Porter, Transat tap $275M in federal loans as jet fuel prices soar

Porter Airlines and Transat have turned to a federal emergency financing program for a combined $275 million as soaring jet fuel prices put mounting pressure on airline operating costs.

According to a report in the Globe and Mail, Transat, operator of Air Transat, has borrowed $150 million (the maximum available under the program) while Porter received $125 million, according to the Canada Enterprise Emergency Funding Corporation (CEEFC).

The federal agency launched the financing program in June to provide liquidity to Canadian passenger airlines grappling with sharply higher aviation fuel costs.

Jet fuel prices have surged amid the U.S. war with Iran, which has disrupted oil shipments through the Strait of Hormuz and reduced refining capacity in the region.

The Strait is a critical energy corridor, historically carrying roughly 20 per cent of the world's oil and a significant share of aviation fuel imported by Europe.

The new loans come as both Porter and Transat continue to repay federal financing received during the COVID-19 pandemic, when travel restrictions brought much of the global aviation industry to a standstill.

Transat borrowed $893 million through the federal pandemic-era program in 2021 and 2022. In 2025, Ottawa reduced the company's outstanding obligation by approximately $400 million in exchange for $41 million and rights to voting shares representing as much as 19.9 per cent of the company.

As of June, Transat reported government debt of $320 million, along with a $75-million credit facility.

Porter, meanwhile, borrowed $250 million through the pandemic program, plus another $20.5 million to provide passenger refunds.

Air Canada and WestJet did not seek financing through the new fuel program, which remains available until November, according to the report. 

WestJet has criticized the initiative as “market-distorting,” arguing that government policy should instead support a sustainable aviation sector where airlines compete on their own merits, the Globe reports.

WestJet did not receive federal pandemic assistance, while Air Canada has repaid its government loan.

The latest fuel loans have four-year terms and carry an interest rate based on the yield of 10-year Government of Canada bonds when the program was announced — approximately 3.5 per cent — plus 50 basis points.

CEEFC describes the initiative as a “financing program designed to help eligible Canadian passenger airlines address temporary liquidity pressures caused by elevated operating costs, particularly aviation fuel price volatility.”

Airlines globally have responded to higher fuel bills by increasing fares and surcharges and cutting routes that are no longer profitable.

Carriers face an additional squeeze because many passengers flying today purchased their tickets months earlier, before the latest spike in fuel prices.

Jet fuel prices climbed nine per cent last week compared with the previous week, according to S&P Global, with European prices averaging nearly US$4.29 per gallon.

Renewed hostilities in the Middle East have added further pressure to energy markets. Oil prices are up approximately eight per cent in September compared with August as conflict in the region intensifies.

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