April 29, 2021 By The Canadian Press
MONTREAL — Travel company Transat AT Inc. says it has reached a deal with Ottawa to borrow up to $700 million, nearly half of which will go toward refunding travellers for cancelled flights.
The reimbursement for customers who were scheduled to leave on or after Feb. 1, 2020, will begin immediately, the airline says.
The money will come through the federal government’s Large Employer Emergency Financing Facility, the same program used to help Air Canada.
“The agreement reached with the government of Canada provides us with an additional $700 million in liquidity, which is the amount we needed to move forward with confidence,” Transat chief executive Jean-Marc Eustache said in a statement Thursday.
“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. With this support, we now look forward to resuming operations as soon as safe travel is possible and travel restrictions can be lifted.”
Transat said $390 million will be used to help support its business, while $310 million will be used to provide reimbursements to travellers.
In connection with the financing, Transat issued the government 13 million warrants for the purchase of Transat shares at an exercise price of $4.50 per share.
Transat has also agreed to restrictions on dividends, stock repurchases and executive compensation as well as to maintain active employment at the level of Wednesday.
Transat has endured a tough year, suspending all flights following the federal government’s request in January to stop travel to Mexico and the Caribbean due to the pandemic.
Air Canada and Transat announced earlier this month that the two Montreal-based companies had agreed to call off a deal that would have seen the country’s largest airline buy its smaller rival.
Initiated two years ago, the takeover was priced at $720 million before shrinking to $190 million as COVID-19 pounded the transport sector, ultimately dying out on April 2.
Transat says refund eligibility criteria is available online at airtransat.com/refunds.