Air Transat Shareholders Give Air Canada Deal The Green Light

Air Canada has the support of Air Transat’s shareholders. On August 23rd, shareholders voted to back Air Canada’s bid for Air Transat. Once the government approves this plan and additional conditions are met, Air Canada will have taken over Air Transat. The estimated completion date is early 2020.

Air Canada
Air Canada has the backing of Air Transat’s shareholders. Photo: Tom Boon – Simple Flying

Air Transat’s shareholders vote

Air Canada’s press release indicates that nearly 95% of shareholders backed the agreement. This agreement allows for Air Canada to acquire all of Air Transat’s issued and outstanding shares.

Air Transat
Air Transat’s shareholders have approved Air Canada’s measures. Photo: Air Transat

Air Canada’s President and CEO Calin Rovinescu, had the following to say,

We are pleased with the outcome of Transat’s special meeting and grateful to Transat shareholders for this overwhelming show of support.

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The latest obstacle

A few days ago, Simple Flying wrote about an obstacle to the deal in the form of businessman Pierre Karl Péladeau. He took issue with the deal and urged shareholders to reject the offer. However, with only a 1.6% stake, he could not muster up the forces to take down the deal entirely. Air Canada already had the backing of Transat’s largest shareholder.

Air Canada
Air Canada entered the vote with the backing of Air Transat’s largest shareholder. Photo: Air Canada

Air Canada increased its purchase price

In order to make the deal more enticing for shareholders, Air Canada upped their purchase price earlier in August to CAD$720 million. Air Canada went all in for Air Transat.

Air Canada went all in to acquire Air Transat. Photo: Air Transat

What comes next?

Well, according to Rovinescu, the following:

We will build a combined company greater than the sum of its parts that we can all be proud of.  We now look forward to engaging with Transport Canada and the Competition Bureau to secure the required approvals to complete the transaction and welcome the opportunity to demonstrate the many benefits it will bring

Regulatory approval can take a while and Air Canada is giving a few months for the remainder of the deal’s conditions to go through.

Air Canada
Air Canada now has to wait for government approval and a few other conditions to go through. Photo: Air Canada

Air Canada has made it clear that they intend to operate Air Transat separate from the flag carrier’s brand. It is unclear if Air Canada will retrofit any of Air Transat’s aircraft. As a leisure carrier, Transat aircraft are not configured for premium long-haul travel. However, if Air Canada keeps Air Transat as a leisure entity, it does not seem necessary for Air Canada to retrofit the aircraft- especially new aircraft like the A321LR.

It also is unclear how Air Canada will operate Air Transat separately from Air Canada Rouge. Rouge is a low-cost brand that competes directly with Air Transat. Whether Rouge folds into Transat or vice versa could make business sense. Although, any plans of that nature are not public.

Do you think Air Canada’s acquisition of Air Transat is good? What do you think will happen to Air Transat? Let us know in the comments!

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Andrew Rogers

Air Transat has a better Customer Service and onboard product, I think it would be wise to merge Canada Rouge with Air Transat livery, improving the Club Class Product for leisure travellers also increasing the economies of scale for both airlines and one marketing campaign for the new airline.

Joey Ashton

I flew Air Transat for the first time to LGW from YVR and I was extremely impress with their product. The cabin crew were much friendlier and happier than AC. The CSAs were friendly and accommodating, something that is lacking at AC. The A332 I was on was quiet nice. With this acquisition, I worry there will be much lesser competition in the market for leisure travel. I hope the Air Transat name and product doesn’t go away because I’d fly them again before I ever go on another AC flight.

Peter Fletcher

Might be good to see Westjet enter more of the transatlantic market especially around Manchester as both Air Transat and Rouge operate YYZ-MAN that might force some different pricing which will now be a monopoly on this route !!!