Air Canada raises £940 million via a stock issue to shore up its finances amidst COVID-19

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Jun 2, 2020
  • Air Canada raises £940 million to shore up its finances amidst the ongoing Coronavirus pandemic.
  • Airline raises £339.52 million from a stock issue & £600 million from convertaible senior notes.
  • The flagship air carrier will resume flights from Kamloops airport to Vancouver from 15th June.

In a statement on Tuesday, Air Canada (TSE: AC) revealed to have raised roughly £940 million via a stock issue and convertible senior notes to shore up its finances amidst the ongoing Coronavirus pandemic that has so far infected more than 92,000 people in Canada and caused over 7,000 deaths.

According to the Canadian national air carrier, the offer priced its shares at £9.59 per share. The company sold a total of 35.4 million voting shares that raised £339.52 million. Due in 2025, its convertible senior notes (unsecured) raised £600 million. Air Canada had originally planned on raising only £318.52 million via convertible senior notes.

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Shares of the company remained flat on average on Tuesday. At £9.84 per share, Air Canada is roughly 70% down year to date in the stock market. Learn more about value investing strategy.

Air Canada to resume flights from Kamloops to Vancouver

Air Canada’s announcement on Tuesday also said that flights from Kamloops airport to Vancouver are expected to resume from 15th June. Booking for flights has already been opened for the public.

Chief Financial Officer of Air Canada, Michael Rousseau, remarked in his comment on Tuesday:

“This important financing will allow us to keep our strong relative position and better manage debt leverage and risk as government restrictions are lifted and the market recovers.”

Global airlines have taken the hardest hit due to COVID-19 that has brought the travel and tourism industry to a near halt. Airlines like Air Canada have been pushed into cancelling hundreds of flights. Owing to a sharp decline in sales and demand at large, airlines resorted to laying off thousands of jobs in recent months to minimise expenditure and cushion the economic from the novel flu-like virus.

Air Canada sees early signs of recovery in demand for air travel

Towards the end of last month, Rousseau had highlighted that flight cancellations were slowing down for Air Canada. He also added that air travel was showing early signs of recovery in demand as the government started to ease COVID-19 restrictions.

In separate news, Air Canada was recently reported to have shown interest in acquiring Transat AT Inc. for £425 million. Raising concerns about hurting competition, EU regulators, however, launched a full-scale investigation into the deal last week.

At the time of writing, Air Canada has a market cap of £2.57 billion and a price to earnings ratio of 88.57.

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