Transat close to reaching aid deal with Ottawa, sources say

From The Globe and Mail – link to source story

MONTREAL, REUTERS | APRIL 28, 2021

Struggling tour operator Transat AT is very close to reaching a financial aid deal with the federal government involving a loan, two sources familiar with the matter told Reuters on Wednesday.

The deal would involve a loan under Canada’s Large Employer Emergency Financing Facility (LEEFF), the sources said on condition of anonymity because the talks are confidential.

Transat, which is scheduled to hold its annual general meeting on Thursday, declined to comment. The federal finance ministry, which is leading the talks with Transat, was not immediately available for comment.

It was not clear whether a deal would be reached by Thursday.

Air Canada dropped its merger plans with Transat earlier this month, creating uncertainty for the Montreal-based operator of leisure carrier Air Transat, which was already struggling due to the pandemic.

Transat has previously said it was holding discussions with the government regarding the LEEFF program and sectoral aid.

Transat, which has suspended flights until June due to pandemic restrictions that have battered travel, has said it needs at least $500-million (US$406-million) in financing this year.

It has obligations due on April 29 for a $50-million revolving facility and a $250-million short-term loan that matures on June 30. If it does not meet the April 29 requirements, or obtain another extension, creditors could accelerate the repayment obligation.

Air Canada, itself struggling with a collapse in traffic due to the COVID-19 pandemic, reached a deal earlier this month on a long-awaited aid package with the federal government that would allow it to access up to $5.9-billion (US$4.69-billion) in funds.