Air Canada Advances Strategic Investments with Prepayment of Approximately $589 Million Aircraft-Related Debt

Air Canada Advances Strategic Investments with Prepayment of Approximately $589 Million Aircraft-Related Debt.

In a decisive move to strengthen its financial position post-pandemic, Air Canada has announced the prepayment of approximately $589 million in aircraft-related debt. This strategic step is part of the airline's broader initiative to deleverage and enhance its balance sheet flexibility.

Details of the Prepayment

The prepayment encompasses two significant components:

• $462 million prepayment to Export Development Canada (EDC) utilized earlier to acquire 14 Airbus A220-300 aircraft. This payment, including accrued interest and break costs, was executed on August 30, 2023.
• $127 million prepayment facilitated by the Export-Import Bank of the United States (ExIm) initially used for procuring four Boeing 787-8 aircraft. This payment, including accrued interest, was carried out on September 6, 2023.

Executive Insights

Executive Vice President and Chief Financial Officer of Air Canada, John Di Bert, highlighted that the airline has prepaid about $1.87 billion in debt since late last year. He noted the airline's robust liquidity position and positive cash flow, which will continue to foster opportunities for further debt reduction. Di Bert expressed gratitude towards EDC and ExIm for their support in bolstering the Canadian aerospace industry and facilitating aircraft acquisitions.

Impact on Air Canada's Asset Pool

Following the prepayments, the aircraft will join Air Canada's unencumbered asset pool, which now stands at roughly $6.3 billion, excluding Aeroplan. The cumulative debt prepayments have reached approximately $1.87 billion, resulting in an estimated annualized reduction in interest expense of around $158 million ($114 million in cash).

Forward-Looking Statements

Air Canada cautioned that the news release contains forward-looking statements subject to risks and uncertainties, and the actual results might vary materially. Individuals can refer to Air Canada's public disclosure file available at www.sedar.com for a detailed understanding of the risk factors

About Air Canada

As Canada's largest airline and a founding member of the Star Alliance, Air Canada operates direct services to over 180 airports globally, holding a prestigious Four-Star ranking from Skytrax. The airline is also home to Aeroplan, Canada's premier travel loyalty program, and has set a visionary goal to achieve net-zero emissions from all its global operations by 2050.