Air Canada Acquires Air Transat in Estimated C$190 million Deal

Air Canada, one of the countries largest and most recognized airlines, has announced that it will acquire Air Transit. The deal, worth close to $190 million, will see Air Canada acquiring all shares of Air Transat at the cost of $5.00 per share in cash. The deal also offers shareholders the option to convert their shares in Air Transit for a fixed 0.2862 exchange ratio in Air Canada stock.

Air Canada had tried to take over Air Transit last year with a more aggressive offer. However, this was overwhelmingly rejected by Air Transit shareholders. Therefore, this weeks announcement was a surprise to many, but due to the coronavirus pandemic, air travel came to an abrupt halt. This put severe strain on Air Transit, who like many other airlines were facing severe financial difficulties.

The deal still has several hurdles to overcome before final approval. This includes getting approval from the Toronto Stock Exchange, the courts and shareholders. In addition, the deal will need regulatory approval in Canada and the European Union.

If approved, and the conditions of the deal are met, it is expected that the acquisition will take effect by February of next year. The chief executive of Air Canada, Calin Rovinescu commenting during the announcement that: “Covid-19 has had a devastating effect on the global airline industry, with a material impact on the value of airlines and aviation assets. Nonetheless, Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms. This combination will provide stability for Transat’s operations and its stakeholders and will position Air Canada, and indeed the Canadian aviation industry, to emerge more strongly as we enter the post-Covid-19 world.”

Air Canada

As the countries most recognizable airline, Air Canada was first founded in 1937 and operates out of all major airports in Canada. The airline, which is listed on the Toronto Stock Exchange, employs over 30,000 people worldwide and reported a net income of $1.476 billion in 2019. It offers commercial and passenger flights to over 220 destinations worldwide using a variety of aircraft.

The company’s current fleet includes over 400 aircraft that are made up of Boeing 737 MAX 8, Boeing 787 Dreamliner wide-body, Boeing 777, Airbus A220-300, Airbus A319, A320, A321 and the A330. In addition to its flagship brand, the company operates Air Canada Cargo, Air Canada Rouge, Air Canada Express, Air Canada Jetz, Air Canada Cargo, Air Canada Vacation and Air Canada Foundation.