Mid-May it was announced that Air Canada intends to take over Air Transat. At that time, the airlines had entered into an exclusive agreement to purchase all issued and outstanding shares in a $ 520 million transaction.
A lot can go wrong after announcing such a deal I've been waiting to see if this deal will come off or not. Well, the deal is one step closer to closing, as the two companies have reached another agreement.
Air Canada acquires Air Transat
Air Canada and Air Transat have reached final agreements on the merger of the two companies . The transaction is still subject to the approval of regulators and shareholders, as well as other closing conditions. However, the transaction is expected to close in early 2020.
Calin Rovinescu, President and CEO of Air Canada, said the following:
"We are pleased to have reached this final agreement to merge Transat and Air Canada to deliver the best possible results for all involved. For the shareholders of Transat and Air Canada, this combination provides excellent value for money while increasing job security for employees of both companies through greater growth prospects. Air Canada intends to maintain the Transat and Air Transat brands and to maintain the Transat headquarters and its main functions in Montreal . Both companies have performed excellently, as the Skytrax Awards 2019 prove. Travelers will benefit from the expanded capabilities of the merged companies in the highly competitive global holiday travel market and access to new destinations, increased call traffic and higher frequencies. The Quebec economy will derive the greatest benefit from having a Montreal -based, growth-oriented aviation world champion, representing the world's most international business. "
Retaining Air Transat as a stand-alone brand
Surprisingly, the Air Transat and Transat brands are retained separately to complement Air Canada, Air Canada Rouge and Air Canada Vacations.
] On the surface this is not very logical – Air Transat is a competitor of Air Canada Rouge. They are both low-cost carriers and their route networks largely overlap. In the long term, it does not make sense for me to keep both brands.
If I had to guess, they would probably say that they are kept for the moment as separate brands. It looks as if they will maintain competition as much as possible as they seek regulatory approval.
Either that, or it is planned in the long term to position Air Transat and Air Canada Rouge separately and let different markets operate (one could be) focused on long-haul flights, while the other could focus on short-haul flights or the like.
I just do not think it will be more or less "business as usual" for Air Canada Rouge and Air in the long run.
This business is bad news for consumers.
While airlines are always trying to do it differently, this is undoubtedly bad news for consumers. Air Transat was a strong competitor in Canada, and this deal eliminates them as a competitor. Even if they run Air Transat as a stand-alone brand, they do not have to assert themselves in the same way that Canadian travelers used to.
What do you think about Air Canada's intention to maintain Air Transat as a stand-alone brand?