Ottawa Offers up to $150 Million in Loan Relief per Canadian Airline, Citing ‘Global Conflicts and Supply Disruptions’

The federal government has announced a new loan program it says will help Canadian airlines dealing with surging fuel costs amid “uncertainty” and supply disruption caused by conflict in the Middle East.

To address what the Department of Finance called “global conflicts and supply disruptions,” the Liquidity for Airline Sector Resilience program will offer up to $150 million each in loans to Canadian airlines who agree to abide by certain conditions including limits of executive pay and dividends as well as “Buy Canadian” commitments.

The loans will have to be paid back and will be given “on an as-needed basis” to carriers struggling with high jet-fuel prices, according to Ottawa.

“Global events continue to create uncertainty in energy markets, increasing costs for industries around the world, including aviation,” Finance Minister François-Philippe Champagne said in the June 8 announcement of the loan program, noting the earlier pause on the federal fuel excise tax in effect from April 20 to Sept. 7, which he says brings down jet fuels by 4 cents per litre.

“By building on existing relief measures with targeted and temporary support for Canada’s airline sector, we are helping maintain connectivity, protect Canadian jobs, and reduce pressures on travellers during this period of elevated fuel costs,” Champagne added.

Carriers, Passengers Struggle

Ottawa says the loans will be provided via the Canada Enterprise Emergency Funding Corporation (CEEFC), a federal financing body formed in 2020 during the pandemic to hand out emergency loans to large Canadian businesses facing difficulty accessing capital during times of financial stress.

In 2021, Air Canada received access to up to $5.9 billion in support and ultimately borrowed roughly $1.2 billion via CEEFC, as well as significantly smaller loan packages provided to Porter Airlines and Air Transat.

In addition to “Buy Canadian” and executive pay and dividend obligations as part of receiving the loans, Canadian carriers will be required to agree to keep Canadian operations and jobs.

“As airlines face rising jet fuel costs, today’s relief measure will help stabilize the industry and support a competitive aviation sector for the future,” Transport Minister Steven MacKinnon said of the loan program.

The announcement comes as as various Canadian airlines cut routes, raise ticket prices, and warn of weaker profits due to the ongoing closure of the Strait of Hormuz. The closure of the key strait is now in its fourth month and has cut off roughly one-fifth of the world’s oil supply, sending energy prices surging.

On the passenger side, average round-trip economy prices between Canadian cities were up an average of 17 percent in May of this year compared to May 2025, according to travel search engine Kayak.

Air Canada has cut back its earning projection for this year by approximately $200 million and eliminated several routes, while Westjet says roughly 6 percent of its flights will face capacity reductions.

Overall profits at major North American airlines are projected to go down by roughly US$3 billion this year, representing a decline of approximately 25 percent, according to a forecast issued this week by the International Air Transport Association. The association attributes this profit loss mainly to the rising price of jet fuel.

Westjet Opposes Loans

Calgary-based Westjet says it opposes the newly announced loans program because it says loans will only distort competition by boosting certain carriers with taxpayer money.

Westjet said that loans to airlines during the pandemic also ended up being costly to taxpayers as some of the loans were not repaid and were forgiven by the federal government. The airline questioned whether the currently offered loans will be able to repaid by some carriers as well, or would once again leave taxpayers to foot the bill.

Instead of the loans, Westjet encouraged Ottawa to focus on cutting structural costs that it says drive up the cost of doing business.

“We ask the government to abandon the cycle of corporate charity and focus on long-term stability by fixing the overdue foundational cost issues that hold our entire industry back,” WestJet said.

Air Transat and Porter have released statements in support of the loan announcement.