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Transat secured loans under Ottawa's Large Employer Emergency Financing Facility (LEEFF) program in 2021 and 2022 as COVID-19 border closures battered the airline industry and pushed the travel outfit to suspend operations for six months.

The loans required companies, including Air Canada, Porter Airlines and Sunwing Vacations, to cap total compensation for senior executives at 2019 levels, or $1 million if they joined the top ranks after that time.

To encourage executives to stay on board at a shaky time, Transat offered them three-year deferred bonuses in 2020. But because the loan has yet to be paid off, its restrictions still apply, leaving Guérard with $1.9 million in total compensation.

"In the case of Ms. Guérard, as the LEEFF loan had still not been repaid, payment of the 2020 (long-term incentive plan) owing in January 2023 in the amount of $489,523 was incompatible with the consequences of and compensation restrictions imposed under the LEEFF loan. She was therefore unable to receive this amount," the circular to shareholders states, ahead of their annual meeting on April 23.

The cash bonus is payable only "if the objectives related to operational and strategic priorities and financial performance are achieved," it notes.

Transat has struggled to get off the ground smoothly post-pandemic, as fears of a flight attendant strike and several grounded Airbus planes due to an engine recall ate away at bookings last quarter.

Transat swung to a loss of $61 million in the three months ended Jan. 31, worse than the $56.6-million loss of the same period a year earlier. Transat has cleared a profit only twice in the past 17 quarters.

Nonetheless, its five senior executives took in a combined $4.47 million in total compensation in 2023, 16 per cent more than the $3.86 million the previous year.

Meanwhile, the grounded planes and high price tags on new aircraft leases drove a decision to scale back growth plans. Instead of bolstering seat capacity by 19 per cent this year, the CEO opted instead for a more modest 13 per cent increase and scrapped some domestic and Canada-U.S. routes as a result.

The vast majority of Transat's emergency loans remain outstanding. A $78-million tranche, of which $36 million has been paid off, comes due in April 2025. Another $312-million slice of debt, whose interest rate ratcheted up to eight per cent from five per cent in January, matures in April 2026.

This report by ºÃÉ«tvwas first published March 21, 2024.

Companies in this story: (TSX:TRZ)