Ottawa and airlines close to $ 7 billion bailout, says union leader

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The federal government is in the final stages of talks with the airlines on what could turn out to be a $ 9 billion support package for the industry affected by the pandemic, union representative Jerry Dias said.

Sources say most airlines are asking Ottawa for financial help, but WestJet wants the federal government to prioritize developing a plan to safely restart air travel.

“I think the sticking point is money,” said Dias, national president of Unifor, which represents approximately 15,000 workers in the airline industry. “The loan, the interest on the loan.”

Dias said talks between the airlines and the government were originally focused on the prospect of a $ 7 billion loan to be repaid at 1% interest over 10 years – but the final package could be considerably most important.

“It is probably not inconceivable to speak of $ 9 billion,” he said.

“This is not a bailout. I would say it is a loan to the industry. Based on the time that has passed and the increased complexity of the negotiations, I suggest you that the $ 7 billion is now the floor, not the ceiling. “

Unifor National President Jerry Dias: “I understand a solution is imminent.” (The Canadian Press)

Dias said he had spoken to government and airline officials and called the negotiations “contentious and difficult.”

“I understand a solution is imminent,” he said. “But frankly, I thought it was imminent over a month ago, so we’ll see where this thing ends. But it has to be done quickly.”

Dias confirmed last night that, as first reported by the Toronto Star, Air Canada has agreed to reimburse passengers for flights canceled as part of the talks. The news offered a public signal that a bailout deal was approaching.

Air Canada said in a statement to media it could not comment publicly on the bailout talks; his last public statement on the talks, released on February 12, said only that the talks were continuing.

Ropes tied

The then president of the airline, Calin Rovinescu, said on a quarterly earnings conference call that talks with the government had “accelerated” to a pace that made him more confident in the outcome, but added that there was no guarantee of a deal.

A Transport Canada official, speaking on the merits, told CBC News that the airline industry has received $ 1.7 billion under the federal wage subsidy program since the start of the pandemic.

The official added that any additional taxpayer support will come with conditions – such as commitments by airlines to reimburse passengers for flights canceled during the pandemic, restore and maintain regional routes, and protect jobs.

WATCH | Ottawa airlines are on the verge of closing a multibillion dollar bailout deal:

Ottawa, airlines move closer to multibillion dollar bailout

Ottawa and the airlines have entered the final stages of talks on a multibillion-dollar bailout deal as passengers await compensation for flights canceled during the pandemic. 2:24

Infrastructure and Communities Minister Catherine McKenna said today that “good progress [is] ongoing “on the deal. She also said airlines offering passengers refunds for canceled flights were a prerequisite for a bailout.

“This has been extremely important,” McKenna said. “We all hear from Canadians who want compensation, who want their reimbursements and I know a lot of hard work is being done by [Transport Minister Omar] Alghabra and also [Finance Minister Chrystia] Freeland to get a deal.

Tensions during the talks

Sources say everyone involved in the confidential talks has signed nondisclosure agreements preventing them from speaking publicly about the details. Deputy Minister of Finance Michael Sabia is leading negotiations for the federal government.

The Globe and Mail reported last month that the government remains open to “some form of equity investment in exchange for low-interest loans to industry.”

WestJet’s demand for a plan to restart domestic air travel is causing tensions in talks, sources say. WestJet President and CEO Ed Sims said his airline was not looking for a “bailout” and instead wanted a stimulus package for the industry.

“We’re not looking for a policy that strictly supports our results and, frankly, that’s not what the nation needs,” Sims wrote to MPs and Senators in December 2020.

WestJet said in a statement to media today that it is continuing negotiations with the federal government and has nothing new to report. The airline also said it has seen a 90% reduction in passenger numbers over the past year.

“Testing must be a priority”

“Given the economic realities created by quarantines and extended restrictions, we are advocating for the prioritization of a domestic travel plan and a transparent policy to ensure the safe restart of travel,” the door said. -WestJet Morgan Bell spoke in a statement.

“With vaccine distribution widely in months, testing must be a priority for the Government of Canada and the relationship between testing and quarantine must evolve based on data and science. “

Andrew Gibbons, WestJet’s director of government relations, told MPs on the House of Commons transport committee last month that Canada needs to make domestic travel a priority and develop cohesive policy, instead of leaving it to the provinces. to write their own travel restrictions.

“In view of the global uncertainty, Canada must prioritize domestic travel and negotiate a transparent and clear policy with provincial governments,” Gibbons said on February 4. “It could be based on COVID levels or on the percentage of the population vaccinated.”

Air Canada has also told the government that restarting the industry is a priority, sources said. The airline has been requesting testing at airports since last spring and has worked with nonprofit McMaster HealthLabs to research alternatives to quarantine measures.

Prime Minister Justin Trudeau said on January 29 that the government is committed to safely restarting the travel and tourism industry when pandemic conditions improve sufficiently, and has pledged to work with the companies aerials on “the future relationship between testing and quarantine requirements”.

Air Canada planes sit on the tarmac at Toronto Pearson International Airport, October 14, 2020. (Nathan Denette / The Canadian Press)

Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, said a strategy to reopen the airline industry should accompany the bailout in the short term.

“We need a plan and we need transparency,” Beatty said.

“[The government] should say, based on the information we have today, this is our best judgment based on when it will be opened. And these are the criteria that we will use to determine whether or not to reopen the economy or restart travel. “

Goldy Hyder, president of the Business Council of Canada, said he feared Canadian airlines were falling behind because governments in other countries have already provided financial support.

He added that Canadians should also be concerned, as losses suffered by airlines could mean higher ticket prices and fewer travel options in the future.

“The longer we wait, the more likely the choice will be and the higher the costs,” he said. “So helping the industry now will help Canadians when they’re ready to travel. “

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