As It Happens·Q&A

'Everyone wins' in Air Canada relief deal, says federal transport minister

Minister Omar Alghabra says that not only are refunds on the way for frustrated ticket holders, investing in Canadian aviation is a good bet for taxpayers.

Minister Omar Alghabra says investing in Canadian aviation is a good bet for taxpayers

After being battered by the pandemic, Air Canada has agreed to restart regional routes and protect jobs in exchange for loans and equity investment. (Chris Helgren/Reuters)

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Federal Transport Minister Omar Alghabra says his government's freshly-inked deal with Air Canada comes with an upside for taxpayers. 

On Monday, Ottawa agreed to provide the airline with financial support — while committing Air Canada to refunding customers whose flights were cancelled when the pandemic began last year, as well as restarting flights on nearly all suspended regional routes. 

It's no small amount: the government will make up to $5.9 billion available to Air Canada through the Large Employer Emergency Financing Facility, a program aimed at supporting large Canadian employers who have lost revenue due to COVID-19.

Under the deal, the government will extend to the country's largest airline a variety of low-interest loans worth up to $5.4 billion, and take an equity stake in the company by purchasing $500 million in stocks.

Alghabra told As It Happens host Carol Off that stake is a sound investment for Canadians, which he believes will only grow in value.

Here's part of their conversation. 

What do Canadians get out of this?

So first, it's important to let your listeners know that we expect these loans to be paid back. Air Canada and other airline companies are going through a difficult, challenging situation because of COVID and because of limitations of travel.

So they're going through a cash flow, a scarcity, and we needed to make sure that they are able to operate, and that we protect jobs, and that communities that have been disconnected are reconnected. That's what Canadians get.

Transport Minister Omar Alghabra says the federal deal with the airline will make sure Canada's aviation sector remains 'resilient.' (Sean Kilpatrick/Canadian Press)

Canadians will also maintain a resilient aviation sector, which our economy depends on, which our security depends on.

But it's also important that there's upside to this deal. In addition to maintaining a resilient airline sector, we believe that the stake in Air Canada will grow in value and this will benefit Canadians.

From day one, we wanted to make a commitment to Canadians who cancelled their flights because of COVID or who had their flights cancelled because of COVID, that they will be refunded. 

This is not a bailout. This is offering loans to airlines during this very, very difficult time for them.- Minister Omar Alghabra 

Airline companies were stretched because of liquidity, where they couldn't pay back everyone all at once. So we offered a loan, that we expect to be repaid, to airline companies in order to repay Canadians who've been carrying that financial burden for the last while.

So they get their money back, while Air Canada is committed to pay us back for that loan. So everyone wins here.

You also mentioned that one other important aspect is the labour force of Air Canada, that these are people whose jobs depend on this bailout, this assistance. But what guarantees do you have that there won't be layoffs, that they will get those jobs back?

This is also another clause of the agreement Air Canada has committed to — that there will be no more layoffs as long as this agreement is enforced.

As the pandemic forced most Canadians to stay home, Air Canada's share value plunged by 70 per cent between March and April 2020. (Dave Gilson/CBC)

So we are protecting existing jobs. But not only that, we believe that with the restoration of routes, with the maintenance of aircrafts, with the purchase of additional aircraft, all that will create additional jobs or restore jobs that were lost because of the pandemic.

The other airlines, of course, are very interested in seeing how this deal plays out. Do you expect to see other, similar deals for other airlines in Canada?

In February, our government struck a deal with Sunwing, where they also got some liquidity, similar loans. The deputy prime minister yesterday said that we're currently in discussions with WestJet.

We also publicly said a couple of weeks ago that we are in discussions with AirTransat, and there are other airlines that are in discussions. The refund facility that we reached an agreement with Air Canada on — it is also going to be available to all of those airlines.

Do you have an idea how much all this is going to cost, if you're going to be offering bailouts to all of these airlines?

So I want to quibble with the word you used, which is a bailout. This is not a bailout. This is offering loans to airlines during this very, very difficult time for them.

They're crunched for cash and there's very little travel going on because of public health measures. Not only do I expect that it won't cost Canadian Canadian taxpayers money, but hopefully there's an upside in it for taxpayers.

WATCH | Unifor president Jerry Dias on the Air Canada deal:

Air Canada relief deal offers 'template' for other airlines, says Unifor president

1 year ago
Duration 7:37
Unifor president Jerry Dias tells Vassy Kapelos on Power & Politics that the deal the federal government reached with Air Canada will provide a template for deals with other airlines.

Air Canada began its life as a government-owned airline that was privatized only a few decades ago. There are those who believe that perhaps the only way for Air Canada to go is to be nationalized again. Would your government consider renationalizing Air Canada?

I want to see a strong, competitive, resilient aviation sector where there are multiple strong players in the sector, in the marketplace, that is offering good service to Canadians, connecting them to where they need to be at very competitive prices. That's what I want to see.

Written by Kate McGillivray. Interview produced by Kevin Robertson. Q&A edited for length and clarity.


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