The Government of Canada will provide a loan guarantee of up to $75 million to respond to the cash flow problems being experienced by Canada 3000, Canada’s second largest airline.
“The repercussions of September 11 have forced Canada 3000 into a short-term cash crunch, which led them to seek the Government’s assistance. It is important that we preserve the competition in the airline industry that was developing strongly before the tragic events of September 11,” said Mr. Collenette.
In its discussions with the air carrier, the government made clear however that certain prerequisites had to be met before any assistance would be considered. This included demonstrating that the airline could return to profitability based on a plan grounded in the private sector.
Canada 3000 is implementing an aggressive restructuring plan that includes commitments or concessions from all stakeholders, such as ncreased shareholder investment; reductions in lease payments, pay cuts of up to 20 per cent; and capacity and staff reductions. Canada 3000 has also produced a viable business plan indicating the way through its present short-term difficulties.
The loan guarantee is designed to provide access to much-needed credit. Canada 3000 will also pay all expenses related to this guarantee as well as a guarantee fee commensurate with the risk being assumed by the Government of Canada.