LONDON – Canadian airline Air Transat has gracefully announced today (29 July 2022) that it has received extra rounds of funding as the company Transat A.T Inc. has reached an agreement with Canada Enterprise Emergency Funding Cooperation (CEEFC).
The arrangement will secure $100 million in additional cash flow. Moreover, it will establish additional cash injections through the Large Employer Emergency Financing Facility (LEEFF).
The airline also secured an agreement with all of its creditors to postpone its April 2023 tranche to April of 2024, as well as to alternate the October 2022 tranche to the October 2023 tranche. This means better liquidity management for the Canadian leisure airline.
The additional rounds of cash flow were injected on April 29th of 2021. With the assistance of LEEFF to aid the airline to heal its wounds from the pandemic, this is a great tool for the airline to stay afloat.
Moreover, on 10 March 2022, the airline also secured an additional $43.3 million for passenger refunds and also negotiated 20 monthly deferrals for key points of the unsecured financing agreement from LEEFF itself.
Annick Guérard, President and CEO of Transat stated: “This complementary financing and the changes to the existing agreements strengthen our treasury position and reinforce our financial resilience.”
“This important financing milestone, combined with sales that have been doing well in recent months, will give us the financial flexibility to deploy our strategic plan with optimism and confidence.”
The additional lifeline for Air Transat is welcomed by all. Its creditor, the Canada Emergency Funding Cooperation, which the airline will require for the next few months for its operations, will total around $100 million, whereby 80% is under the terms and conditions of the tranche first made last March.
With the LEEEFF financing in place, the airline has thereof a total of 4,687,500 warrants for the acquisition of an equivalent number of Transat shares at an exercise price of $3.2 per share over a 1 decade period.
These latest rounds of financial agreements will also give Canadian leisure additional credit with the $50 million, conditions applied. This means that extra funding from a third party is also covered in the conditions.
The airline’s acceptance of receiving additional rounds of funding shows Air Transat’s commitment to adhering to its recovery plan. This will certainly catapult the airline into a better position to compete with other airlines in the country operating on highly contested leisure flights.
Newer airlines offering lower fares such as Flair Airlines and Swoop are potential threats to the airline, and this round of funding provides a better position for Transat to recover in a post-pandemic world.