Airline bailout begins in Canada with loan to vacation seller

Canada granted an emergency loan to a company selling beach holidays, the first sign of a rescue package awaited by the industry after Prime Minister Justin Trudeau barred travel to Mexico and other sun destinations.

Two related firms, Sunwing Airlines Inc. and Sunwing Vacations Inc., will receive a combined C$375 million ($292 million) under a federal loan facility aimed at large employers, a government agency said Monday. The Sunwing companies have nearly 3,000 Canadian employees, the agency said in a statement.

The announcement comes three days after Trudeau introduced sweeping new restrictions on international travel, including a suspension of flights to the Caribbean and Mexico for three months. Travelers coming into Canada will now be tested on arrival and will have to quarantine at designated hotels, at their own expense, for as long as three days to await results.

Those new measures add to existing requirements that include evidence of a negative test before boarding the flight and 14-day quarantine after arrival. They also brought a new urgency to talks with airlines on financial aid that officially started in November, but had shown few outward signs of progress until now.

Sunwing agreed to a number of conditions as part of the loan from the Large Employer Emergency Financing Facility, known as LEEFF. It will maintain a separate account to hold money from customers whose trips were canceled because of the pandemic, until the government and the airline industry establish a policy on refunds and credits of prepaid amounts.

Companies dipping into LEEFF money also agree to make “reasonable commercial efforts” to minimize job cuts and to place restrictions on dividends, share buybacks and executive pay.