Canada’s Air Transat announces C$43.3 million in Covid state aid

Air Transat’s (TS, Montreal Trudeau) parent company, Transat AT Inc., has announced additional financial support of C$43.3 million (US$33.7 million) from the Canadian government to help it recovering from the impact of the Omicron variant of COVID-19.

During an earnings call following the release of the company’s first quarter 2022 results, President and CEO Annick Guérard said, “We have seen an impact on our cash burn, and we expect that this impact could continue into the summer. To fill the gap created by our cash, we have re-initiated discussions through the Canada Business Emergency Financing Corporation (CEEFC) with the federal government, which has been very receptive to the impact of border measures on the hardest hit businesses.”

“The deferral of certain conditions of our funding under the Large Employer Emergency Funding Facility (LEEFF), as well as securing an additional C$43.3 million for the reimbursement of travellers, will facilitate our recovery from the resurgence of the pandemic,” she said. in a report. LEEFF is a program instituted by the federal government and administered by CEEFC to provide short-term liquidity assistance in the form of interest-bearing term loans to large Canadian employers affected by the pandemic.

Chief Financial Officer Patrick Bui explained that the second tranche of C$43.3 million would be added to Transat’s C$310 million ($241 million) unsecured bond facility under LEEFF, bringing it to C$353.3 million ($275.7 million) at a reimbursement rate of 1.2%. The funds were to reimburse the company for the more than CAD 310 million already refunded to passengers.

Bui said the company also managed to delay the start of interest rate hikes by 20 months until Dec. 31, 2023, on the unsecured C$312 million ($243 million) portion of a other principal facility of C$390 million ($304 million).

“Our priority is protecting our cash and accessing liquidity to weather these unprecedented times. While we are on an upward trend, the impacts of COVID-19 continue and the geopolitical landscape is changing as we remain in a cash burn position, and in the context, we want to be very cautious,” he explained.

Guérard said the surge in the Omicron variant in the second half of December put a temporary damper on the recovery. However, by mid-January and February, Transat had caught up with the November 2021 booking rate which had reflected 70% of 2019 levels.

After border restrictions eased, bookings picked up, which bodes well for the coming summer, she said. “Omicron has certainly had a major impact for us, but we’ve adapted and moved on. We’ve now picked up speed and are ready for a more satisfying summer,” she said.

During the first three months of 2022, Transat recorded revenues of CAD 202.4 million (USD 157.8 million), up CAD 160.5 million (USD 125.1 million) compared to the same period in 2021; and an operating loss of CAD 73.8 million (USD 57.5 million) compared to CAD 98 million (USD 76.4 million) in 2021, an improvement of CAD 24.2 million (USD 18.8 million).

Guérard said the leisure specialist will open 69 summer routes, representing most of those it operated before the pandemic and some new ones like Amsterdam Schiphol, Quebec, London and San Francisco, CA.

“The actions taken under our plan will allow us to significantly improve our operational performance from summer 2022, when we will be operating at 90% of our 2019 capacity with eight fewer aircraft, increasing fleet utilization. 13%. This is a major improvement as a result of our transformation,” she said.

Bui said the company’s cash and cash equivalents were CAD 343 million ($267 million) as of January 31, 2022. In total, available funding was CAD 820 million ($639 million), of which $678 million million CAD (528 million USD) was drawn at the end of the quarter for total unrestricted liquidity of 485 million CAD (378 million USD). After the quarter ended, the company drew an additional CAD 112 million ($87.3 million) for a total of CAD 790 million ($616 million).

“Thus, with the C$43 million increase in the Warrant Facility and considering C$885 million ($690 million) of total unrestricted cash, the pro forma unrestricted cash was 528 million CAD ($412 million) as of January 31, 2022. Lease obligations amounted to CAD 943 million million ($735 million), and with the CAD 678 million drawn, the total debt amounted to CAD 1.6 million (USD 1.2 million), while offsetting CAD 343 million in cash and cash equivalents, our net debt was CAD 1.3 billion (USD 1.2 million). ) “, did he declare.

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