OTTAWA – Airlines in Canada are apparently close to reaching a bailout deal with the federal government.
A government source tells The Globe and Mail the Trudeau government and the country’s airlines are in late-stage negotiations that could end months of talks for a multi-billion dollar rescue plan.
Air Canada CEO Calin Rovinescu said on the company’s recent conference call that he was optimistic about a deal being put together. This comes after what he described as the bleakest year in the history of commercial aviation, as the number of passengers declined 73 per cent following several years of record growth for Air Canada.
On Friday, the airline reported a $4.5 billion loss for 2020. It said it lost $1.16 billion in the final three months of last year, releasing a financial report on the heels of Thursday’s news that the Canadian government approved Air Canada’s $190-million purchase of Transat A.T.
The travel industry has been hard-hit by travel restrictions imposed during the COVID-19 pandemic. Recently, the Canadian government and some of the country’s airlines — Air Canada, WestJet, Sunwing, and Air Transat — agreed to cancel flights to Mexico and the Caribbean until April 30 to discourage trips amid the rise in the number of COVID variant cases.
The main frustration for consumers had been many airlines’ unwillingness to refund unused tickets. WestJet, among other carriers, began giving refunds late last year, however, there were suggestions some airlines may have been balking in the hopes of a bailout.
The government source tells The Globe and Mail any deal would be contingent on the airlines indeed sending cash to customers, and that none of the bailout money would go to executive bonuses.
Still being discussed is the idea of Ottawa taking equity stakes in the companies.
Editor’s note: This article has been updated to reflect that some airlines had been providing refunds to customers as of last year.