Air Canada has prepaid loans of approximately $650 million from Export Development Corporation (EDC) used by the company to help fund its acquisition of 19 Airbus A220-300 aircraft. The prepayment, which is also subject to accrued interest, was made on June 21, 2023.
"One of Air Canada's major financial objectives is to deleverage its balance sheet following the COVID-19 pandemic and prepaying these loans we received for our A220 aircraft is a significant step toward this goal," said Amos Kazzaz, executive vice president and chief financial officer of Air Canada. “We appreciate EDC's assistance in purchasing these Canadian-built aircraft, which not only advanced our fleet modernisation program to improve our fuel efficiency and competitiveness, but also helped to ensure that the investments Air Canada is making directly support jobs in Canada's aerospace industry and contribute to the country's economy.”
The prepayment of the loans for 19 Airbus A220-300 aircraft financed through EDC was achieved with the full prepayment of Air Canada's 2021 credit facility for the acquisition of 15 A220-300, and a partial prepayment the airline’s 2020 credit facility with EDC for the acquisition of 18 A220-300s.
As a result of the prepayment, the aircraft will be added to Air Canada's unencumbered asset pool, bringing the total to approximately $5.4 billion, excluding Aeroplan, confirmed the airline.
Air Canada has now prepaid debt totalling approximately $1.28bn, which includes the repurchase of some of the airline’s outstanding 4.000% convertible senior notes due 2025 completed last year. The partial repurchase of the notes led to a reduction in interest expense of approximately $115 million (approximately $72 million in cash) on an annualised basis, says the airline.