Aviation
Commercial /
Americas
Merger canceled
Amid the pandemic, Air Canada and Air Transat terminate common agreement
Airbus A321
Air Canada
Gilbert Hechema, GDFL 1.2, via wikimedia commons
Rafael Ramos
4/4/2021
Air Canada, a Canadian company that had an agreement for the acquisition of Air Transat, also Canadian, announced on April 2 that the companies mutually agreed to cancel the agreement that proposed the acquisition of Air Transat by Air Canada.
The acquisition required approval by regulatory authorities, such as the European Commission (EC). Air Canada offered a package of improvements and adjustments to the contract, however, the deal - even with concessions to address antitrust issues - is unlikely to receive approval from the European Commission in its current state.
Boeing 737-800
Air Transat
CC BY-SA 2.0
Given this scenario, Air Canada concluded that providing more changes and resources would be very costly and may not guarantee EC approval.
“After careful consideration, Air Canada concluded that providing additional costly solutions, which may not yet secure EC approval, would significantly compromise Air Canada's ability to compete internationally, negatively impacting customers, other stakeholders and future prospects for as it recovers and reconstructs the impact of the COVID-19 pandemic, ”Air Canada said in a statement.
"Especially in this challenging environment, it is essential that Air Canada focus on creating the ideal conditions for its full recovery, preserving and leveraging all of its key strengths and assets, including its strong employee culture."
Air Canada and Air Transat have agreed to terminate the agreement. Air Canada will pay a $ 12.5 million withdrawal fee, and Air Transat is no longer under any obligation to pay Air Canada if it is involved in another such transaction.
Some Canadians say this was the right decision to make, as they feared that a merger between Air Canada and Air Transat would further limit their choice in a market already constrained by competition, which sees Air Canada and WestJet in a kind of duopoly.
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Rafael Ramos
Aviation enthusiast from an early age, he had his first contacts with the area developing that good old habit of spending dozens of hours in front of the screens of Micrsoft Flight Simulator and other simulators. With a solid background in various technological areas, including engineering and chemistry, Rafael has rejoined aviation as editor and author of articles and materials on our portal, providing invaluable help to the dynamics and expansion of the website and the aeronautical community, bringing us the news and updates so indispensable for us to remain current in our area of operation.
   
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