• ITVI.USA
    15,494.200
    152.800
    1%
  • OTRI.USA
    25.070
    0.290
    1.2%
  • OTVI.USA
    15,447.770
    158.270
    1%
  • TLT.USA
    2.700
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    2.550
    -0.030
    -1.2%
  • TSTOPVRPM.CHIATL
    3.030
    -0.080
    -2.6%
  • TSTOPVRPM.DALLAX
    1.450
    0.150
    11.5%
  • TSTOPVRPM.LAXDAL
    2.910
    -0.030
    -1%
  • TSTOPVRPM.PHLCHI
    1.700
    -0.040
    -2.3%
  • TSTOPVRPM.LAXSEA
    3.020
    -0.010
    -0.3%
  • WAIT.USA
    120.000
    0.000
    0%
  • ITVI.USA
    15,494.200
    152.800
    1%
  • OTRI.USA
    25.070
    0.290
    1.2%
  • OTVI.USA
    15,447.770
    158.270
    1%
  • TLT.USA
    2.700
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    2.550
    -0.030
    -1.2%
  • TSTOPVRPM.CHIATL
    3.030
    -0.080
    -2.6%
  • TSTOPVRPM.DALLAX
    1.450
    0.150
    11.5%
  • TSTOPVRPM.LAXDAL
    2.910
    -0.030
    -1%
  • TSTOPVRPM.PHLCHI
    1.700
    -0.040
    -2.3%
  • TSTOPVRPM.LAXSEA
    3.020
    -0.010
    -0.3%
  • WAIT.USA
    120.000
    0.000
    0%
Air CargoAmerican ShipperNews

Air Canada raises $750 million to boost liquidity

(Correction: An earlier version had an incorrect headline stating $750 billion is being raised.)

Air Canada (TSX:AC) late Tuesday announced it is raising more than $750  million in working capital through the sale of CA$500 million ($357.5 million) of stock and a private placement of $400 million in bonds.

The development came the same day as the International Air Transport Association warned that airlines could eventually fail because of debt loads they are taking on to support operations. The coronavirus pandemic has caused drastic declines in airline earnings and cash as people stay home to prevent spreading the disease.

Since March, Air Canada has tapped a line of credit for $1 billion, borrowed $600 million and arranged a large bridge loan for new Airbus regional jets it ordered.

It temporarily reduced passenger operations by 90% and suffered a $345 million adjusted net loss in the first quarter. Extensive cost savings have come from early retirement of aircraft, encouraging workers to take unpaid time off, and cutting discretionary spending and capital expenditures. Earlier this month, Air Canada said it needed to reduce its workforce by up to 60% to save money.

Air Canada is lobbying the Canadian government for direct emergency assistance. The Canadian government has implemented a federal wage subsidy designed to keep Canadians on payrolls and has a new loan program for large employers. Air Canada is not participating in the payroll program because the protections only last for a short period of time and the airline expects business to bounce back very slowly.

The new offerings will raise Air Canada’s liquid assets to about CA$7 billion, which will be used for general purposes until travel demand returns and the company is able to generate profits.

Underwriters have the option to increase share issues by an additional 15% and an additional 15% of the convertible senior unsecured notes, which must be repaid before other debts in the event of bankruptcy and can be converted into company stock.

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Eric Kulisch, Air Cargo Editor

Eric is the Air Cargo Market Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at ekulisch@freightwaves.com
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