WestJet Airlines Ltd. turned down federal government support on Tuesday, a move that sets the carrier apart from competitors such as Air Canada and Transat AT Inc. at a time when airlines are stepping up competition for post-COVID-19 passengers.
Calgary-based WestJet has been in talks with the federal government for several months over financial support such as low-interest loans. On Tuesday, WestJet said in a press release: “Given encouraging vaccination rates across the country, both sides have mutually agreed to divert attention from these negotiations and move away from taxpayer-funded support to lead the safe restart of the travel and tourism sector. ”
“WestJet and the Government of Canada remain open to resuming discussions on financial support going forward,” the company said. WestJet is owned by asset manager Onex Corp., which acquired the airline in December 2019 for around $ 5 billion, including debt.
Over the past three months, the federal government has announced a series of support programs for other Canadian airlines. The government granted Air Canada access to $ 5.9 billion, while Transat received $ 700 million and Porter Aviation Holdings Inc. contracted loans of $ 270.5 million.
“Throughout the pandemic, we have provided substantial support to Canada’s airlines and the tens of thousands of good, middle-class jobs that this sector supports across the country,” the ministry spokesperson said. Finance, Katherine Cuplinskas, in an email. She said government assistance included $ 2 billion in wage subsidies and $ 1 billion for airports and small airlines.
“At this time, the federal government and WestJet have mutually agreed to suspend constructive discussions regarding additional federal support for the airline. Should the need arise in the future, we remain open to reopening our discussions, ”said Cuplinskas.
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The Canadian government funding came with strings attached, including Ottawa equity stakes that diluted the holdings of existing business owners, caps on executive compensation, and a commitment by carriers to offer refunds, rather than credits. , for all flights canceled during the pandemic.
Other countries have also seen governments aggressively backing airlines during the pandemic. Then-US President Donald Trump provided US carriers with a US $ 25 billion bailout in April 2020.
WestJet has announced that it has ended talks with the Canadian government at a time when regulators around the world are easing travel restrictions. In recent weeks, WestJet and other carriers have reinstated routes that were closed during the pandemic and began to aggressively market vacation travel with seat sales and advertising campaigns.
In June, for example, WestJet expanded service from Calgary to Amsterdam with its new Boeing 787 and reconnected several Canadian cities that the airline primarily served with its 737 fleet.
On Monday, the federal government announced that Canada will open its border to fully vaccinated U.S. citizens on August 9, ending a 16-month shutdown. The border will open to people vaccinated from elsewhere in the world a few weeks later.
John Gradek, professor of aviation at McGill University, said WestJet’s decision to go it alone “would work very well in Western Canada.”
“They will say, ‘We didn’t need the government to survive. We did what we needed to do to get by, ”Gradek said.
Jacques Roy, professor of transportation at HEC Montreal, speculated that WestJet was reluctant to accept government aid because, as a private company, it was unwilling to share certain financial information, or offer ownership in exchange for help, as Air Canada and Transat have done.
The failure of government talks leaves the issue of passenger reimbursement open. WestJet has refused to reimburse customers who canceled their own flights, although it said last fall it would reimburse flights canceled by the airline.
When the federal government announced it would launch talks to help the airline industry, it said the aid would come with conditions for reimbursement to customers. Other major Canadian airlines have accepted bailouts and are using government money to provide refund for all customers.
“Everyone agreed that travelers should be reimbursed,” Professor Roy said. “This has been a major problem. Everyone complained that airlines in other countries were reimbursing and not us. Politically, it was difficult for the federal government not to facilitate the reimbursement of passengers by airlines. The best way to do this is to provide money.
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