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Air Canada has the support of Air Transat shareholders. On August 23, shareholders voted in favor of Air Canada's offer on Air Transat. Once this plan has been approved by the government and other conditions have been met, Air Canada will have taken over Air Transat. The expected completion date is early 2020.
Vote of the shareholders of Air Transat
Air Canada's press release indicates that nearly 95% of shareholders supported the deal. This agreement allows Air Canada to acquire all of the issued and outstanding shares of Air Transat.
Air Canada President and Chief Executive Officer Calin Rovinescu stated:
We are delighted with the results of Transat's special meeting and are grateful to Transat shareholders for this unprecedented show of support.
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The last obstacle
A few days ago, Simple Flying had raised an obstacle to the transaction, namely businessman Pierre Karl Peladeau. He challenged the deal and urged shareholders to reject the offer. However, with only a 1.6% stake, he could not muster the necessary forces to cancel the deal. Air Canada already had the support of Transat's largest shareholder.
Air Canada has increased its purchase price
In order to make the transaction more attractive to shareholders, Air Canada increased its purchase price earlier in August to reach 720 million Canadian dollars. Air Canada is immediately involved with Air Transat.
What happens next?
Well, according to Rovinescu, the following:
We will build a combined company that is larger than the sum of its components and of which we can all be proud. We are now looking forward to working with Transport Canada and the Competition Bureau to obtain the approvals required to complete the transaction and we are pleased to be able to demonstrate the many benefits it will bring.
Regulatory approval may take some time and Air Canada gives a few months for the remaining terms of the agreement to be met.
Air Canada has clearly indicated its intention to operate Air Transat separately from the national carrier brand. It is unclear whether Air Canada will upgrade one of its aircraft. As a leisure carrier, Transat's aircraft are not configured for high-end long-haul travel. However, if Air Canada retains Air Transat as a recreational entity, it does not appear necessary for Air Canada to modernize the aircraft, particularly new aircraft such as the A321LR.
It is also 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 Red folds in Transat or vice versa could have a commercial meaning. Although all plans of this nature are not public.
Do you think Air Canada's acquisition of Air Transat is good? What will happen to Air Transat? Let us know in the comments!
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