Federal government sells its Air Canada stake
The federal government has sold its roughly 6-per-cent stake in Air Canada in the past few days, according to a source.
Ottawa bought $500-million in Air Canada AC-T shares for about $23.18 apiece in April, 2021, becoming the biggest investor as part of a bailout package that aimed to shore up the finances of Canada’s largest airline, which lost billions in the COVID-19 shutdown.
The average selling price was about $25 a share over the past few days, according to the source, whom the Globe is not identifying because they are not authorized to speak publicly on the matter.
A government spokeswoman declined to comment on Thursday.
“The government does not intend to be a long-term shareholder of Air Canada and the shares will be divested in due course,” Ministry of Finance spokeswoman Marie-France Faucher said in September.
Peter Fitzpatrick, an Air Canada spokesperson, declined to comment.
Air Canada shares were trading at about $25.45 on the Toronto Stock Exchange on Thursday and have risen by 60 per cent in the past three months.
As part of the selloff, Ottawa unloaded 14 million shares in the past two days through two large block trades, one for 4.15 million shares on Wednesday and another for 10.13 million shares early Thursday, according to trading data reviewed by The Globe and Mail. The average weighted price for these sales was $25.02 per share.
The federal government announced the Air Canada investment as part of an aid package in April, 2021, almost a year into the pandemic that halted most airline traffic and closed borders. The domestic aviation industry was lobbying intensely for financial help to limit deep losses, pointing to large aid packages given to their international rivals.
Ottawa’s aid to Air Canada came with conditions that the carrier provide customer refunds, protect jobs and limit executive compensation.
During the pandemic, Air Canada laid off more than half of its 38,000 employees and grounded much of its fleet, posting a total loss of $9.9-billion between 2020 and 2022. The airline has since ridden a global recovery in demand for travel to post profits, add routes and expand its fleet.
The Air Canada share sale took place against a background of strong stock market performance, with the benchmark S&P/TSX Composite Index up 22.4 per cent year to date.
In the past month, the rally in stock prices has prompted investment banks to serve up a series of stock sales, including two large equity sales from consumer-focused companies, a sector that also includes Air Canada.
Recent stock sales came from clothing retailer Groupe Dynamite Inc., where the founder raised $300-million from an initial public offering, and a $100-million equity sale from Dentalcorp Holdings Ltd. In Calgary, Tourmaline Oil Corp. raised $345-million by selling a portion of its stake in Topaz Energy Corp.