Ottawa is opening a new funding stream for airliners struggling with rising fuel costs, the latest effort to help shore up the sector amidst the volatility caused by the war in the Middle East.

The federal government announced Monday that it is launching a loan program for the airline sector offering up to $150 million in repayable support, on an “as-needed” basis.

Funding will come from the Canada Enterprise Emergency Funding Corporation, which also oversees the government’s support measures for large companies impacted by U.S. tariffs.

“The Government of Canada is focused on strengthening a resilient and competitive air sector that supports economic growth and keeps air travel affordable for Canadians,” Finance Minister François-Philippe Champagne said in a statement.

“As airlines face rising jet fuel costs, today’s relief measure will help stabilize the industry and support a competitive aviation sector for the future.”

The U.S. and Israeli-led war against Iran has sent fuel prices soaring after Iran blocked the Strait of Hormuz, a major transit point for fuel tankers.

In April, the federal government announced it would pause federal fuel taxes until Labour Day, including for aviation fuel.

The government said rising prices have “significantly increased operating costs across the global aviation sector, placing additional pressure on airlines as they navigate ongoing market volatility.”

Ottawa said any airliners that receive funding from the Liquidity for Airline Sector Resilience program would have to commit to “Buy Canadian, restrict dividends and executive compensation, and maintain their Canadian operations  — including protecting jobs.”

More to come…