Canada's airline industry is in talks to receive at least $7 billion in loans from the federal government once carriers are able to refund passengers whose flights were postponed or cancelled due to the COVID-19 pandemic, according to the head of the nation’s largest union.

Unifor President Jerry Dias said in an interview on Thursday that the government is in negotiations with airlines, including Air Canada, on how to structure the funds, which may come as a loan with a low-interest payment, as opposed to a full bailout package. 

"Neither the federal government nor Air Canada will confirm or deny this, because they're in bargaining. So, I understand the cloak of secrecy during this time. But I'm frustrated. It's been going on way too long," Dias said. 

Refunding passengers whose flights were postponed or cancelled was one of Ottawa's key demands before any decision was made to provide the ailing airline sector with billions of dollars in a bailout package. Other demands included airlines restoring regional flights and improving their financial transparency. 

The pandemic has weighed heavily not only on Air Canada, but most major airlines operating in Canada. Air Canada laid off more than half of its 38,000 employees in June as demand for air travel plunged amid border restrictions and efforts to reduce the spread of COVID-19. It also laid off another 1,700 people in January while cutting several domestic regional routes. Other airlines like privately-held WestJet Airlines Ltd. and Sunwing Airlines Inc. have also announced layoffs and route reductions. 

"There's no real playbook for a pandemic,” Dias said. “I think the government was waiting to see if, you know, we would get through this quickly, and what the overall economic carnage would be for the industry." 

"We are at a crucial stage and decisions have to be made, and they have to be made now."

An Air Canada spokesperson declined to comment on whether the airline has agreed to reimburse affected passengers but pointed to a Feb. 12 release that stated the company remains in negotiations with federal officials. A representative from Transport Canada wasn't immediately available for comment. 

A Finance Ministry spokesperson said in an email to BNN Bloomberg that the government is committed to supporting the airline sector during the pandemic. 

"The government is in discussions with air carriers on potential additional financial assistance. Any further taxpayer support will prioritize: Refunding Canadians for cancelled flights, retaining and reinstating regional routes in Canada, and protecting jobs across the air sector. We continue to emphasize this in our ongoing conversations with the airlines," the spokesperson said.