Federal regulators have approved Air Canada’s (TSX:AC) $190-million purchase of Transat A.T.
Transport Minister Omar Alghabra announced in Ottawa the approval just days before the deal's February 15 deadline, saying the government concluded the purchase is in the public interest. He said it considered a range of factors, including level of service, wider social and economic implications, the financial health of the air transportation sector, and competition.
Montreal-based Air Transat said it may not be able to continue on its own because of the significant financial challenges posed by the global pandemic. Transat shareholders in December approved the deal, equal to $5 per share.
Ottawa is requiring that Air Canada ensure Transat A.T. provides communications and public services in both official languages after the purchase is completed. The country's largest airline must also preserve the Transat head office and brand in Quebec, maintain 1,500 employees for Transat's leisure travel business, conduct aircraft maintenance in Canada while prioritizing contracts in Quebec, have a price monitoring mechanism and launch new destinations within the first five years.
The deal still requires approval by European regulators. Transat was co-founded in 1986 by several Quebec businessmen, including current CEO Jean-Marc Eustache and Francois Legault, the province's premier. Legault left the company in 1997.
Air Transat has completely paused operations until April 30 and furloughed about 450 employees due to travel restrictions imposed by Ottawa during the pandemic.
