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Air Canada raises additional $1.23B

June 23, 2020  By Wings Staff

Air Canada 787 Dreamliner. (Photo: Air Canada)

Air Canada recently closed two additional financing transactions for net proceeds of $1.23 billion. Since the start of the COVID-19 pandemic in the first quarter of 2020, Air Canada has raised $5.5 billion of liquidity and expects to end the second quarter of 2020 with at least $9 billion in liquidity.

On June 22, 2020, Air Canada completed a private offering of $840 million in secured notes due 2024. The company explains these 2024 notes are secured on a second lien basis by certain real estate interests, ground service equipment, certain airport slots and gate leaseholds, and certain routes and the airport slots and gate leaseholds utilized in connection with those routes.

Earlier in June, Air Canada completed a private offering of one tranche (pieces of a pooled collection of securities) with a combined aggregate face amount of approximately US$315 million – with a final expected distribution date of July 15, 2026.

“The fact Air Canada was able to add $1.23 billion to its liquidity with these last two transactions without utilizing any of its previously disclosed unencumbered assets leaves the airline in an excellent position to access additional funds should the need arise,” said Pierre Houle, managing director and treasurer of Air Canada. “Complementing these efforts have been ongoing initiatives to reduce cash burn through such measures as workforce reductions, a $1.1 billion Cost Transformation Program and capacity and network rationalization.”


In addition to these more recent arrangements, Air Canada points to its conclusion of the following financing transactions in 2020:

• In March 2020, Air Canada drew down its US$600 million and $200 million revolving credit facilities for aggregate proceeds of $1.03 billion;
• In April 2020, Air Canada concluded a 364-day term loan in the amount of US$600 million, secured by aircraft and spare engines, for proceeds of $829 million;
• In late April 2020, Air Canada concluded a bridge financing of $788 million for 18 Airbus A220 aircraft, which Air Canada expects to replace with longer-term secured financing arrangements later in 2020; and
• In June 2020, Air Canada concluded an underwritten marketed public offering of 35,420,000 Class A Variable Voting Shares and/or Class B Voting Shares of the Company at a price to the public of $16.25 per share, for aggregate proceeds of $575.6 million, and a concurrent marketed private placement of convertible senior unsecured notes due 2025 for aggregate proceeds of US$747.5 million ($1.01 billion).

“We entered 2020 on the doorstep of investment grade with a very strong balance sheet, low net leverage and significant liquidity, before the COVID-19 pandemic and government-imposed quarantines and border restrictions destroyed demand and depleted cash,” said Houle.

Houle continues to explain Air Canada’s strong relative position has allowed it to navigate through this crisis. “We have full confidence that we will be successful in maintaining liquidity at levels more than sufficient to meet the challenges and take advantage of the opportunities ahead,” he said.

Air Canada’s unencumbered asset pool (excluding the value of Aeroplan and Air Canada Vacations) amounts to approximately $2.5 billion at current exchange rates.


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