News coming from Montreal indicates that Air Canada will be purchasing Air Transat in a deal worth $520 million. The deal will give Canada’s largest carrier another slice of the market as they compete against an expanding WestJet.
An Air Canada press release announced the purchase of Air Transat shares at $13 per share. While final steps in the process are still undergoing completion, it is still highly likely that Air Transat will merge with Air Canada.
Air Canada does have the necessary funding to seal the deal. Once the final steps have been completed, this Air Transat merger will give Air Canada access to new slots and new aircraft. In the release, Air Canada indicated their wish to grow in Montreal.
Air Transat and Air Canada
Air Canada is Canada’s largest airline. On the other hand, Air Transat is a leisure airline. In terms of fleet, Air Transat’s fleet will easily be absorbed into Air Canada’s.
Air Canada will be able to use Air Transat’s aircraft to expand new routes and also to cover for the global 737 MAX grounding. Already, Air Canada must lease some aircraft to cover routes until the 737 MAX is ready to fly again. In the meanwhile, Air Transat’s A321s and 737s can cover many of the routes previously flown by 737 MAX aircraft.
What will happen in the long-term?
Air Transat is a leisure airline and, as such, their aircraft are configured for long-haul, low-cost routes. Thus, Air Transat could easily be merged into Air Canada’s low-cost arm, Air Canada Rouge.
Air Transat previously announced the retirement of their A310 fleet, so it seems that this will continue since Air Canada has a preference for newer aircraft. In the short-term, however, Air Canada may still use the A310s on certain routes before they are sent for retirement.
For Canadian passengers, however, this acquisition could come with mixed reactions. It remains to be seen whether fares will increase. However, with one less competitor on the market, Air Canada could potentially charge higher fares on certain routes. But, while fares may increase, some passengers will benefit from increased connectivity options with Air Canada.
Canadian aviation has had some big news stories this week. First, we saw WestJet’s sale to Onex Corporation. Now, we see Air Transat’s sale to Air Canada. While the deal has to undergo some final processes, it still is highly likely that Air Canada will acquire Air Transat.
Do you think it is good for Air Canada to acquire Air Transat? Do you like Air Transat? Let us know in the comments!