Thursday,  July 9, 2020  5:38 pm

Air Canada aims to raise $1 billion+ to increase cash position amid pandemic

  • Air
  •   05-26-2020  6:43 pm
  •   Pax Global Media

Air Canada aims to raise $1 billion+ to increase cash position amid pandemic
Pax Global Media

Air Canada is attempting to raise more than $1 billion in share and debt offerings to support its finances during the COVID-19 pandemic, the company stated. 

In a press release issued on Tuesday (May 26th), the airline said it has commenced a marketed public offering for approximately $500 million (CAD) of Class A and Class B voting shares. 

The company has also started a private placement of convertible senior unsecured notes for gross proceeds of approximately US$400 million (about $550 million CAD). 

Air Canada intends to grant the underwriters an option to purchase up to an additional 15 per cent of the shares and up to an additional 15 per cent of the convertible notes. 

The share offering will be priced in the context of the market with the price and other final terms to be determined at the time of entering into an underwriting agreement, the company stated. 

The company says the net proceeds from the offerings will serve to increase Air Canada's cash position and allow "additional flexibility both from an operational standpoint and in the implementation of its planned mitigation and recovery measures in response to the COVD-19 pandemic."

TD Securities Inc., J.P. Morgan Securities Canada Inc. and Citigroup Global Markets Canada Inc. are acting as joint active book-running managers for the share offering and J.P. Morgan Securities LLC, TD Securities Inc. and Citigroup Global Markets Canada Inc. are acting as joint active book-running managers for the Convertible Notes Offering.

Air Canada posted a $1.05 billion loss in its first quarter last March as the demand for travel tanked due to border closures and travel restrictions linked to the COVID-19 pandemic.

The carrier said revenue fell by $712-million to $3.7-billion in the first three months of 2020 compared to last year.

READ MORE: Air Canada posts $1.05-billion loss as airline faces “darkest period”

At that time, Calin Rovinescu, president and CEO of Air Canada, said it would take “at least three years” to recover to 2019’s levels of revenue and capacity.

“We expect that both the overall industry and our airline will be considerably smaller for some time, which will unfortunately result in significant reductions in both fleet and employee levels,” Rovinescu said in March. 

Since March 16th, Air Canada has reduced its flight schedule by 90 per cent.

In lieu of passengers, Air Canada has recently taken to shipping cargo to assist with the global requirements of goods and personal protective equipment during the pandemic.


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