Transat Secures Up to $150 Million in Federal Funding to Offset Rising Fuel Costs

Transat A.T. has secured a financing agreement of up to $150 million with the federal government under the Large Enterprise Emergency Funding Facility for the Aviation Sector (LRSA), a program designed to help airlines manage the sharp increase in aviation fuel costs.

Announced as expected following the company’s second-quarter financial results released on June 11, the agreement is intended to mitigate the impact of the unprecedented rise in jet fuel prices affecting the entire aviation industry.

According to Transat, the amount ultimately drawn will be based on what is needed to offset higher fuel costs through October 31, 2026, compared with the same period in 2025.

An initial $125 million has already been disbursed. The remaining funding, if required, will be provided in monthly installments, up to the maximum of $150 million.

The loan has a four-year term and carries an annual interest rate of 3.91%.

Targeted Support for a Major Industry Challenge

Rising fuel prices have become one of the most significant financial challenges facing airlines in recent months. For Transat, the new credit facility is intended to provide greater financial stability at a time when operating costs remain under pressure.

The LRSA program, administered by the Canada Development Investment Corporation (CDEV), was created specifically to support airlines dealing with volatility in aviation fuel prices.

Transaction Approved by the Board of Directors

Transat said the financing agreement was unanimously approved by its board of directors following the recommendation of a special committee composed entirely of independent directors.

The company also noted that, although CDEV already holds certain financial instruments related to Transat, the transaction qualifies for exemptions under Multilateral Instrument 61-101, which governs related-party transactions. According to Transat, the financing was negotiated on commercially reasonable terms and does not result in any change to CDEV’s ownership interest in the company.

In its release, Transat also cautioned that several factors could continue to affect its future results, including fuel price fluctuations, economic conditions, foreign exchange movements, supply chain challenges, and ongoing issues related to Pratt & Whitney’s GTF engines.