Air Canada has closed two additional financing
transactions for net proceeds of $1.23 billion. Since the start of
the COVID19 pandemic in the first quarter of 2020, Air Canada has
raised $5.5 billion of liquidity.
On 22 June 2020, Air Canada completed a private
offering of $840 million aggregate principal amount of 9.00%
Second Lien Secured Notes due 2024, which were
sold at 98% of par. The 2024 Notes are secured obligations of Air
Canada, secured on a second lien basis by certain real estate
interests, ground service equipment, certain airport slots and
gate leaseholds, and certain routes and the airport slots and gate
leaseholds utilized in connection with those routes.
Earlier in June, Air Canada completed a private offering of one
tranche of Class C EETCs with a combined aggregate face amount of
approximately US$315 million, which were sold at 95.002% of par.
The Class C tranche ranks junior to the previously issued Series
2015-1, Series 2015-2, and Series 2017-1 EETCs, and is secured by
liens on the 27 aircraft financed under the Series 2015-1, Series
2015-2, and Series 2017-1 EETCs. The Class C EETCs have an
interest rate of 10.500% per annum, and a final expected
distribution date of July 15, 2026.
"The fact Air Canada was able to add $1.23 billion
to its liquidity with these last two transactions without
utilizing any of its previously disclosed unencumbered assets
leaves the airline in an excellent position to access additional
funds should the need arise," said Pierre Houle, Managing Director and Treasurer of Air Canada.
"Complementing these efforts have been ongoing initiatives to
reduce cash burn through such measures as workforce reductions, a
$1.1 billion Cost Transformation Program and capacity and network
In addition to these more recent financings, Air Canada
also concluded the following financing transactions in 2020:
- In March 2020, Air Canada drew down its US$600 million and
$200 million revolving credit facilities for aggregate proceeds of
- In April 2020, Air Canada concluded a 364-day
term loan in the amount of US$600 million, secured by aircraft and
spare engines, for proceeds of $829 million.
- In late April
2020, Air Canada concluded a bridge financing of $788 million for
18 Airbus A220 aircraft which Air Canada expects to replace with
longer-term secured financing arrangements later in 2020.
June 2020, Air Canada concluded an underwritten marketed public
offering of 35,420,000 Class A Variable Voting Shares and/or Class
B Voting Shares of the Company at a price to the public of $16.25
per share, for aggregate proceeds of $575.6 million, and a
concurrent marketed private placement of convertible senior
unsecured notes due 2025 for aggregate proceeds of US$747.5
million ($1.01 billion).
"We entered 2020 on the doorstep
of investment grade with a very strong balance sheet, low net
leverage and significant liquidity, before the COVID19 pandemic
and government-imposed quarantines and border restrictions
destroyed demand and depleted cash. Air Canada's strong relative
position has allowed us to navigate through this crisis and we
have full confidence that we will be successful in maintaining
liquidity at levels more than sufficient to meet the challenges
and take advantage of the opportunities ahead. With these latest
transactions Air Canada has now raised approximately $5.5 billion
in 2020 and expects to end the second quarter of 2020 with at
least $9 billion in liquidity," concluded Mr. Houle.
Air Canada is utilizing the net proceeds from
these transactions to supplement its working capital and for other
general corporate purposes.
unencumbered asset pool (excluding the value of Aeroplan and Air
Canada Vacations) amounts to approximately $2.5 billion at current
The airline says it will continue to explore financing
arrangements should additional liquidity be required or to
refinance existing debt to push out maturities.