Transat, the parent company of Canadian leisure carrier Air Transat, has reached a deal to borrow up to C$700 million ($569 million) from the Canadian government.
The agreement, made through a Canadian pandemic-relief programme, comes four weeks after Transat and Air Canada disclosed that their planned merger had been called off.
In mid-April, Air Canada said it had secured C$5.9 billion in federal government funding.
Transat chief executive Jean-Marc Eustache says the funds will allow the Montreal company “to move forward with confidence”.
“With this support, we now look forward to resuming operations as soon as safe travel is possible and travel restrictions can be lifted,” he says. “We will then be able to implement our plan to make Transat a solid and profitable company once again.”
The “fully repayable” funds include C$390 million “needed to support Transat until its business has recovered to a level where it can generate cash once again”.
The company will receive another C$310 million for the purpose of reimbursing customers for tickets on flights cancelled by Transat.
As part of the deal, Transat agreed to “restrictions on dividends, stock repurchases and executive compensation”, and to retain its current staff level.