Canada’s regulators have given Air Canada the go ahead to buy smaller rival Air Transat for a total of C$180 million ($142 million). The deal has been the subject of negotiations between the carriers for almost two years, with Air Canada agreeing to buy all outstanding shares in Transat for $5 apiece.
That’s more than 70 percent less than the price first agreed on in late 2019, when Air Canada had offered as much as $18 per share, or C$720 million ($570 million). What happened in the meantime was COVID-19 and the precipitous fall of air travel demand.
“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,” said Omar Alghabra, Canada’s transport minister in a statement.
“It will be accompanied by strict conditions which will support future international competition, connectivity and protect jobs. We are confident these measures will be beneficial to travelers and the industry as a whole.”
The two airlines will continue to operate under separate brands. In addition other stipulations to the deal include: Air Canada has agreed to maintain Transat’s head office and brand in Quebec, keeping maintenance contracts in Canada, launching new routes within five years and committing to employ 1,500 workers in the merged company’s new travel business.