Air Canada exits government support amid industry recovery

·2-min read

(Reuters) -Air Canada said on Friday it would not need further financial support from the Canadian government, citing the airline's recovery from the COVID-19 pandemic and an improved financial position.

The country's No. 1 carrier earlier this month posted a quarterly revenue beat, aided by Canada's decision to open its borders to fully-vaccinated travelers.

The improving results amid a rise in air travel and debt restructuring that generated cash of about C$7.1 billion ($5.63 billion) in the third quarter prompted Air Canada to exit the government's aid package, the carrier said.

"Air Canada's recovery from COVID-19 continues. We are recalling employees, adding new routes and frequencies to our network, and restoring services," Chief Executive Officer Michael Rousseau said in a statement.

The Canadian government announced in April a support package that provided the carrier access to interest bearing loans of C$5.38 billion ($4.25 billion), as the country's restrictions to curb the spread of the virus battered travel.

Air Canada said about C$3.98 billion worth of loans from the facility were "never accessed and remain unused."

ATB Capital Markets analyst Chris Murray said the announcement is in line with recent management commentary on demand, along with advanced booking curves, adding that the government package was a last resort for the carrier.

"It's another sign of confidence that the company has," he said.

The government also purchased a 6% stake in Air Canada worth C$500 million and continues to hold those shares, the carrier said.

A representative for Canada's Finance Minister Chrystia Freeland was not immediately available for comment.

Air Canada stock was down almost 2% in morning trade.

($1 = 1.2647 Canadian dollars)

(Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Anil D'Silva and Shailesh Kuber)

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