Montreal Air Canada has reached an agreement with one of its major credit card processors that will drop the level of unrestricted cash the airline is expected to have on hand to $800-million.
Air Canada says the move will help it maintain financial stability as the cash-strapped airline deals with weak economic conditions.
Under the memorandum of understanding, the airline will provide the credit card processor with security to be accumulated over time.
Air Canada says its first priority remains getting a funding moratorium on its pension payments, calling that a “critical priority.”
The airline also says it is in discussions with its unions on the pension issue and with several potential lenders on additional financing.
Air Canada has been looking to cut at least $250-million in costs and raise more cash but its CEO has said he doesn't foresee the need for massive layoffs or a bankruptcy protection filing to help it survive.