Ottawa approves Transat purchase
Canada’s travel landscape is about to change after the federal government approved Air Canada’s $190-million purchase of Transat A.T., after COVID-19 diminished the deal’s value.
Transport Minister Omar Alghabra announced the approval Thursday evening, saying the government concluded the purchase is in the public interest. He said it considered a range of factors, including level of service, wider social and economic implications, the financial health of the air transportation sector, and competition.
“Given the devastating impact of the COVID-19 pandemic on the air industry, the proposed purchase of Transat A.T. by Air Canada will bring greater stability to Canada’s air transport market,” he said in a statement.
The pandemic was also cited as a factor when Montreal-based Transat noted it may not be able to continue on its own because of the significant financial challenges.
The government said the acquisition is the best outcome for workers, Canadians travellers and other industries that rely on air transport.
Transat shareholders in december approved the revised deal, equal to $5 per share and a significant decrease from an earlier $720 million or $18 per share.
Air Canada won support from Transat’s largest shareholder, Letko brosseau, after sweetening the deal in August 2019 from its initial offer of $520 million or $13 per cent a few months earlier.
Alghabra said approval is subject to “strict conditions which will support future international competition, connectivity and protect jobs.
“We are confident these measures will be beneficial to travellers and the industry as a whole,” he added.
Air Canada must ensure that Transat A.T. provides communications and public services in both official languages.
The country’s largest airline must also preserve the Transat head office and brand in Quebec, maintain 1,500 employees for Transat’s leisure travel business, conduct aircraft maintenance in Canada while prioritizing contracts in Quebec, have a price monitoring mechanism and launch new destinations within the first five years.
It wasn’t immediately clear when the deal will close.
Transat reconfirmed its unanimous support for the sale to Air Canada in January after receiving an unsolicited proposal on dec. 22.
Telecom owner Pierre Karl Peladeau’s investment company Gestion MTRHP Inc. had made an offer valued at $5 per share if Ottawa and regulatory authorities rejected Air Canada’s takeover.
Transat was co-founded in 1986 by several Quebec businessmen, including current CEO Jean-marc eustache and Francois Legault, the province’s premier. Legault left in 1997.