Air Canada announces longer-term refinancing to replace short-term facilities

  • $787.7 million Secured refinancing of 18 Airbus A220 aircraft
  • $552.6 million Class A and B Enhanced Equipment Trust Certificates, Series 2020-2

MONTREAL, September 23, 2020 /CNW Telbec/ – Air Canada (TSX: AC) (the “Company”) announced today that it has recently completed two longer-term refinancing transactions totaling approximately $1.52 billionreplaces short-term facilities.

The first transaction consists of a committed Secured Facility Aggregate $787.7 million Financing for Air Canada’s purchase of the first 18 Airbus A220 aircraft for a period of 12 years from delivery of each aircraft on a floating rate basis based on CDOR. This equates to an interest rate of approximately 2.39% using current CDOR rates. Because aircraft will be funded in Canadian dollars under this new secured facility, the bridge financing will be $787.7 million for the same 18 deployed Airbus A220 aircraft April 2020 are repaid at the same time. Any unpaid amount on the bridging loan will be refunded after the 18th year has been fundedth A220 aircraft expected in first quarter of 2021.

The second transaction consists of a private placement of two tranches of Enhanced Equipment Trust Certificates, the proceeds of which were used to purchase equipment certificates issued by Air Canada and used by three Boeing 787-9 aircraft, three Boeing 777-300ER aircraft and one Boeing 777-200LR and nine A321-200 aircraft were secured. The two tranches of the Certificates together have a total principal amount of US$552.6 million and a weighted average interest rate of 5.73%. The private placement consists of Class A Certificates and Class B Certificates. The Class A Certificates amount to US$452.6 million have an interest rate of 5.25% per annum and a final expected distribution date of April 1, 2029. Class B certificates amount to US100 million dollars have an interest rate of 9.00% per annum and a final expected distribution date of October 1, 2025. Air Canada used the proceeds from this financing along with cash to fully repay the US600 million dollars Originally established loan with a term of 364 days April 2020.

Debt maturities in 2021 previously disclosed in our Q2 2020 results are reduced by approximately on a pro forma basis $1.42 billion and are now estimated at total $1.71 billionas soon as both of the aforementioned bridging loans have been repaid in full.

“These two refinancing transactions were completed in an extremely challenging environment and continue to demonstrate Air Canada’s ability to access financial markets on attractive terms to either enhance liquidity or refinance existing debt to extend maturities and reduce overall financial risk said Pierre HolleCompany director and treasurer.

The Class A and Class B Enhanced Equipment Trust Certificates (the “Certificates”) have not been, and may not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any other jurisdiction offered or sold The United States lack of registration or an applicable exception to the registration requirements of the Securities Act and state securities laws. The Certificates have been or will only be offered and sold to persons who are deemed to be qualified institutional purchasers within the meaning of Rule 144A of the Securities Act and persons other than US persons in transactions outside of the United States The United States in reliance on Regulation S of the Securities Act. The Certificates have not qualified for sale to the public under applicable Canadian securities laws and accordingly no offer or sale of the Certificates is Canada was or will be made on a basis that is exempt from the prospectus requirements of these securities laws. This press release does not constitute an offer to sell the Certificates or the solicitation of an offer to buy the Certificates in any jurisdiction.


This press release contains forward-looking statements within the meaning of applicable securities laws. Such forward-looking statements may be based on forecasts of future results and estimates of amounts that are not yet determinable. These statements may include, among other things, comments regarding policies, strategies, expectations, proposed operations or future actions. Forward-looking statements are identified by terms and expressions such as preliminary, anticipate, believe, could, estimate, expect, to intend, can, to plan, predict, Project, will, want, and similar terms and expressions, including references to assumptions. By their nature, forward-looking statements are based on assumptions, including those described herein, and involve significant risks and uncertainties. Forward-looking statements cannot be relied upon, among other things, due to changing external events and general imponderables in business. Actual results could differ materially from those projected in any forward-looking statements as a result of a number of factors, including those discussed below. The value of assets in Air Canada’s unencumbered asset pool can be affected by a number of factors, including market and economic conditions and exchange rates.

Air Canadais, along with the rest of the global airline industry, facing a sharp and abrupt drop in traffic and a corresponding drop in revenue as a result of the Coronavirus (“COVID-19”) pandemic and the travel restrictions imposed in many countries around the world and particularly in Canada as well as The United States. The effects of the COVID-19 pandemic were noticeable early on in traffic and sales figures March 2020. These impacts include drastic reductions in profit and cash from operations. With evolving government restrictions around the world and the severity of the restrictions, visibility into travel demand is very limited Canada; These restrictions and concerns about travel due to the COVID-19 pandemic and passenger expectations regarding the need for certain precautions such as physical distancing are significantly restraining demand. Air Canada cannot predict the full impact or when conditions will improve. Air Canada is actively monitoring the situation and will respond as the impact of the COVID-19 pandemic evolves, which will depend on a number of factors including the course of the virus, government actions and passenger response, as well as the timing of an international recovery and Business travel, which are important market segments for Air Canada, none of which can be predicted with certainty.

Other factors that could cause results to differ materially from those set forth in forward-looking statements include those factors discussed in Air Canada’s public disclosure file, which is available at and in particular those referred to in Section 14 risk factors Air Canada’s Q2 2020 MD&A and Section 20 risk factors Air Canada’s 2019 MD&A. The forward-looking statements contained in this press release represent Air Canada’s expectations as of the date of this press release (or as of the date otherwise stated) and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable securities regulations.

About Air Canada

Air Canada is canada largest national and international airline. canada Flag Carrier is one of the 20 largest airlines in the world and served over 51 million customers in 2019. Air Canada is a founding member of star alliance, the most comprehensive air transport network in the world. Air Canada is the only international network operator in North America Receive a four-star ranking from independent UK research firm Skytrax, which also named Air Canada the best airline of 2019 North America. For more information, please visit: @AirCanada on Twitter and join Air Canada Facebook.

SOURCE Air Canada

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