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An Air Canada Boeing 737 Max 8 sits parked at Toronto Pearson International Airport on March 13, 2019.Chris Helgren/Reuters

Air Canada has raised nearly $500-million by selling and leasing back nine aircraft to help offset the cash drain from COVID-19.

The Montreal-based airline said Thursday it has sold nine Boeing 737 Max 8 jets for $485-million, and long-term lease commitments of $458-million.

The extra financial buoyancy comes after Air Canada saw passenger revenues drop 95 per cent in its second quarter, prompting 20,000 layoffs as the carrier burned through $19-million a day.

“If Air Canada has the flexibility to commence a sale and leaseback on any of the aircraft to raise additional funds, that’s a good thing,” said Robert Kokonis, president of Toronto-based consulting firm AirTrav Inc.

“The ramifications further down the road will be that Air Canada will have less unencumbered assets to pledge as collateral against other forms of debt.”

The company has raised almost $6-billion in liquidity since the start of the pandemic to mitigate the challenges and uncertainty caused by the virus, chief financial officer Michael Rousseau said in a release.

It also recently completed two long-term financings to replace $1.4-billion in short-term debt coming due within the next nine months.

Air Canada currently has 24 Max 8s in its fleet, including the nine it has sold and leased back.

An additional 26 Max 8s that were initially slated for delivery are on hold indefinitely owing to the pandemic as well as the continuing grounding of the Max by authorities across the globe after two fatal crashes in 2018 and 2019.

Three of the sale-leasebacks are with San Francisco-based Jackson Square Aviation and the other six are with Dublin-based Avolon Aerospace Leasing Ltd.

Air Canada said it will continue to explore other financing arrangements that may be required to expand its cash position.

Travel restrictions and dried-up demand continue to take a toll on the airline and tourism industries, with passenger numbers in Canada down 90 per cent year over year in July, according to Statistics Canada.

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