Air Canada has announced that it has made significant prepayments on some of its debts. According to the company's release, it has settled loans totalling approximately CAD $462 million with the Export Development Corporation (EDC). The airline previously used these funds to finance its acquisition of 14 Airbus A220-300 aircraft. This settlement, made on 30AUG, 2023, includes accrued interest and break costs.
On 06SEP, 2023, Air Canada also prepaid about CAD $127 million, backed by the Export-Import Bank of the United States (ExIm). This was for loans acquired to fund the purchase of four Boeing 787-8 aircraft and includes accrued interest.
John Di Bert, Executive Vice President and CFO of Air Canada said, "One of Air Canada's top priorities following the pandemic is to deleverage and since late last year we have now pre-paid approximately CAD $1.87 billion in debt."
He added, "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."
The airline plans to "continue to look for more opportunities to reduce debt."
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.
These payments will add the aircraft to Air Canada's unencumbered assets, increasing the total to roughly CAD $6.3 billion. This figure excludes Aeroplan.
To date, Air Canada's total debt prepayment is approximately CAD $1.87 billion. Consequently, the airline expects to see an annualized reduction in interest expenses of about CAD $158 million, equivalent to CAD $114 million in cash.