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Canadian Mega-merger Proposed

Photo: Air Canada announced on May 16 that it is in exclusive talks with the company that owns leisure carrier Air Transat. (Photo Air Canada)

 

Air Canada announced on May 16 that it is in exclusive talks with the company that owns leisure carrier Air Transat. The flag carrier proposes an all-cash purchase at CA$13 per share, valuing the deal at approximately CA$520m. The two Quebec firms have entered a 30-day period of negotiations to finalise arrangements. Should the deal go through, it would create a Montréal-based global travel services group and a serious player within key markets including the transatlantic and Caribbean. It would also bolster its defence against a revitalised WestJet, which is in unrelated takeover talks with private equity firm, Onex.

Calin Rovinescu, president and chief executive of Air Canada remarked: “The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel. It will also allow us to further grow our hub at Montréal/Trudeau Airport.”

Since 2012, Air Canada has added 35 new routes from Montréal including long-haul destinations such as Sao Paulo, Casablanca and Shanghai. The airline – Canada’s largest in both the domestic and international market – has been headquartered in the city since 1949.

Any deal is subject to regulatory and shareholder approvals, with Reuters reporting comments made by Canadian transport minister Marc Garneau who said that the proposed transaction would likely “be subject to provisions” of the country’s Competition Act.

In a separate development, Air Transat has taken delivery of its maiden Airbus A321LR (pictured). The jet, C-GOIE (c/n 8755), was handed over on May 3 to the Montréal-based carrier and will be operated under a lease agreement from AerCap. It is the first of 17 Airbus A320neo aircraft, including 15 A321LRs, to be delivered to the airline from the lessor’s order book with Airbus. The larger leasing deal is part of a programme to convert Air Transat to an all-Airbus fleet by 2022 and phase out older widebody and narrowbody aircraft.

Air Transat has taken delivery of its maiden Airbus A321LR. The jet, C-GOIE (c/n 8755), was handed over on May 3 to the Montréal-based carrier and will be operated under a lease agreement from AerCap. (Photo Air Transat)

The A321LRs are being configured with 199 seats in a two-class layout – 12 premium economy and 187 economy – and each jet has Airbus’ Cabin Flex option allowing the installation of additional fuel tanks, offering ranges of up to 4,000 nautical miles (7,408km).

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