Wednesday,  May 31, 2023  6:52 pm

Transat secures $700M in funding from Ottawa; refunds, commission protection promised

  • Air
  •   04-29-2021  7:39 am
  •   Pax Global Media

Transat secures $700M in funding from Ottawa; refunds, commission protection promised
Jean-Marc Eustache, president & CEO, Transat A.T.
Pax Global Media

Transat A.T. has reached an agreement with the Government of Canada to borrow up to $700 million in additional liquidity through the Large Employer Emergency Financing Facility (LEEFF).

"The agreement reached with the Government of Canada provides us with an additional $700 million in liquidity, which is the amount we needed to move forward with confidence. Our strong balance sheet prior to the pandemic and the aggressive actions we have taken since have enabled us to weather this unprecedented crisis so far," said Jean-Marc Eustache, president and CEO of Transat A.T., in a statement on Thursday morning (April 29). "With this support, we now look forward to resuming operations as soon as safe travel is possible and travel restrictions can be lifted. We will then be able to implement our plan to make Transat a solid and profitable company once again, one that will continue to symbolize leisure travel for its many customers in Quebec and elsewhere." 

"The funds obtained will also enable us to reimburse our customers whose travel had to be cancelled due to the pandemic under conditions that are sustainable for the company, which we welcome."

The fully repayable credit facilities was made available by the Canada Enterprise Emergency Funding Corporation under the LEEFF.

LEEFF loans provide bridge financing to Canada's largest employers whose needs during the pandemic are not being met through private market financing.

In February, Sunwing used LEEFF to access $375 million of liquidity which the company said it used to protect full-time jobs. 

Refunds part of the deal

Transat says $390 million will be used to help support its business and $310 million will be used to reimburse travellers who were scheduled to depart on or after Feb. 1, 2020, for whom a travel credit was issued as a result of COVID–19.

To be eligible, customers will need to expressly indicate their desire for a refund. 

A webpage dedicated to Transat's refund's process has been set up here

Passengers that have a travel credit must submit their refund request to Transat by Aug. 26, 2021. 

The company is urging customers to submit their request as "soon as possible."  

“We’ve been impatiently waiting for this moment, and we know our customers have been, too,” said Annick Guérard, COO of Transat in a release shortly after the funding was announced. “Now that a funding agreement has been reached and the eligibility criteria have been established by the Government of Canada, we are delighted to be able to provide our customers with this long-awaited aid.” 

Refunds will be issued to eligible passengers with:

  • a travel credit issued before April 29, 2021
  • a departure that was scheduled for February 1, 2020, or later
  • a booking that was made before April 29, 2021

Refunds will also be available to those who did not transfer their travel credit (nor receive a transfer) and who did not submit a claim to their insurance company. 

Eligible bookings must also not be subject to an active chargeback claim, nor already have been refunded by a credit card provider. 

Commissions protected

Transat also confirmed that travel agent commissions will be protected. 

“Travel agents have shown unwavering resilience and support since the crisis began,” said Guérard“That’s why we’re pleased to confirm that commissions earned by agents will not be recalled if their customers opt for a refund.”

If customers originally booked with a travel agent or online travel agency, they should contact them directly, Transat said. 

Other commitments 

Other commitments in Transat's deal with Ottawa include:

  • Restrictions on dividends, stock repurchases and executive compensation.
  • Maintaining active employment at the level of April 28, 2021.

In addition to the new funding, the amounts already drawn on the existing facilities will remain in place and will be extended for a period of two years from the implementation of the new financing.

Connected to the financing, Transat issued the government 13 million warrants for the purchase of Transat shares at an exercise price of $4.50 per share.

The news comes after Transat and Air Canada announced on April 2 that they had agreed to call off a $190 million-dollar deal that would have seen Canada’s biggest airline acquire the country's third biggest.

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