Air Canada Announces Prepayment of Aircraft Related Debt Totalling Approximately $589 Million

The Voice of Canada:

Air Canada today announced it has prepaid loans of approximately $462 million from Export Development Canada (EDC) previously used by the company to help fund its acquisition of 14 Airbus A220-300 aircraft. The prepayment, which is also subject to accrued interest and break costs, was made on August 30, 2023. The airline additionally prepaid financings of approximately $127 million supported by the Export-Import Bank of the United States (ExIm) previously used by the company to help fund its acquisition of four Boeing 787-8 aircraft. The prepayment, which is also subject to accrued interest, was made on September 6, 2023.

“One of Air Canada’s top priorities following the pandemic is to deleverage and since late last year we have now pre-paid approximately $1.87 billion in debt. This strengthens our balance sheet and provides us more flexibility to make strategic investments, including to improve the customer experience, and to continue upgrading our fleet such as through our previously announced acquisition of Canadian-made Airbus A220 aircraft. With our very solid liquidity position and cash flow we will continue to look for more opportunities to reduce debt further. We were pleased to partner with EDC in supporting the Canadian aerospace industry and we thank Exlm for facilitating our acquisition of Boeing aircraft,” said John Di Bert, Executive Vice President and Chief Financial Officer of Air Canada.

The prepayment for the financed aircraft was achieved via:

• a full prepayment of the remaining loans under Air Canada’s 2020 credit facility with EDC for the acquisition of Airbus A220-300 aircraft, and
• a partial prepayment of Air Canada’s financing arrangements supported by ExIm for the acquisition of four Boeing 787-8 aircraft.

As a result of the prepayments, these aircraft will be added to Air Canada’s unencumbered asset pool, bringing the total to approximately $6.3 billion, excluding Aeroplan.

The amount of debt prepayments now totals approximately $1.87 billion since and including the repurchase of some of its outstanding 4.000% convertible senior notes due 2025 completed last year, leading to an aggregate reduction in interest expense of approximately $158 million (approximately $114 million in cash) on an annualized basis.