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It’s been an eventful week in the Canadian airline industry. Following the news on May 13 that Onex Corporation is acquiring WestJet Airlines, another big announcement came on May 16: Air Canada is aiming to buy Transat A.T. Inc.
Valued at approximately $520 million, the transaction would see Air Canada purchase all outstanding shares in Transat A.T. Inc. at $13 per share. The Montreal-based leisure tour operator, which includes airline division Air Transat, would be merged into Air Canada. Control of the organization would remain in Quebec.
Air Canada has 30 days to complete its required due diligence and finalize the deal, which has been recommended by the Transat A.T. board.
On April 30, the tour operator said it was in preliminary discussions with multiple parties for its acquisition. After reviewing all alternatives, “the board of directors has determined that it is now in the interests of Transat and its stakeholders to finalize negotiations on an exclusive basis with Air Canada,” said a statement released on May 16.
Air Canada said its vision is to create a “Montreal-based global travel services company in leisure, tourism and travel distribution operating across Canada and internationally.”
The buyout is subject to regulatory and shareholder approvals and final documentation. Air Canada said financing conditions do not apply because it has the necessary funds to complete the transaction.
“A combination with Transat represents a great opportunity for stakeholders of both companies,” said Calin Rovinescu, president and CEO of Air Canada. “This includes the shareholders of both Transat and Air Canada, employees of both companies who will benefit from increased job security and growth prospects, and Canadian travellers, who will benefit from the merged company’s enhanced ability to participate as a leader in the highly competitive leisure travel market globally.”
Rovinescu added that the deal would allow the new operation to compete heavily in the leisure travel market. It would also permit growth at Air Canada’s hub at Montreal-Trudeau Airport, while the existing Air Canada network would be complemented by Transat’s international presence.
The deal is being promoted as a “made in Quebec” solution to maintaining jobs and ensuring future growth. Air Canada said passengers will benefit from more services, a more comprehensive schedule and new travel options.
“This announcement is good news for Transat,” said Jean-Marc Eustache, president and CEO of Transat. “This is an opportunity to team up with a great company that knows and understands our industry and has had indisputable success in the travel business. This represents the best prospect for not only maintaining, but growing over the long term the business and jobs that Transat has been developing in Quebec and elsewhere for more than 30 years.”
Headquartered in Montreal since 1949, Air Canada employs 36,000 employees globally, with close to 10,000 of those in the province of Quebec. In 2018, the airline served nearly 51 million customers.
Also based in Montreal, Air Transat flies to some 60 destinations in 26 countries, carrying close to five million passengers annually. The airline was established in 1987 and employs about 3,000 people, operating under the Transat A.T. Inc. umbrella. Most recently, Air Transat was in the news as being the first North American operator of the Airbus A321LR long-range aircraft, which it said would open up new destinations.
Transat said normal operations will continue without interruption and travellers can continue to book vacation packages.