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UPDATE 1-Canada ready for talks on aid to airlines, which could include loans

(Adds comments, details and background)

OTTAWA, Nov 8 (Reuters) - Canada is ready to start talks with major airlines this week about financial assistance to the hard-hit sector that could come in the form of loans or other support, Transport Minister Marc Garneau said on Sunday.

The government is drafting a package of measures for Canadian airlines, airports and the aerospace sector, Garneau said in a statement, confirming an exclusive story last week by Reuters.

“As part of this package, we are ready to establish a process with major airlines regarding financial assistance which could include loans and potentially other support to secure important results for Canadians,” Garneau said.

He said it would ensure that regional communities would retain their connections to the rest of Canada, the world’s second-largest country by area, and added that “strict conditions” would come with any aid.

Garneau also said Canada would not spend “one penny of taxpayer money on airlines” until Canadians received refunds for flights that were canceled due to the coronavirus pandemic.

While several countries, including the United States and Australia, have offered billions in direct emergency support to their airlines, Canada has not.

Air Canada and WestJet, the two main carriers, and transport unions have been pleading for help for months as passenger demand cratered.

Air Canada has already laid off around 20,000 workers, about half its workforce. According to the Canadian Airports Council, Canadian passenger traffic from April through August was down 92% from the same period in 2019.

“The air sector cannot respond to these challenges on its own, given the unprecedented impacts on its operations,” Garneau said. (Reporting by Steve Scherer; Editing by Sandra Maler and Peter Cooney)

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