Ottawa Urged To Halt Air Canada Air Transat Take Over

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An influential Quebec businessman is urging the Canadian government to block the sale of Air Transat to Air Canada, offering 20% more per share than Canada’s largest airline. Pierre Karl Péladeau, the CEO of Quebecor – a telecommunications, media, and sales conglomerate – has sent multiple letters to the federal cabinet, including Canada’s Transportation Minister, requesting that the sale be denied.

Transat A330
Air Transat is a Canadian leisure airline with service to Europe, Mexico, and the Caribbean. Photo: Air Transat

Péladeau’s allegations

Quebecor CEO, Pierre Karl Péladeau, is seeking to block Air Canada’s acquisition of Air Transat, stating that Air Transat’s leadership failed to allow its shareholders to vote on his offer to purchase the leisure airline.

After the Air Canada deal was revised post-COVID to $5 per share, Péladeau submitted an offer for $6 per share for the carrier. According to The Globe and Mail, his offer was allegedly sent to Transat’s Board of Directors but was declined via email – the night before Transat Shareholders approved the sale to Air Canada. Péladeau says that this refusal showed ‘contempt’ for Transat’s shareholders.

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Calgary International Airport Air Canada
It’s been over a year since Air Canada announced its intention to acquire Air Transat. Photo: Getty Images

Why the alternate offer could be better

Above and beyond an offer that is 20% higher than that of Air Canada’s, Péladeau argues that a sale to a private investor like himself would be more beneficial to travelers rather than a consolidation of the industry through this airline merger.

Time and time again, we’ve seen how competition on routes lowers fares for travelers. Indeed, in March, the Competition Bureau of Canada outlined its own concerns about the Transat deal, indicating that fewer options would be available for passengers to choose air travel or vacation packages.

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Concerns included increased prices, fewer choices, decreases in service, and a significant reduction in travel on a variety of routes with overlap. As part of the analysis, the Competition Bureau noted that there are 83 overlapping routes between the two carriers.

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Air Transat’s acquisition by Air Canada has been examined by both the European Union and the Canadian government in the interests of competition. Photo: Air Transat

The ultimate conclusion of the bureau’s report was that the proposed Air Canada acquisition of Air Transat is likely to lead to “substantial lessening or prevention of competition in the sale of air travel or vacation packages to Canadians.”

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On December 18th, 2020, the Superior Court of Québec had issued a final order approving its arrangement with Air Canada. However, the transaction is still subject to other regulatory approvals. Notably, the parties involved must wait for considerations under the likes of the Canada Transportation Act and the European Union Council Regulation (EC) No. 139/2004.

What do you think about this situation? Should the Canadian government block the sale, effectively giving Péladeau an opportunity to purchase the airline? And do you think this alternate offer would be beneficial to the industry? Let us know your thoughts in the comments.

Simple Flying reached out to both Air Transat and Air Canada with requests for comment or statement on the matter. Neither airline has responded at the time of publication.

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