Agreements Worth Up To $195 Million

Air Canada announced this week it has concluded a series of agreements for secured financings with General Electric Capital Corporation (GECC) and its affiliates, providing the airline with up to $195 million US, or approximately C$238 million.

Under the agreements, $80 million was funded Wednesday as the first of two tranches of a loan agreement which would provide Air Canada with $155 million. The loan matures in 2014.

The second tranche of the secured loan is expected to close and fund prior to the end of January 2009.

Funding of the second tranche of the loan agreement, as well as retention of the funded first tranche, are subject to certain conditions, including conclusion of a sale and leaseback of one Boeing 777-300ER aircraft with GE Commercial Aviation Services (GECAS), a division of GECC.

"This sale and leaseback for a lease term of 12 years will, upon conclusion, provide Air Canada with at least US$40 million (approximately C$48 million) of additional financing," the airline stated.

Full funding under all the agreements would provide Air Canada with financing of approximately $195 million, as the airline explores numerous options to   "improv[e] its short term and longer term liquidity through both traditional and non-traditional means."

FMI: www.aircanada.com