Air Canada pulls out of government rescue package

Written by By Josie Ensor, CNN Air Canada is no longer interested in a federal government assistance package that was issued to it a year ago. The cancellation was the latest twist in a…

Air Canada pulls out of government rescue package

Written by By Josie Ensor, CNN

Air Canada is no longer interested in a federal government assistance package that was issued to it a year ago.

The cancellation was the latest twist in a long-running saga that has already seen the airline post at least 10 voluntary concessions and create a plan to minimize its costly obligations to Canada’s C$4.9 billion bondholders.

“Air Canada has substantial financial flexibility to fund our business growth and strengthen our finances,” said Benjamin Smith, president and chief executive officer of Air Canada, in a statement on Friday.

The company will reinvest the $700 million toward the maintenance of aircraft and growing non-aviation revenue sources such as extra fees and sales of higher yielding tickets, Smith said.

Last week, the airline said it was considering selling all or part of its planes and relinquishing its airport terminal to the city of Montreal.

In November, it also agreed to permit another airline to serve its Toronto hub, in exchange for securing Delta Air Lines’ services to Canada through 2026.

Air Canada filed for creditor protection last March

The most recent funding proposal, issued in November 2017, helped secure $250 million from the federal government.

Smith said in the company’s statement that he had met with Canadian Prime Minister Justin Trudeau, “to discuss our continuing discussions and progress towards a long-term plan for long-term financial stability for the company.”

Canada’s national carriers, including Air Canada and WestJet Airlines, have also recently unveiled discount ULCCs , with plans to focus their efforts on cutting prices and increasing the number of seats sold.

Meanwhile, global mega-carriers are amassing ambitious expansion plans across multiple markets, and have threatened to squash regional flyers.

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