By Skies Magazine | June 3, 2020 Estimated reading time 2 minutes, 21 seconds.
Air Canada is considering backing away from its plans to take over Air Transat, according to a report in French newspaper Journal de Montreal.
The $720 million deal, first announced in May 2019, would see Air Canada buy Montreal-based tour operator Transat AT, parent company of Air Transat.
A few short months later, the coronavirus has decimated the airline industry and drastically altered financial positions for all air operators.
Reuters reported on May 1 that the terms of the deal were “fuelling jitters” among Air Canada investors given the impact of the COVID-19 pandemic on the aviation industry.
In early May, Air Canada announced a $1.05 billion loss in its first quarter directly resulting from travel bans enacted to curtail the spread of the coronavirus. It also said it had cut second quarter capacity by 85 to 90 per cent and was moving to quickly retire 79 aging aircraft to further reduce costs and protect liquidity.
As Transat’s share value has fallen during the pandemic, some have speculated that Air Canada may want to back out of the deal, which is being analyzed in the public interest by regulators. In March, Canada’s Competition Bureau said it had “concerns” about the agreement.
“I just don’t think they need any more capacity more than anything else,” said Greg Taylor, a portfolio manager at Purpose Investments, in an early May interview with Reuters.
Hopefully Air Canada will back out of the deal, Airtransat is a fantastic, service oriented company with friendly ,helpful nd cheerful staff. It would be devastating to see such a fine organization, destroyed by Air Canada quality service.