercise Price and Share Rate, CEEFC and its affiliates would own 36,147,506 Shares, representing approximately 9.71% of the outstanding voting securities of Air Canada (or 14.10% of the outstanding Class B voting shares) on a partially diluted basis after giving effect to such exercise. 

CEEFC is restricted from transferring any Purchased Securities and any Shares issuable on exercise of the Warrants (together with the Purchased Securities, the "Investment Securities") until April 12, 2022, and thereafter is subject to certain limitations on the persons to whom those securities may be transferred, in each case, subject to certain exceptions.

CEEFC intends to hold the Investment Securities for investment purposes. Depending on market conditions and other factors, including Air Canada's business and financial condition, and subject to the transfer restrictions noted above, CEEFC or its affiliates may dispose of some or all of the securities of Air Canada that it owns at such time. CEEFC and its affiliates do not intend to acquire additional equity securities of Air Canada except through the possible exercise of the Warrants. 

 

 

Edited April 13, 2021 by dagger

[Guest1]

Waiting for reaction from other Canadian Airlines. Could be interesting.  

[CanadaEH]

Quote

Under LEEFF, CEEFC is also purchasing $500 million of newly-issued Class B Voting Shares from Air Canada at a 15% discount to their recent trading price. CEEFC will also receive warrants to purchase Air Canada shares in conjunction with its loan commitments.

So AC is back to being owned by the government (albeit a small amount)?