Air Canada has entered into talks with Transat AT (Air Transat) regarding the proposed purchase of all issued and outstanding shares of the airline.
The proposed transaction, valued at approximately C$520 million ($387 million) or $13 per share of Transat (on a fully-diluted basis), will create a Montreal-based global travel services company in leisure, tourism and travel distribution operating across Canada and internationally.
Air Canada said it has all the necessary funding required to complete the transaction which is not subject to financing conditions and it will allow it to expand its Montreal hub.
The transaction remains subject to the finalisation of definitive agreements, confirmatory due diligence, regulatory and shareholder approvals and other closing conditions.
Air Canada president and chief executive, Calin Rovinescu said: “A combination with Transat represents a great opportunity for stakeholders of both companies.”
He added: “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, where we have added 35 new routes since 2012 to the benefit of the Montreal and Quebec communities, and from which we carried 10 million customers in 2018 alone.”
Air Canada serves 11 airports across Quebec. The international reach of Air Canada’s network makes Quebec a gateway to the world and is an important tool for economic development, including tourism.
Montréal-Trudeau Airport is a strategic hub for Air Canada connecting its Quebec and Atlantic Canada domestic network, with its US transborder, Caribbean, European, North African, Asian and South American flights. To the US alone, Air Canada connects Montreal-Trudeau to some 24 cities.
Since 2012, Air Canada has launched 35 new routes from Montréal-Trudeau to global markets including Shanghai, Beijing, Tokyo, Tel Aviv, Lima, Sao Paulo, and Casablanca. Air Canada served more than 10 million passengers in Montreal in 2018.
Air Transat reported an adjusted operating loss of C$37.7 million for the first quarter amid higher costs in investments and fuel expenses and posted a C$45 million operating loss in 2018. It has a fleet of 39 in-service aircraft and 16 more on order.