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Air Canada and Air Transat Terminate Acquisition

Air Canada’s acquisition of Air Transat has been in the works for almost 2 years. Even after all the hurdles that they had to go through to get to this point, it still ended in a cancellation.

The agreement required various regulatory authority approvals. It got stuck at the European Commission (“EC”). In short, the EC was not going to approve the acquisition for several reasons including negatively impacting customers.

In the end, Air Canada agreed to pay Air Transat a termination fee of $12.5 million, while Air Transat is no longer under any obligation to pay Air Canada any fee should Transat be involved in another acquisition or similar transaction in the future.

Thoughts

I think that people, like me, who had fears of Air Canada growing its monopoly are breathing a sigh of relief. However, on the one hand, I am glad that Air Canada cannot squeeze the market. But on the other hand, if Air Transat goes bankrupt, I would actually prefer that Air Canada have bought them out and merge their resources to have a stronger airline.

As much as I do not like monopolies, I also want to see Canada have at least one strong airline that can compete internationally. I still believe that it is in Canada’s best interest to have a superior product that is accessible worldwide. Running it like an amazing service is step two. But we cannot have step two (great product/service) if step one (a company that has the resource to do so) never existed.

Moving On

Air Canada will have to look elsewhere to expand and improve its product.

While Air Transat seems to already be looking for another buyer. At this point, they will probably need find someone if they are going to survive, after the reduction is capacity they have taken.

Here is hoping that whoever buys them out can bring their product and service to a higher level to compete more directly with other major airlines across the country!

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