Question Period Note: LIQUIDITY FOR AIRLINE SECTOR RESILIENCE (LASR) FACILITY

• Fuel prices, one of the largest cost drivers for airlines, have risen sharply, putting pressure on operations and ticket prices for Canadians.
• Jet fuel is expected to remain elevated compared with 2025, significantly lifting fuel's share of operating costs.
• This is a real pressure across the industry, we see signs of sector weakness – with rising costs and risks of business closure, reducing travel options for Canadians.
• This is why the Government announced yesterday the launch of the Liquidity for Airline Sector Resilience (LASR) facility.
• This support is focused on fuel costs only, is time-limited, based on demonstrated need, and provided as repayable loans on commercial terms.
• We are acting to protect Canadian jobs, maintain routes and connectivity, and ensure Canadians continue to have access to reliable and affordable travel.

• Elevated jet fuel prices have significantly increased operating costs across the global aviation sector, placing additional pressure on airlines as they navigate ongoing market volatility.
• In response to the jet fuel price spike, other countries have reacted by easing regulatory restrictions to allow capacity reductions and route consolidation, and by allowing increased operating flexibility for airlines (e.g. updated guidelines on the use of Jet-A fuel in Europe to draw on North American refining capacity). Requests for government assistance have also been made by airlines in countries such as France and India. In the United States Spirit Airlines filed for liquidation in May 2026, as high jet fuel prices exacerbated underlying financial challenges.
• On April 20, 2026, the Government of Canada introduced temporary relief by removing the federal fuel excise tax on aviation fuel, reducing costs by approximately 4 cents per litre. This measure is in place until September 7, 2026, alongside broader relief of 10 cents per litre on gasoline and 4 cents per litre on diesel.
• On June 8, 2026, the Government announced the launch of the Liquidity for Airline Sector Resilience (LASR) facility, a new loan program through the Canada Enterprise Emergency Funding Corporation (CEEFC). The facility will offer eligible Canadian airlines experiencing significant financial pressures resulting from elevated jet fuel costs up to $150 million in repayable liquidity support, on an as-needed basis.
• The LASR facility provides eligible Canadian airlines with up to $150 million in temporary, repayable liquidity support to address financial pressures linked to elevated fuel costs, with funding available until November 1, 2026. Loans are provided on commercial terms, with a repayment period of four years at rates above the Government of Canada’s borrowing cost but favourable relative to market rates for affected companies.
• Support is provided on an as-needed basis and is tied to fuel price increases and airline fuel consumption levels, ensuring that assistance responds directly to the impacts of higher fuel costs.
• The facility is designed as a temporary and targeted measure to help stabilize the sector, reduce the amount of increased fuel costs passed on to passengers, and support a competitive and resilient aviation industry during a period of elevated global fuel price volatility.
• The LASR facility is designed to link support to both the increase in the price of jet fuel and the jet fuel consumption levels of Canadian airlines. Airlines that receive support through this new loan program would have to commit to Buy Canadian, restrict dividends and executive compensation, and maintain their Canadian operations—including protecting jobs.
• In response to the LASR, WestJet announced that it strongly opposes the new loan facility, claiming it will distort the market. The company argues that similar to COVID-19-related airline loans, certain airlines will not be able to repay the new loans, which will become direct taxpayer subsidies. WestJet urged the government to “focus on long-term stability by fixing the overdue foundational cost issues that hold our entire industry back.”

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