Air Canada secures another $100 million of financing

Wed Dec 31, 2008 2:46pm EST
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CALGARY, Alberta (Reuters) - Air Canada said on Wednesday it won a C$100 million ($82 million) credit facility from Canadian Imperial Bank of Commerce in its fourth arrangement for badly needed financing this month.

Air Canada, the country's biggest airline, said it has already drawn C$50 million from the new one-year secured revolving credit facility as it seeks to shore up its cash position.

Shares in Air Canada rose 9 Canadian cents, or more than 5 percent, to C$1.80 on the Toronto Stock Exchange.

In November, the carrier said it had C$1.114 billion of cash on hand, slightly higher than the amount it considers comfortable for its operations, as the global credit crunch led to a slowdown in travel demand, especially between Canadian and U.S. destinations.

Since then, its frequent-flier operator, Groupe Aeroplan Inc, agreed to speed up payment for reward tickets, which translated into a C$70 million cash injection.

It secured a C$95 million five-year loan with Calyon New York Branch and Norddeutsche Landesbank Girozentrale, and on December 24 got up to C$238 million in financing from GE Capital Corp as part of a sale and leaseback arrangement with one of its new Boeing 777 jets.

Earlier this month, Air Canada's parent company, ACE Aviation Holdings Inc, said it will wind up its operations and distribute its stock in the airline and other assets to its shareholders.

($1=$1.22 Canadian)

(Reporting by Jeffrey Jones; editing by Rob Wilson)

<p>Air Canada planes sit on the tarmac at Pearson International Airport in Toronto, June 17, 2008. REUTERS/Mike Cassese</p>