Freeland blasts Air Canada for paying $10M executive bonuses while receiving bailout

Air Canada is heading for political turbulence as Finance Minister Chrystia Freeland signalled her displeasure over millions in bonuses to the airline's executives as the company negotiated a federal bailout.

The airline on Monday disclosed in its annual proxy circular to shareholders that it gave $10 million in bonuses to people the investor document called instrumental to the airline's survival over the past year, as air travel plunged during the pandemic.

In a lengthy comment Wednesday, Freeland said she was disappointed in how some businesses seem not to be behaving as responsible corporate citizens while receiving taxpayer-funded federal aid to survive the pandemic.

As for the bonuses themselves, she called them inappropriate.

In April, the airline and government agreed to a $5.9 billion loan package that includes money to help refund passenger tickets, but also capped executive compensation at $1 million until 12 months after the loan is fully repaid.

WATCH | Ticket refunds a key part of Air Canada bailout cash:

Airline passengers to get refunds in Air Canadas deal with Ottawa

3 years ago

Duration 2:01

Air Canada and the federal government reached an agreement for low-interest government loans to support the beleaguered airline, and it includes refunds for passengers whose flights were cancelled because of COVID-19.

The government also paid $500 million for a six per cent stake in the country's biggest airline, which Freeland says was done to ensure taxpayers could benefit once Air Canada's revenue rose as regular travel resumed.

It also makes the government one of the key shareholders in the airline.

"That gives us a voice in decisions taken by the company, and we will not shy away from using that voice to express our very reasonable view of what constitutes responsible corporate behaviour," Freeland said.

"Canadian companies receiving money from the government have a duty to behave responsibly when it comes to regular Canadians who are now their shareholders as well as their customers."

Calls to claw back compensation

In the House of Commons later, Prime Minister Justin Trudeau said the airline's executives needed to provide an explanation, as he was pressed by the Bloc Quebecois to make Air Canada claw back the compensation.

Freeland made the comments during a call with reporters where she outlined the details of a new federal program to help eligible companies rehire laid-off staff, or boosthours for existing workers, by underwriting up to half of the payroll increase.

The government sees the program as an avenue to flow aid to recovering businesses as it winds down the wage subsidy, which has provided over $80 billion in aid to date. The official launch can't happen until Parliament approves the Liberals' budget bill, but the government is promising payments to be retroactive to June 6.

The value of the wage subsidy and suite of "recovery" benefits are set to decline starting next month. Freeland said the government will be looking at a number of indicators before changing plans, including vaccination rates and case counts, how much of the economy has reopened, employment levels and hours worked.

The Air Canada investor document noted the airline benefited from $554 million through the wage-subsidy program in 2020, which the company said helped retain workers, even as it laid off 20,000 staff because of the downturn.

The document said the airline plans to continue applying for the aid.