MIAMI – Transat A.T. Inc., which operates Canadian leisure carrier Air Transat (TS), announced it has reached an agreement with the Canadian government to borrow up to CAD$700m (US$569m) in additional liquidity through the Large Employer Emergency Financing Facility (LEEFF).

The cash infusion will enable the company to immediately process refunds for canceled travel due to the pandemic.

“The agreement reached with the Government of Canada provides us with an … amount we needed to move forward with confidence,” said Jean-Marc Eustache, president and CEO of the Montreal-based airline and travel operator.

“Our strong balance sheet prior to the pandemic and the aggressive actions we have taken since have enabled us to weather this unprecedented crisis so far,” he said. “With this support, we now look forward to resuming operations as soon as safe travel is possible and travel restrictions can be lifted.”

Air Transat C-FTXQ Airbus A321. Photo: Misael Ocasio Hernandez/Airways

Air Canada Merger Called off

Earlier this month Transat and Air Canada (AC) announced the termination of a plan by AC to take over Air Transat due to disapproval from the European Commission. Forced to go its own way, the carrier sought support from the Canadian government, which also has provided financial support for AC.

Transat plans to use the fully repayable credit facilities made available by the Canada Enterprise Emergency Funding Corporation as follows:

  • CAD$390m (US$309m) “to support the company until its business has recovered to a level where it can generate cash once again.”
  • CAD$310m (US$252m) consisting of an unsecured credit facility to provide reimbursement to travelers who were scheduled to depart on or after February 1, 2020, for whom a travel credit was issued as a result of COVID–19.

In exchange for financial support, TS has made certain commitments, including:

  • The reimbursement of travelers. Refunds will begin immediately.
  • Restrictions on dividends, stock repurchases and executive compensation.
  • Maintaining active employment at the level of April 28, 2021.

Featured image: Daniel Gorun/Airways