April 29 Reuters Struggling Canadian tour operator Transat AT said on Thursday it would borrow up to C700 million 569.71 million from the Canadian government and use a portion of the funds to reimburse customers whose travel plans had to be canceled.

The news comes barely a day after Reuters reported that Transat was close to reaching a financial aid deal with the federal government involving a loan.

Transat was already struggling due to the COVID19 pandemic when Air Canada dropped its merger plans with the company earlier this month, creating uncertainty for the Montrealbased operator of leisure carrier Air Transat.

Transat said it would use C390 million to support the companys liquidity needs until its business has recovered enough to generate cash and the rest to reimburse travelers.

Transat has suspended flights until June due to pandemic restrictions that have battered travel and has said it needs at least C500 million in financing this year.

It has repayment obligations due on April 29 for a C50 million revolving facility and a C250 million shortterm loan that matures on June 30.

1 1.2287 Canadian dollars

Reporting by Ankit Ajmera in Bengaluru; Editing by Shailesh Kuber and Anil DSilva

Source Reuters