Airline will reimburse passengers for cancelled flights as part of $700 million package from the Canadian government

Canadian leisure operator Transat has a new lease on life, thanks to a $700 million lifeline from the Canadian government. The airline announced the aid package Thursday morning.

The amount is enough to allow Transat to continue operating for at least the rest of the year. The airline’s future was thrown into doubt when a proposed merger with Air Canada fell apart. Both sides walked away from the deal in the face of sustained opposition from European regulators.

“Our strong balance sheet prior to the pandemic and the aggressive actions we have taken since have enabled us to weather this unprecedented crisis so far,” said Transat President and Chief Executive Officer Jean-Marc Eustache. “With this support, we now look forward to resuming operations as soon as safe travel is possible and travel restrictions can be lifted. We will then be able to implement our plan to make Transat a solid and profitable company once again, one that will continue to symbolize leisure travel for its many customers in Quebec and elsewhere.”

Transat will receive up to $390 million in loans to keep operating. The loans contain provisions that could see Ottawa take up to a 20% ownership stake in the airline. It’s the second time Ottawa has negotiated such terms. Aid for Air Canada includes terms that could see Ottawa own up to 20% of the airline.

$310 million for refunds

Another $310 million is going to repay passengers whose flights were cancelled as a result of the pandemic. Transat shut down operations a year ago and, despite a brief restart in 2021, is grounded and not earning passenger revenues. Transat hopes to resume operations this summer with a limited

Transat, like other Canadian carriers, cancelled hundreds of flights when the pandemic hit. But it held onto the cash, instead tying refunds to government aid. Passengers launched several class action lawsuits over the issue.

The move infuriated passengers and roiled the political sector.

“We’ve been impatiently waiting for this moment, and we know our customers have been, too,” says Annick Guérard, Chief Operating Officer of Transat. “Now that a funding agreement has been reached and the eligibility criteria have been established by the Government of Canada, we are delighted to be able to provide our customers with this long-awaited aid.” 

Passengers who have a credit with Transat but want a refund can apply by visiting a special Transat website. Affected passengers have until August 26 to claim their money.

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