Air Canada raises $1.6 billion to mitigate losses during pandemic

Air Canada raises $1.6 billion to mitigate losses during pandemic

Air Canada raises $1.6 billion to mitigate losses during pandemic

MONTREAL — Air Canada has raised $1.59 billion from share and debt offerings intended to offset some of the carrier’s losses from the COVID-19 pandemic.

The company said Tuesday it sold 35.4 million voting shares at $16.25 apiece for gross proceeds of $575.6 million.

It also issued $1.02 billion in convertible senior unsecured notes due in 2025, well above its initial plan for about $540 million.

The financing proceeds help to bolster Air Canada’s liquidity after confinement measures and border shutdowns “destroyed demand and depleted cash,” chief financial officer Michael Rousseau said in a release.

Despite more than $1 billion in losses in the first quarter, a positive reaction from the public markets amounted to “a strong endorsement” of the airline’s strength, he said.

The underwriters exercised their over-allotment option to buy 15 per cent of the shares on offer, and initial buyers of the convertible notes exercised their option to purchase an additional 15 per cent, Air Canada said.

The company is burning through about $20 million per day — $620 million per month — in the second quarter, said National Bank analyst Cameron Doerksen, as the bulk of the fleet remains grounded while fixed costs such as plane leases persist.

“We believe demand for air travel and associated bookings (i.e., cash in the door) will progressively improve in Q3 and into Q4 and we forecast the cash low point at $5.4 billion in Q1/21, so we are very comfortable that Air Canada has sufficient liquidity to manage through the crisis,” Doerksen said.

Liquidity now amounts to roughly $9.7 billion, giving the company “significantly more staying power under a more bearish COVID-19 scenario,” said analyst Walter Spracklin of RBC Dominion Securities.

Spracklin said he does not expect a return to break-even cash flow until 2022.

This report by The Canadian Press was first published June 2, 2020.

Companies in this story: (TSX:AC)

The Canadian Press

Air Canada

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

SARS-CoV-2 virus particles, which causes COVID-19, emerge from the surface of cells isolated from a patient in the U.S. and cultured in a lab in a 2020 electron microscope image. THE CANADIAN PRESS/AP-HO, National Institute of Allergy and Infectious Diseases - Rocky Mountain Laboratories
Alberta now has 17,743 active cases of COVID-19

Province now has 17,743 active cases

File Photo
Sylvan Lake Community Christmas Eve Dinner cancelled

The 20th anniversary of the Community Christmas Eve dinner is cancelled amidst COVID-19 concerns

The consensus around the Sylvan Lake council chamber Wednesday was the town does not have the ability to properly enforce a proposed mandatory indoor mask bylaw. File Photo
Sylvan Lake town council squashes mask bylaw

The bylaw did not make it past first reading, after a 4-3 vote defeated the motion

Sylvan Lake RCMP are looking for the identity of the suspect who stole from over 40 resident mail boxes. (Photo Courtesy of Sylvan Lake RCMP)
Over 40 mailboxes broken into at Sylvan Lake apartment building

Sylvan Lake RCMP are investigating the incident and searching for the identity of the suspect

Ten-month-old Aidan Deschamps poses for a photo with his parents Amanda Sully and Adam Deschamps in this undated handout photo. Ten-month-old Aidan Deschamps was the first baby in Canada to be diagnosed with spinal muscular atrophy through Ontario’s newborn screening program. The test was added to the program six days before he was born. THE CANADIAN PRESS/HO, Children’s Hospital Eastern Ontario *MANDATORY CREDIT*
First newborn tested for spinal muscular atrophy in Canada hits new milestones

‘If Aidan had been born any earlier or anywhere else our story would be quite different’

People line up at a COVID-19 assessment centre during the COVID-19 pandemic in Scarborough, Ont., on Wednesday, December 2, 2020. Toronto and Peel region continue to be in lockdown. THE CANADIAN PRESS/Nathan Denette
COVID-19 vaccine approval could be days away as pressures mount on health-care system

Many health officials in regions across the country have reported increasing pressures on hospitals

A logo for Netflix on a remote control is seen in Portland, Ore.,Aug. 13, 2020. Experts in taxation and media say a plan announced Monday by the government will ultimately add to the cost of digital services and goods sold by foreign companies. THE CANADIAN PRESS/AP-Jenny Kane
‘Netflix tax’ for digital media likely to raise prices for consumers, experts say

The government says Canadian companies already collect those taxes when they make digital sales

Gaming content was big on YouTube in 2020. (Black Press Media files)
What did Canadians watch on Youtube during isolation? Workouts, bird feeders

Whether it was getting fit or ‘speaking moistly,’ Canadians had time to spare this year

A teacher places the finishing touches on the welcome sign at Hunter’s Glen Junior Public School which is part of the Toronto District School Board (TDSB) during the COVID-19 pandemic in Scarborough, Ont., on Sept. 14, 2020. THE CANADIAN PRESS/Nathan Denette
Hindsight 2020: How do you preserve a year many Canadians would rather forget?

Figuring out how to preserve the story of the pandemic poses a series of challenges

Team Manitoba celebrate after defeating Team Ontario to win the Scotties Tournament of Hearts in Moose Jaw, Sask., Sunday, Feb. 23, 2020. Curling Canada wants Calgary’s Canada Olympic Park to be a curling hub for the season’s top events. THE CANADIAN PRESS/Jonathan Hayward
Calgary facility set to become curling hub during pandemic

Curling Canada has provisional approval for Calgary’s hub-city concept from Alberta Health

Ash and Lisa Van carry a freshly cut Christmas tree while wearing personal protective masks at a Christmas Tree Farm in Egbert, Ontario, Sunday, Nov. 29, 2020 THE CANADIAN PRESS/ Cole Burston
‘Everyone wants a tree and they want it now’: Christmas tree sales on pace for record

Anticipated demand for Christmas trees has sparked a rush by some to purchase more trees wholesale

Most Read