Ottawa sells stake in Air Canada following pandemic equity acquisition

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The Canadian government has announced its decision to sell its stake in Air Canada, marking the conclusion of a unique chapter in the airline’s financial history.

The stake was acquired during the COVID-19 pandemic as part of a $5.9 billion financial assistance package designed to stabilize the struggling airline industry.

This package included a $500 million equity stake in Air Canada, equivalent to about 6% ownership, alongside a $5.4 billion low-interest loan facility.

During the pandemic, Air Canada faced severe challenges, with a 73% drop in passenger traffic in 2020 and substantial layoffs.

The federal assistance package came with conditions such as refunding passengers for canceled flights, limiting executive compensation, resuming service to regional airports, and maintaining employment levels.

The government’s temporary equity stake aimed to provide financial security while ensuring taxpayer funds were protected.

Now that Air Canada’s financial position has improved, including recovering passenger volumes and profitability, the government is divesting its stake.

This move aligns with the global trend of governments stepping back from pandemic-induced ownership in private industries, as seen in similar situations with airlines like Lufthansa and Air France-KLM​.

The sale of the shares signifies confidence in Air Canada’s financial stability and reflects Ottawa’s broader commitment to winding down pandemic-era economic interventions while recouping taxpayer investments.

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