Freeland criticizes Air Canada for paying $10 million in executive bonuses when accepting bailout
Air Canada is heading for political turmoil because Treasury Secretary Chrystia Freeland said she was dissatisfied with the multimillion-dollar bonus of airline executives because the company negotiated a federal bailout.
The airline disclosed in its annual proxy notice to shareholders on Monday that as air travel plummeted during the pandemic, it provided investors with a bonus of $10 million. The survival of airlines is crucial.
In a long comment on Wednesday, Freeland said she was disappointed that some companies did not appear to behave as a responsible corporate citizen while receiving federal assistance funded by taxpayers to survive the pandemic.
As for the bonus itself, she said it was inappropriate.
In April, airlines and governments Agreed to a US$5.9 billion loan program, which includes funds to help refund passenger tickets, But also set the cap on executive compensation to $1 million until 12 months after the loan is repaid in full.
Watch | Ticket refunds are a key part of Air Canada’s rescue cash:
The government also spent 500 million Canadian dollars to buy a 6% stake in the country’s largest airline. Freeland said that this was done to ensure that taxpayers could benefit once the income of Air Canada increases as scheduled travel resumes.
It also makes the government one of the major shareholders of the airline.
“This allows us to express our opinions in the company’s decision-making, and we will not shy away from using this voice to express our very reasonable views on what constitutes responsible corporate behavior,” Freeland said.
“Canadian companies that receive funds from the government have a responsibility to ordinary Canadians who are now both their shareholders and their customers.”
Call for compensation
Later in the House of Commons, Prime Minister Justin Trudeau said that the airline’s executives needed to provide an explanation because the Quebec Group asked him to let Air Canada recover the compensation.
Freeland made the above comments in a conference call with reporters. She outlined the details of a new federal plan designed to help eligible companies re-employ laid-off employees or increase the working hours of existing employees. Cover up to half of the salary increase.
The government sees this plan as a way to provide assistance to companies that are recovering because it is gradually reducing wage subsidies. So far, the plan has provided more than 80 billion U.S. dollars in assistance. Until Parliament approves the Liberal Party’s budget bill, it cannot be officially launched, but the government’s promise of payment can be traced back to June 6.
Starting next month, the value of wage subsidies and a series of “restoration” benefits will fall. Freeland said that the government will consider a number of indicators before changing the plan, including vaccination rates and number of cases, the degree of economic reopening, employment levels and working hours.
Air Canada’s investor documents stated that the airline benefited from a salary subsidy program of 554 million Canadian dollars through the 2020 salary subsidy program. The company said the program helped retain employees even if 20,000 employees were laid off due to the economic downturn.
The document stated that the airline plans to continue to apply for assistance.