Transat secures up to $150M in federal aid amid higher fuel costs

Transat Inc. has secured access to as much as $150 million in federal financial assistance as the airline industry contends with higher jet fuel prices stemming from the war in the Middle East, reports CTV.

The Montreal-based company, which operates Air Transat, said the final loan amount will be determined by comparing its fuel expenses over the coming months with costs during the same period last year. 

The calculation period ends Oct. 31.

The agreement follows Ottawa’s announcement seven weeks ago of a loan program for airlines affected by rising oil prices, reduced flight schedules and weaker profit forecasts.

Air Canada indicated earlier this summer that it did not expect to use the program. 

WestJet said it “strongly opposes” the assistance, citing its potential to distort the market.

Transat will receive the financing in monthly instalments. An initial $125 million was disbursed by the federal government on Tuesday.

The loan carries an annual interest rate of 3.91 per cent and must be repaid over four years.

Don't miss a single travel story: subscribe to PAX today!  Click here to follow PAX on Facebook.