Sunwing Vacations and Sunwing Airlines will gain access to $375 million in additional liquidity through the Large Employer Emergency Financing Facility (LEEFF). As part of the agreement, Sunwing will set aside cash already paid by customers for travel that was cancelled due to the pandemic. The account will be maintained as the federal government and the airline industry conduct negotiations on the treatment of those prepaid amounts.
According to government documents, Sunwing has drawn $50 million of the $375 million facility, and is the first Canadian air carrier to tap the program. The LEEFF program provides loans in excess of $60 million, and is available to companies that can generally demonstrate at least $300 million in annual revenue.
While the federal government put the LEEFF program in place in 2020 to help large employers who are unable to access more traditional sources of financing. Sunwing is just the third company to have its LEEFF application approved.
Among the concerns raised about the program is the relatively steep interest rate charged to companies, starting at a five per cent annual rate, rising to eight per cent after one year. Companies that also tap the LEEFF program must publish climate-related discloses and note how their future operations will support various national environmental goals.