Canadian Government OKs Air Transat take-over by Air Canada
After careful consideration, the Canadian Government has given the green light to Air Canada to take-over Air Transat. The governmental approval was one of the final hurdles of the merger, with only the approval of the European Union missing.
The deal between Air Canada and Air Transat has been in the works since May 2019 and experienced some issues during the Corona-pandemic, but both companies announced in October last year that the deal would proceed, although for a lower price.
Despite having some concerns about a potential monopoly, the Government gave the OK as continuation of Air Transat has been in jeopardy due the ongoing crisis in the aviation sector. As part of the approval, Air Canada and Air Transat must:
- reduce flights between Canada and Europe and facilitate and encourage other airlines to take-over these routes
- maintain Air Transat's brand and headoffice in Quebec
- employ at least 1,500 people assigned to the leisure flying business
- commit to ensure aircraft maintenance is being conducted in Canada, with a focus on Quebec
- support and submit to a new pricing monitoring mechanism
- launch new destinations within five years of completing the take-over.
Due to the Corona-pandemic, both Air Canada Rouge and Air Transat have suspended all flights and it's unclear what Air Canada's post-pandemic plans are for its leisure-subsidiary Rouge. Industry-experts are expecting a merge into Air Transat, now that the company has been tasked with maintaining that brand. This will mean Air Transat will become Air Canada's leisure-brand.
Despite the governmental approval, objections have been filed against the merger out of fear of a monopoly and subsequently higher prices for consumers. Airlines like WestJet and Flair were quite vocal about their disapproval over the last few days, while Sunwing has welcomed the deal.
In the meantime, a Canadian media CEO is still trying to persuade Air Transat's shareholders to abandon the deal and work with his investment firm to keep the airline independent. This looks, however, not very fruitful at this stage of the process.
Photo by Anton Homma.