Airlines Negotiating $7-Billion Relief Package With Ottawa

Canada's airline industry is in talks to receive $7 billion in low-interest loans from the federal government.

Unifor, the union that represents various airline worker groups, confirmed that the aviation industry and decisionmakers in Ottawa are negotiating a multi-billion-dollar loan package to help beleaguered airlines such as Air Canada (TSX:AC) and WestJet (TSX:WJA).

Any low-interest loan will be contingent on the air carriers refunding passengers whose flights were postponed or cancelled due to the COVID-19 pandemic. Refunding passengers is one of Ottawa's key demands before any deal is finalized to provide the ailing airline sector with billions of dollars in support.

Other government demands included airlines restoring regional flights and improving their financial transparency. 

The pandemic has weighed heavily on all airlines operating in Canada. Air Canada laid off more than half of its 38,000 employees in June as demand for air travel plunged amid border restrictions and efforts to reduce the spread of COVID-19. The carrier laid off another 1,700 people in January while cutting several domestic regional routes.

Other airlines such as WestJet and Sunwing have also announced major layoffs and route reductions in recent weeks as Ottawa has tightened travel restrictions further.