Transat AT Inc. says it has restructured its pandemic-era debt in a deal that forgives hundreds of millions of dollars owed. Most of that reduction is due to about $380 million of debt forgiven under the agreement in principle. The Montreal-based company, which owns Air Transat, said it had cut its total debt with a federal Crown corporation by more than half to $334 million from $772 million.

Transat was one of several airline outfits to take advantage of federal aid packages during the COVID-19 pandemic, which saw border closures and health restrictions wreak havoc on carrier earnings.

“We are pleased to have been able to reach this agreement, which will substantially deleverage our balance sheet and pave the way for Transat to further implement its long term sustainable strategic plan and complete the implementation of its Elevation program” said Transat President and Chief Executive Officer Annick Guérard.

The restructure comes on “highly favourable terms” — including no interest for the first five years of the debenture — for Transat given the red ink on its balance sheet, said ATB Capital Markets analyst Chris Murray.

Transat shares jumped 16% on the Toronto Stock Exchange on the news.

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