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Home » Air Canada: “unlimited travel” pass and $ 500 million raised from the sale and leasing back of aircraft

Air Canada: “unlimited travel” pass and $ 500 million raised from the sale and leasing back of aircraft

After losing more than a billion dollars for two consecutive quarters, the company’s stock has fallen to very low levels. In addition to losing money, the company is borrowing money to cover its operating costs.

Air Canada executives spent much of 2020 lobbying the government to ease travel restrictions. This week, the company argued that mandatory quarantines after travel should be lifted. Before that, he had lobbied for other measures that would help airlines financially, despite being contrary to public health guidelines.

The company seems to be getting desperate and recently has taken a step that can confirm this. The desperate need to generate revenue led Air Canada to create on September 16 the “unlimited travel” pass.

This pass allows customers to fly as much as they want for a fixed monthly fee. Starting at $ 2,000 a month, the pass is not even remotely accessible for most Canadians. It may be that the company has some success in increasing revenue with the wealthiest layers of Canadian society.

All the chaos generated in the area of ​​tourism worldwide is the big problem for this option created by Air Canada, since the mandatory self-isolation that most provinces have implemented has made travel unattractive – even for those with financial resources to shell out. $ 2,000 a month. If you travel and are caught violating self-isolation orders, you could face legal consequences.

UPDATE:

In October, Air Canada raised nearly $ 500 million from the sale and lease of nine aircraft to help make up for the COVID-19 money leak.

The Montreal-based airline said Thursday it had sold nine Boeing 737 Max 8 jets for $ 485 million and long-term lease commitments of $ 458 million.

The extra financial boost comes after Air Canada saw passenger revenues drop 95 percent in its second quarter, causing 20,000 layoffs, as the airline consumed $ 19 million a day.

Since the start of the pandemic, the company has raised almost $ 6 billion in liquidity to deal with the uncertainties brought about by COVID-19. The company also made two long-term loans to replace accumulated debt of $ 1.4 billion to mature in the next 9 months.

Air Canada said it will continue to explore other financing arrangements that may be needed to expand its cash position.

Travel restrictions and depletion of demand continue to affect the aviation and tourism industries, with passenger numbers in Canada falling 90% in July, according to Statistics Canada.

On Friday 9 October Air Canada shares closed sharply lower: CAD $ 16.09 (-0.67) (-4.00%)