Air Canada has announced the closing of its previously announced fund-raising effort, hauling in nearly CAD1.6 billion Canadian dollars (USD1.19 billion) by selling shares and convertible debt to strengthen its cash flow, showing that investors are still willing to support aviation through the coronavirus crisis.
The company will use the proceeds to supplement its working capital and for other general corporate purposes, bolstering its cash position and “allowing for additional flexibility both from an operational standpoint and in the implementation of its planned mitigation and recovery measures in response to the Covid-19 pandemic,” it said in a statement on June 2.
The “important financing” will allow the flag carrier to “better manage debt leverage and risk” as the market recovers, its chief financial officer Michael Rousseau explained in the statement.
In May, Rousseau said that Air Canada was seeing fewer cancellations and rising demand for air travel, and on May 22 the carrier announced a summer schedule with nearly 100 destinations.
However, on May 28, Moody’s Investors Service downgraded its rating for Air Canada from Ba1 to Ba2, giving it a negative outlook and foreseeing that the current crisis and uncertain recovery will extend throughout 2020 and 2021.
Meanwhile, Air Canada awaits a decision by antitrust regulators and the country’s transport minister on its deal to buy the Canadian tour operator Transat AT, which owns Air Transat (TS, Montréal Trudeau). But according to a story aired on the Canadian French-language television network TVA on June 3, citing three sources close to the matter, Air Canada is now allegedly lobbying government officials to block the deal.
The crisis has clouded the outlook for the industry and would make the acquisition unnecessary for the national carrier, the report said.
However, Air Canada has told the English-language network CTV that the only meetings it has had with the government relate to the impact of Covid-19. Regarding Air Transat, it was merely waiting to hear what regulators decide, it added.