Ottawa has announced a multimillion-dollar loan program aimed at providing financing to large employers in sectors impacted by the COVID-19 pandemic.
Calling them “bridge loans, not bailouts,” Prime Minister Justin Trudeau explained the new initiative at his daily press briefing from Rideau Cottage on Monday (May 11th).
The Large Employer Emergency Financing Facility (LEEFF), as the program is called, will allow companies access to adidtonal liquidity to keep operations going, retain workers, and avoid bankruptcy.
Canada’s airline industry is one sector that can access this program.
As an industry that has “larger financing needs,” airlines can access loans of up to $60 million per company, and guarantees of up to $80 million. (Terms and conditions apply).
“...Private-sector lenders are adequate for the needs of large businesses. But in an extraordinary situation when that isn’t always enough, we must act to prevent massive harm to Canadian workers and families, and the Canadian economy,” Trudeau told reporters.
The objective of the program is to keep Canadian companies running, Trudeau said, adding that the financial aid will be accessible to every sector in Canada. (All with exception to companies in the financial sector and firms convicted of tax evasion).
To be eligible, companies must have annual revenues of $300 million or higher and are seeking financing of $60 million or more.
“Different sectors will need the funds for different reasons," said Finance Minister Bill Morneau of the new program. "In the retail sector clearly rent is a very significant portion of their cost of doing business and we can expect that this will be supportive of that challenge. Whereas in the airline or hospitality sector, it might be for different costs that they need to support to get through this crisis."
Sunwing issued a statement in response to the announcement:
“Throughout the pandemic and following associated bans on non-essential travel, Sunwing has vocally advocated for support for the air transportation industry and its employees," the company stated. "Our discussions have been productive and we appreciate the understanding and attention that senior Government of Canada officials have paid to the specific challenges that airlines face, and their potentially adverse impacts on the Canadian economy."
The company said the announcement "shows that the government has been listening and we are pleased to see this major commitment to large employers. At this point, we are still reviewing the program for details on its potential application to Sunwing, but applaud the commitment to protect Canadian jobs and help businesses weather the current economic downturn.”
In a statement, WestJet acknowledged the creation of LEEFF, noting that "we will review the program specifics to determine our next steps," the company said. "In the meantime, we continue to do everything we can to mitigate the impacts on our employees, operations and the critical investments we make that are essential to Canadian communities."
Don't miss a single travel story: subscribe to PAX today!