Air Canada looking to quit Transat deal: reports

News from FlightGlobal – link to story

By Pilar Wolfsteller | 2 June 2020

French-language media in Canada report that legacy carrier Air Canada is looking to exit its planned takeover of Transat AT, the parent company of Air Transat, as Canada’s biggest airline attempts to manage through the coronavirus crisis while preserving its liquidity.

Neither Air Canada nor Transat would comment on the news reports, which first appeared in the French-language daily Journal de Montreal on 2 June. The story cites three sources that say Air Canada is lobbying the Canadian government to block the deal.

Air Canada_B787_2
Source: Air Canada

Air Canada looks to quit merger plans with Transat

Montreal-headquartered Air Canada on 2 June denied that recent meetings with the government had anything to do with the Transat tie-up.

“All meetings registered by Air Canada with government ministers relate to the impact of Covid-19, not the Transat acquisition,” a spokesperson tells FlightGlobal.

When asked specifically about the merger, and the coronavirus’ effects on the company’s strategy regarding Transat, he adds, “There is no change to what we have said previously, which is we are awaiting the outcome of the regulatory review process.”

Transat is the parent company of vacation specialist carrier Air Transat, the number three airline in Canada behind Air Canada and Calgary-based WestJet, and operates a sizable vacation package business.

Last August, Transat’s shareholders voted overwhelmingly in favour of Air Canada’s C$720 million ($513 million) takeover bid for the company. That calculates out to C$18 per share. Both entities had said they had expected the transaction to close in the second quarter of 2020, but as time went on that looked less and less likely.

On 2 June Transat’s stock was trading at just C$6.40 per share, making the deal look severely overvalued.

But the transaction has been under close scrutiny for months. In March, the Competition Bureau of the government of Canada had “competition concerns” about the planned takeover, which, it said at the time, could be detrimental to Canadian travelers going to sun destinations as well as Europe.

The merger also faces closer examination in Europe, and the European Commission said last week that it is opening an in-depth investigation into the proposed acquisition, which will take up to 90 days.

The transaction as planned would merge the number one and number three airlines in the Canadian market. Earlier this year, WestJet, the country’s second-largest carrier, said it was “watching with great interest” to see if the deal would be approved. 

Booking or changing a flight? Here are the rules for major Canadian airlines

News from Global News – link to story and video


 WATCH: Air Canada has changed its policy for customers who lost their flights due to the COVID-19 pandemic, but anyone hoping for a cash refund will be disappointed.

The federal government’s advisory against all non-essential international travel remains in effect. Many other countries, even those where COVID-19 case counts have been steadily declining for weeks, also have strict travel restrictions in place.

But you wouldn’t know that by looking at airline websites.

As the industry struggles with an unprecedented collapse in air travel and tourism, airlines are touting “flexible” booking policies as a way to woo back customers.Watch: Frustration mounts over lack of refunds for flights cancelled 

If you’re contemplating rebooking an existing flight that was cancelled amid the pandemic or making a new reservation for a future date, here’s what some of the major Canadian airlines are offering:

Air Canada

After facing public criticism for offering a 24-month travel credit rather than refunds for cancelled flights, Canada’s flagship carrier recently introduced expanded booking options. Through June 30, passengers can make a one-time change with no fee to all new or existing bookings for original travel dates between March 1, 2020, and June 30, 2021. As of June 15, those who booked directly with Air Canada will also be able to convert their ticket to a “fully transferrable” travel voucher that has no expiry date or turn it into Aeroplan Miles with 65 per cent bonus miles.

Air Canada says it’s working on ensuring two new options are also available to those who booked through a travel agency, including Expedia.

Customers with refundable tickets can also choose to get their money back. However, if you purchased a non-refundable ticket and decide to cancel your flight, you won’t be eligible for a refund, the website warns.

The changes come as the airline announced it’s still planning to fly to some 100 destinations this summer, including in the U.S., Europe, the Caribbean, Asia and South America.Watch: Coronavirus outbreak: Trudeau says government looking at vouchers for airline passengers 


WestJet has suspended its international routes through June 25. Like Air Canada, WestJet has been offering travel credit valid for two years for cancelled flights and vacation packages.

For new flight bookings made between March 3 and June 30, you can change or cancel your trip with no fee one time if you act more than 24 hours ahead of departure.

For U.S. flights, if you cancel within 24 hours of making a booking, you get a full refund, according to the company website.

Air Transat

Air Transat flights are temporarily suspended until June 30. The airline says on its website it has been automatically granting travel credit valid for 24 months to customers whose flights were cancelled.

For flights and vacations in southern destinations booked between April 30 and May 31, customers get to reschedule the same trip for any time within a year of the original return date or book a new trip — with different dates, destination and hotel — at no charge up to 24 hours before departure.

Those who just want to cancel get a 12-month travel credit for southern vacation packages and flights in the lowest fare class. For those who bought tickets in other fare classes, the standard cancellation terms apply, according to the airline’s website.


Sunwing has suspended all southbound flights until June 25. Those with flights or vacation packages starting between March 17 and June 25 are eligible for travel credit valid for departures up to June 20, 2022. Notably, the company says its travel credits are non-transferable and non-refundable.

For bookings after June 25 of this year, the company says it will be applying its standard change and cancellation policies.Watch: Coronavirus outbreak: Garneau says airlines facing ‘very tough times’ as customers hope for refunds 


WestJet’s ultra-low-cost carrier has suspended all international flights until Aug. 31.

All new bookings made at least seven days ahead of departure will come with the ability to change the date or time of the flight up to 24 hours in advance. If you have an existing booking, you can add the flexible-booking feature to your reservation for travel that is at least seven days out.

Customers get a one-time change per direction.

Flair Airlines

Another no-frills Canadian airline, Flair, also says it has relaxed its booking policies. For those with existing reservations for flights in March, April and May, passengers can choose between a one-time chance to rebook their trip without having to pay a change fee and a travel voucher valid until May 31, 2021. You can only use one voucher per reservation, and it won’t cover costs like baggage, seat selection and other optional fees.

For new bookings made in March, April and May, you get the fee waived on a one-time rebooking for travel until May 31, 2021.STORY CONTINUES BELOW ADVERTISEMENT

Travel changes and cancellations must be made at least 24 hours in advance of departure.Watch: Airline credits versus full refunds 

Air passenger rights advocate warns against flexible bookings

Flexible bookings, travel credit and vouchers are hardly unique to Canadian airlines. Customers perusing U.S. or other international carriers will be hard-pressed to find any mention of the possibility of refunds, especially for non-refundable flights.

But air passenger rights advocate Gabor Lukacs argues that any alternative to getting your money back comes with considerable financial risk.

For one, consumers should watch out for fare increases. Often, he notes, airlines are merely waiving rebooking fees, with passengers left to cover any cost differential between their original and new bookings out of pocket.

“You will not get a flight to New York City in September for the price you paid in February,” he said via email.

Lukacs takes issue with the practice, noting that current rules under Canada’s Air Passenger Protection Regulations stipulate carriers must rebook passengers at no charge if their flight is cancelled.

Watch: Coronavirus: The future of travel

Another important caveat: most airlines allow only a one-time change to your reservations. (There are exceptions: Hong Kong’s Cathay Pacific, for example, is currently allowing unlimited rebookings for some customers within certain dates.)

Also, it’s not clear what happens to travel vouchers if an airline files for insolvency.

“Vouchers holders are unsecured creditors,” Lukacs warns.

Finally, airlines are leaving it up to consumers to figure out whether they can travel. Just because you were able to book a flight to, say, Rome doesn’t mean you’ll be allowed to take the trip.

Traditionally, it’s passengers’ responsibility to make sure they have any permits or visas required to travel to their destination — and travel during COVID-19 is no different, Lukacs notes.

Ultimately, customers should get refunds, he says, adding that even consumers with a non-refundable ticket are entitled to their money back if their flight was cancelled.

European Union and U.S. authorities have said travellers have a right to refunds amid the pandemic. In Germany, the government recently announced a €9-billion (C$13.6-billion) rescue deal for national carrier Lufthansa after the European Commission reasserted in mid-May EU airlines’ obligation to provide refunds to eligible travellers who ask for them.STORY CONTINUES BELOW ADVERTISEMENT

Consumer rights advocates say Canadians are also entitled by law to a full refund for flights cancelled amid the COVID-19 pandemic.

Prime Minister Justin Trudeau has said Ottawa recognizes both “how vulnerable the airline sector is” and that Canadians are concerned about being “out-of-pocket” for airplane tickets they won’t use.

“I think we need to have some very careful discussions with airlines, with the air travel sector and, indeed, with Canadians … to try and figure out a way forward where we can ensure that Canadians are treated fairly and our airline industry remains there for when our economy picks up again,” the prime minister recently said.

“We will work with airlines and with Canadians who are concerned with finding solutions.”

— With files from Global News’ Beatrice Britneff

Transat takes note of the continuation of the European Commission’s approval process for the transaction with Air Canada

From Transat A. T. Inc

MONTREAL, May 25, 2020 /CNW Telbec/ – Transat A.T. Inc. has taken note of the European Commission’s decision to open an in-depth (“Phase 2”) investigation to assess the proposed transaction with Air Canada. Transat is currently studying the EC’s decision in order to prepare the next steps in the process.

This extension is part of the EC’s normal process of assessing the impact of transactions submitted for its approval, which is currently complicated by the COVID-19 pandemic and the impact it is having on the international commercial aviation market.

To take into account the resulting longer delays, Transat has informed Air Canada of its decision to activate the first one-month extension of the outside date set for the transaction, provided for in the Arrangement Agreement. It is therefore postponed for the time being to July 27, 2020, from June 27. The Arrangement Agreement provides for the possibility of postponing the deadline for three one-month periods simply by notification from one of the parties, and then for three additional periods under certain conditions.

It should also be noted that the transaction is subject to a public-interest assessment conducted by Transport Canada, whose report was submitted on May 1 to the Honourable Marc Garneau, Minister of Transport.

If the required approvals are obtained and the conditions satisfied, the arrangement is now expected to close early in the fourth quarter of the 2020 calendar year.

Air Canada’s bid for Transat faces extended EU merger probe

News from BNN Bloomberg – link to story

Aoife White, Bloomberg News | 25 May 2020

Besides some hiccups ‘conversation has been good’ with management: Union president representing Air Canada flight attendants

Air Canada’s bid for tour operator Transat A.T. Inc. faces an extended probe from European Union regulators who said the deal may hamper competition by combining the two biggest airlines linking Europe and Canada.

The European Commission set a Sept. 30 deadline to rule on the deal, citing concerns that the “transaction could significantly reduce competition on 33” routes, according to an emailed statement on Monday.

One potential rival to the combined company, WestJet Airlines Ltd., is unlikely to be able to compete strongly on the routes that regulators see as problematic, the EU said.

Montreal-based Transat agreed in August to be acquired for $18 a share in cash. Shares have since slumped well below that level, suggesting investors are questioning whether the $720 million deal will happen in light of the coronavirus crisis, which has hammered the prospects for travel companies.

Margrethe Vestager, the EU’s antitrust chief, said the pandemic shouldn’t prevent careful scrutiny of deals.

“This is a challenging time, especially in markets severely impacted by the coronavirus outbreak, but a return to normal and healthy market conditions must be based on markets that remain competitive,” she said in the statement.

Canadian airline passengers are entitled to vouchers for cancelled flights from COVID-19 — but what about refunds?

News from Vancouver Sun – link to story

Author of the article: Emily Jackson  •  14 May 2020

Air Canada is offering refunds to customers who bought refundable tickets and offering 24-month vouchers to the rest. COLE BURSTON/BLOOMBERG FILES

As Canada’s largest airlines cut capacity and cancel dozens of routes even as summer travel season approaches, airlines and travellers on both sides of the Atlantic are continuing the debate over whether passengers with travel plans foiled by COVID-19 are entitled to full refunds or vouchers for future travel.

On Wednesday, the European Commission confirmed passengers have the right to full refunds within seven days despite pressure from 16 member states to temporarily relax the regulations to allow for vouchers so cash-strapped airlines don’t collapse.

Instead of amending the rules, the European Commission issued a non-binding suggestion that airlines offer more attractive vouchers, refundable after one year and transferable to another traveller.

The decision outraged European airline associations, who have decried the commission’s decision given airlines have no cash coming in yet and are facing up to €9.2 billion in cash reimbursements through the end of May, according to the International Air Transport Association.

The IATA noted the refund rules were not designed to deal with mass cancellations caused by a global pandemic — and emphasized that Canada allows the voucher approach.

“While passengers have a clear right to reimbursement of their tickets, we believe refundable vouchers, or a delayed reimbursement, represents a fair and reasonable compromise given the unprecedented liquidity situation airlines are currently facing,” Airlines for Europe managing director Thomas Reynaert said in a statement.

A woman walks through a mostly empty Ronald Reagan Washington National Airport in Arlington, Virginia, on May 12, 2020.
A woman walks through a mostly empty Ronald Reagan Washington National Airport in Arlington, Virginia, on May 12, 2020. ANDREW CABALLERO-REYNOLDS/AFP VIA GETTY IMAGES

The United States also requires airlines to provide refunds when the carrier cancels or significantly changes a passenger’s flight, but customer complaints about refunds have soared since the pandemic.

On Tuesday, the U.S. Department of Transportation said it received 25,000 complaints in March and April, up from a typical 1,500 complaints per month. The department issued its second enforcement notice on the matter since travel restrictions began, reminding airlines that they may offer vouchers as long as they also give customers the option of a refund.

“The department is asking all airlines to revisit their customer service policies and ensure they are as flexible and considerate as possible to the needs of passengers who face financial hardship during this time,” U.S. Secretary of Transportation Elaine Chao said in a statement.

The issue is particularly charged in the U.S. given the federal government’s US$50-billion bailout for major airlines.

Meanwhile in Canada, full refunds are but a wish for customers who booked standard tickets since cancelled. Instead, most Canadian airlines are offering 24-month travel vouchers.

Canada’s air passenger protection regulations require airlines to ensure customers can complete their trips when flights are cancelled for reasons outside the airlines’ control, but they do not mandate refunds in such circumstances.

In late April, the Canadian Transportation Agency said the vouchers could be a “reasonable approach in the extraordinary circumstances.”

“Vouchers for future travel can help protect passengers from losing the full value of their flights, and improve the odds that over the longer term, consumer choice and diverse service offerings ­— including from small and medium-sized airlines — will remain in Canada’s air transportation sector,” it stated.

Passengers can file complaints with the CTA if they believe they are entitled to a refund, although the agency has paused all dispute resolution activities until June 30. It did not respond to questions on Wednesday on how many complaints have been filed.

Parked WestJet Boeing 737 aircraft fill an unused runway at the Calgary International airport on Tuesday, May 5, 2020.
Parked WestJet Boeing 737 aircraft fill an unused runway at the Calgary International airport on Tuesday, May 5, 2020. GAIN YOUNG/POSTMEDIA NEWS FILES

The National Airlines Council of Canada, which represents Air Canada, WestJet, Jazz and Transat, supports the CTA’s guidance that vouchers are acceptable given the financial and operational crisis the pandemic caused.

“The industry is reeling from the unprecedented impact of the COVID-19 pandemic, with over 90 per cent of capacity pulled from the market, billions of dollars worth of aircraft parked, and virtually no revenue coming in,” NACC president Mike McNaney said in an email.

But some passengers hope to band together to get their money back in court. In April, a plaintiff filed a proposed class action lawsuit against Air Canada, WestJet, Transat, Swoop and Sunwing. It argues customers are entitled to refunds under contract law for frustrated contracts. The defendants have yet to file a statement of defence and the action has not yet been certified.

For its part, WestJet, which on Sunday announced it would suspend three dozen routes between June and July, said it “values the feedback we are receiving from our guests and appreciates how difficult this unprecedented situation is for all.”

The airline is monitoring the legal frameworks in every jurisdiction it operates, a spokesperson said in an email, adding it has waived rebooking fees and extended vouchers to 24 months.

Air Canada is offering refunds to customers who bought refundable tickets and offering 24-month vouchers to the rest.

Financial Post

Coronavirus: Smaller Canadian airlines fear being left out of federal aid programs

News from Global News – link to story and videos


As the federal government gears up to deliver relief measures for hard-hit industries, smaller airlines worry they’ll be left out.

Prime Minister Justin Trudeau announced Monday that federal financing will be available to the country’s largest employers to help weather the COVID-19 economic crisis. Loans will start at $60 million for companies with at least $300 million in annual revenues.

Regional carriers, most of which fall far short of that threshold, fear they might go under without a tailor-made support program from Ottawa as border shutdowns and the collapse of global travel continue to choke off demand.

Flair Airlines, an ultra-low-cost carrier based in Edmonton, has reduced its commercial fleet to one airplane since late March. The flight schedule — 16 trips per week — stands at 10 per cent of pre-coronavirus levels after the company lost 95 per cent of its revenue in nine days, CEO Jim Scott said.

“We need a federal airline support package that does not select winners and losers but demonstrates a commitment to a diversified and competitive airline industry accessible to all Canadians,” Scott said in a statement last week.

He cautioned against a bailout that would reinforce a “David and Goliath system dominated by a large-carrier duopoly.”

The $300-million threshold rules out about three-quarters of Canadian airlines from the new relief program, said John McKenna, president of the Air Transportation Association of Canada, which counts 30 smaller carriers as members.

“The outlying communities, the northern communities, they rely on these regional carriers as a lifeline,” McKenna said. “I am happy for the seven or so carriers in Canada who may qualify (but) the government must not forget that the regional carriers offer just as important a service as the large carriers.”

A federal aid package for the territories includes $17 million for northern airlines to help fly food and medical supplies to remote communities. Far-flung areas south of the 60th parallel, such as northwestern Ontario and Nunavik in Quebec, are not covered.

“We want the government of Canada to come out with a plan that treats everyone equitably but fairly,” McKenna said.

Part of the anxiety stems from a lack of feedback, with “radio silence” from Ottawa.

“There’s not even any dialogue with the government. We have no idea what they’re doing,” he said. “When we talk to finance, they say, ‘Something’s coming, we can’t talk about it.’”

McKenna has asked the government for $2 billion in loans and loan guarantees for smaller carriers and maintenance and repair operators.

In a letter sent to the prime minister Friday, his association and a dozen other groups including the National Airlines Council of Canada (NACC) — which represents Air Canada, WestJet and Transat — requested relief from various taxes, fees and charges, on top of financial support.

Mike McNaney, head of the NACC, thanked Ottawa on Monday for addressing the “urgent liquidity challenges facing airlines,” but said he needed more details around “timelines and process.”

Most large airlines said it was too early to comment as they review the fine print, though Sunwing applauded the announcement and said it “shows that government has been listening.”

Strings attached to the bridge financing require companies to have already gone unsuccessfully to the banks or the market and demand that recipients open themselves to financial scrutiny and prove their commitment to fighting climate change.

The federal government has also waived the monthly rent paid by airport authorities to Ottawa for the rest of the year, providing support worth up to $331.4 million in ground lease rents from March through December.

At least 20 countries from Norway to New Zealand have announced financial aid specifically for airlines, ranging from equity stakes to loans and grants, sometimes with strings attached that limit dividends and executive bonuses.

Last month the United States rolled out US$25 billion in government aid to pay airline workers and avoid massive layoffs. The assistance includes a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading carriers.

The French government has announced at least US$7.66 billion in loans and loan guarantees to rescue Air France, with conditions requiring it to cut carbon emissions in half by 2030 on long and medium-haul routes.

In Germany, the government is in talks with Lufthansa AG for up to US$10.85 billion in aid but demanding a 25 per cent stake in the airline.

Even with planes parked, money continues to bleed as airlines dole out airport fees, leasing payments, and parking and maintenance costs — each plane needs to have its engine run, tires rotated and hydraulics electronics checked multiple times per week.

“We’re a capital intensive industry,” Flair’s Jim Scott said in a phone interview. “Our fixed costs are very high, and we have no revenues to offset it.”

Transat extend suspension to June 30

From Transat A.T. Inc.

Temporary suspension of our flights

Due to the coronavirus pandemic, we are temporarily suspending our flights until June 30, 2020.

If you were unable to travel due to the cancellation of our flights, we are providing a flight credit for travel within 24 months of your original return date.

These are extraordinary circumstances, when all airlines and travel companies have been forced to temporarily halt or drastically reduce their operations while governments have decided to close their borders.

This unprecedented situation is well beyond our control; we believe that the 24-month credit is an acceptable solution, and we are confident that our customers will be able to travel again in the near future, once the crisis passes.

Battered Canadian airline industry pushing for government bailout

News from CBC News – link to story

Consumer group wants strings attached to taxpayer help, including refunds for cancelled flights

Ashley Burke · CBC News · Posted: May 02, 2020

Some Canadian airlines are in talks with the federal government and asking for a relief package for the entire industry that’s shedding tens of millions of dollars a day as planes sit idle due to the pandemic. (Jonathan Hayward/The Canadian Press )

Crippled by COVID-19, Canada’s airline industry says it’s plummeting into insurmountable debt as planes sit idle and people cancel or postpone travel plans.

Behind the scenes, major airlines are pressing the federal government for an aid package to help them survive the pandemic and quickly recover when countries finally lift their travel restrictions.

“The carriers are burning through cash,” said Mike McNaney, the president of the National Airlines Council of Canada, which represents Air Canada, Air Transat and WestJet.

“The industry will not be able to get out of this challenge unless there’s government assistance.”

Heading into the pandemic, some of Canada’s large airlines were riding a financial high. But COVID-19 brought international travel to a halt, something the sector has never experienced before.

Some airlines stopped flying altogether. Others, such as Air Canada, scaled back operations by more than 90 per cent because of the unprecedented drop in demand.

Thousands of planes now sit parked across the country, costing air carriers tens of millions of dollars daily. And there’s no end in sight, said McNaney.

Airlines have been tapping into Canada’s wage subsidy program to hire back thousands of laid-off workers, but say they need an infusion of cash, loans and a freeze on taxes and fees to prop up the industry.

A consumer group warns that if a taxpayer bailout is on the way, it should come with strings attached banning airlines from paying executive bonuses and requiring them to reimburse consumers for cancelled flights during the pandemic.

Parked planes with big bills

Planes worth $10 billion are parked at airports across Canada, bleeding money, said McNaney. He added he’s “astounded” that 90 per cent of the market is gone.

Most airlines finance the purchase of their aircraft, which can cost more than $100 million each. The engines themselves are so expensive that they’re sometimes paid off separately, said John McKenna, president of the Air Transportation Association of Canada, which represents carriers like Porter and Sunwing Airlines.

“It’s been a catastrophe,” said McKenna. “Everyone is hurting. We are a capital intensive industry.

“Planes cost tens or sometimes hundreds of millions of dollars. For them to be profitable they have to be flying all the time. Sitting there, you still have to insure them, maintain them, and you have to pay for them.

“You’re not generating any money from them. You’re just losing it.”

Porter Airlines suspended all flights during the pandemic, which is hitting the airline and tourism industries hard. (David Donnelly/CBC)

Complicated process to restart industry

Sunwing’s president Mark Williams said some companies are managing their financial losses but won’t be able to sustain it for months on end.

“There isn’t a sector that’s been more impacted by this,” said Williams on Thursday at a virtual Canadian Club Toronto event. “We’re really looking for liquidity.

“It’s not reasonable to expect that any airline in Canada can go on like this for six months without getting some sort of financial support from the government.”

A vice president at Air Canada recently said he anticipates air travel will resume worldwide by Christmas. But without federal aid, McNaney said, it will be a struggle for airlines to ramp up quickly.

“It’s going to be a very complicated process to restart aviation,” he said. “We’ve never seen 90 per cent of capacity parked at one point in time.

“That’s like trying to walk out into a parking lot after a [hockey] game with 15,000 cars in the lot and none of them turn over because it’s too cold and their engines have all shut down. So you have to get all those cars ramped up and ready to roll. Then you have to find your way out to the parking lot.”

McNaney said the government needs to stabilize the airline industry so it can start working out the logistics of re-starting with air carriers, staff and government agencies. The longer they wait, the tougher that process will be, he said.

McNaney added that the airline and tourism industries are key to rebuilding Canada’s economy.

“We recognize there are certain industries that have been extremely hard hit by both the drop in oil prices and the COVID-19 challenge, whether it’s airlines or oil and gas or tourism,” Prime Minister Justin Trudeau told reporters on April 1. (Justin Tang/The Canadian Press)

Government evaluating ‘all options’

A month ago, Prime Minister Justin Trudeau said he recognized the industry has been hit “extremely” hard and that help was on the way.

Finance Minister Bill Morneau has waived airport authorities’ rent fees, worth an estimated $331 million. The government is giving $17 million to Yukon, Northwest Territories and Nunavut to help airlines flying essential goods to remote northern communities.

Morneau’s office said the government is still evaluating “all options to support the industry.”

“We have been in touch with airlines and we understand the impact COVID-19 is having on their industry and we are with the workers who are facing a difficult situation in these unprecedented times,” said spokesperson Maéva Proteau in a statement to CBC News.

Williams said talks continue with the government to come up with an equitable solution so that all companies — big and small — receive help.

“The government shouldn’t be picking winners or losers here,” he said. “They need to support the industry as a whole.”

Europe, U.S. promising bailouts

Some European nations and the U.S. have agreed already to bailouts. France and the Netherlands are providing a 10-billion-euro taxpayer-funded bailout to save Air France-KLM.

The Trump administration agreed to a $25 billion bailout to prop up its airline industry. Canada’s industry is roughly ten times smaller than the American one. Some Canadian pilot and airline associations have told CBC News a $5 billion bailout from the federal government would be reasonable.

But airlines have been hesitant to put a price tag on damage that’s still unfolding, and have not offered a number to the federal government.

Customers should be reimbursed, says consumer group

If Canada does announce a bailout, some argue there should be strict criteria to ensure taxpayer money isn’t misused.

John Lawford, executive director of the Public Interest Advocacy Centre, said Ottawa should focus on “making sure companies couldn’t skim off excess profits through the bailout by giving dividends to their shareholders with that money, or giving large executive bonuses.

“These sorts of things should be prohibited.”

Lawford said the government also should make it mandatory for airlines to use some of the government aid package to reimburse customers for flights cancelled due to the pandemic.

There are two proposed class-against lawsuits against major Canadian airlines seeking full refunds for passengers whose flights were cancelled during the pandemic, according to the consumer group Air Passenger Rights. That same group has also taken the Canadian Transportation Agency to court over the issue. 

“It’s a large expense for the average consumer,” said Lawford. “The $3,000 to $4,000 dollars for a large vacation you’ve been saving up for multiple years is a large cost for consumers to absorb.”

Some analysts have suggested that it could take more than five years for the airline sector to return to the same traffic it saw before COVID-19 hit.

Air Canada’s Transat buyout fuels investor coronavirus jitters – sources

News from Reuters – link to story

Exclusive: 1 May 2020

(Reuters) – Air Canada’s C$720 million ($517 million) purchase of tour operator Transat AT is fuelling jitters among some investors who would like to see the deal renegotiated with the aviation industry in turmoil due to COVID-19, two sources familiar with the matter told Reuters.

Air Canada secured Transat shareholders’ approval for the deal last year with a sweetened C$18.00 a share bid, to bolster its leisure business. On Friday, Transat shares were trading 44% below AC’s offer price.

Air Canada, like many of its global peers, has slashed flights, suspended financial forecasts and sought government aid as the industry deals with its worst slump.

“There is no way the deal should proceed as structured,” said Norman Levine, managing director of Portfolio Management Corporation, who does not own either of the two stocks.

“The whole world has changed in the airline/travel business and valuations from when the deal was announced to today bear no resemblance to each other,” he added.

The turmoil has also given Air Canada reasons to weigh its options.

“All options are on the table – the board is still deciding on what’s the best way forward,” one of the sources said.

The sources declined to be identified as the discussions are confidential.

Neither company would comment directly on possible investor jitters over the deal.

In an email, Air Canada said its priority is “looking after our employees and our customers as well as implementing cost saving steps to conserve cash during the crisis.”

Transat said “any major change regarding the transaction that we would be aware of would be communicated promptly to the market.”

The global pandemic has torpedoed several proposed mergers and acquisitions, including aircraft and industrial parts maker Woodward Inc’s deal to buy Hexcel Corp.

But it is not clear whether Air Canada could walk away from the transaction even if it wanted to, as the deal’s material adverse effect (MAE) clause has exceptions including “natural disasters … outbreaks of disease,” according to the agreement.

Still, Air Canada’s chief financial officer, Michael Rousseau, has told recent virtual events that AC may be able to invoke the MAE clause if Transat were disproportionately impacted by coronavirus, a third source said.

Air Canada did not comment when specifically asked about the CFO’s remark.

“They haven’t defined what ‘disproportionate’ means, but if it’s a significant enough gap to be considered disproportionate then they would have an option to back out,” said Scotiabank analyst Konark Gupta.

The transaction still requires approval of Canada’s Transport minister, Marc Garneau, though the nation’s competition regulator has voiced concern. European Union antitrust regulators are scheduled to decide on an agreement by May 25.

Greg Taylor, a portfolio manager at Purpose Investments, who has a short position on Air Canada for a short-term trade, said the airline “went into this with one of the better balance sheets in the airline industry, so any way they can save cash and not pay it out would be a positive.”

“I just don’t think they need any more capacity more than anything else.”

Reporting by Anirban Sen in Bengaluru and Allison Lampert in Montreal; Additional reporting by Fergal Smith in Toronto and Foo Yun Chee in Brussels; Editing by Denny Thomas and Matthew Lewis

N.B. airports will lose millions this year

News from CBC News – link to story

Normal traffic won’t be back before 2022, caution some industry experts

Rachel Cave · CBC News · Posted: Apr 30, 2020

Airports across Canada are being cautioned to expect a slow recovery. (Submitted by Peter Sonnenber)

New Brunswick’s three largest airports are counting up their losses for 2020 and bracing for more lean years to follow. 

“We’ve seen a 94 per cent decrease in passenger traffic and a 15 per cent decrease in cargo,” said Moncton airport CEO Bernard Leblanc, who now expects revenue for the year to fall from $20 million to $8.5 million. 

“There’s no Air Canada activity and no Porter activity,” said Leblanc, “Sunwing and Air Transat, with their southern destinations, ceased all activities in the mid-March timeframe.”

As a result, Moncton took a hit at what should have been its busiest time. 

Normally, March and April combined would bring some 140-thousand passengers through the doors — most of them looking for holiday sun. 

Instead, Leblanc says the only service is WestJet, which comes five times a week from Toronto. 

The only way to reach New Brunswick by Air Canada, is to catch the one daily flight to Fredericton, where airport CEO Johanne Gallant says passenger traffic has fallen by 70 per cent. 

Meanwhile, she says she’s dealing with high fixed costs, such as runway maintenance, which has to be done to the same standard whether one plane is landing or ten. 

In Saint John, those fixed costs are running at least $400,000 per month, even though its arrivals and departures board is empty.  

CEO Derrick Stanford says no commercial flights means a projected $1.5 million surplus will probably turn into a $1.5 million deficit.  

“Seventy per cent of the airport’s revenues come from what’s called aeronautical revenues,” said Stanford.

The only way to reach New Brunswick by Air Canada is to catch the one daily flight to the Fredericton International Airport. (Fredericton International Airport)

“That’s passenger spending, whether it’s in the parking lot or the restaurant or the gift store, or what’s called passenger facility fees, which are part of every plane ticket that is sold.”

“So to have no passengers, pretty much equates to a minimum of at least a 70 per cent drop in revenues.”

Radio silence

Charter airline pilot Peter Sonnenberg says it’s unnerving to be in the cockpit and not hear pilot chatter. 

“I don’t think I’ve ever flown in this region and heard so little traffic on the radio and I’ve flown in this region my entire life,” said Sonnenberg in a call from Grand Manan. 

In more normal times, he says some of the demand to charter his Cessnas and Pipers would come from politicians and business executives who need to get to remote locations and don’t have time to spare. 

Peter Sonnenberg, CEO Atlantic Charters on Grand Manan, inside the cockpit of a plane with first officer Diana Dragomir, left. (Submitted by Peter Sonnenberg)

He says that’s not happening these days. Instead, he says he’s only taking off for medical calls, when patients need to get to hospitals on the mainland. 

Medavie says New Brunswick patients still need to be transported by air ambulance, although the cancellation of elective procedures has reduced demand. 

Still, between March 16 and April 25, there were 25 air transfers. 

It’s another reason why airports like Saint John have to stay open. 

No pillows, no blankets, no snacks, no bar

Audrey Gillespie says travelling by air these days feels different and sad. 

As an assistant supervisor for house-keeping and sanitization at a gold mine work camp in Nunavut, she’s an essential worker. 

Every month, she makes the epic journey from Fredericton to Meadowbank, via Montreal, Val d’Or, and Churchill, Man.

“The airports are empty,”she said. 

“You get on the plane and nobody sits beside each other. I think there were 11 people on the plane when I flew the last time.” 

Every month Audrey Gillespie travels from Fredericton to Meadowbank in Nunuvut via Montreal, Val d’Or, and Churchill, Man. for work. (Submitted by Audrey Gillespie)

“The flight attendant doesn’t come down the aisle with drinks or snacks or anything.”

“And a lot of flights are cancelled. You’re at work and your co-worker says ‘Is your flight still going?’ So you’re constantly checking that your flight hasn’t been cancelled, too.” 

“There’s a lot to it, and it’s very scary and when you get home, everything’s closed.”

Gillespie says when she gets home to Fredericton, she has to self-isolate, which means no visits to her son across the street, no hugs for her grandson. 

“You just have to respect the rules,” she said. 

She must also take her own mask or cloth face-covering and wear it in the airport and for the duration of her flights. 

When will traffic come back?

Airports across Canada are being cautioned to expect a slow recovery.

“I think most experts think the industry won’t get to pre-COVID levels before the end of 2021 so I think we’re looking at 2022,” said Angela Gittens from her home office in Montreal.

Angela Gittens, director general of Airports Council International, whose Canadian division represents the local airport authorities in Fredericton, Moncton and Saint John.  (Submitted by Airports Council International)

Gittens is the director general for Airports Council International, whose Canadian division represents the local airport authorities in Fredericton, Moncton and Saint John. 

“A lot will depend on how long the virus will last, how long the various restrictions will last and then how long, and how deep the recession will be,” said Gittens. 

“This is one of the reasons that we have asked governments to consider relief for airports, for airlines, and the entire aviation ecosystem.”

No plans to close N.B. airports

New Brunswick’s three airport authorities did apply to Ottawa for wage subsidies under the COVID–19 response program that ends in June.

All three CEOs said they’re also looking for ways to defer some capital spending — some projects can be suspended temporarily or scaled back. 

There’s no talk of closing any one airport. All three say they can survive until the end of the year. 

“The airport does have money in the bank and cash reserves for an emergency,” said Saint John’s Derrick Stanford. 

“We can weather the storm for several months but if we’re still having this conversation at Christmas time, I would say we’re looking at a dire situation, and we’d need some injection of money to remain viable.”