Air Canada-Air Transat Merger Clears Another Hurdle

Jun 27, 2019

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Air Canada’s takeover of leisure carrier Air Transat moved forward Thursday after the board of Air Transat’s parent company unanimously approved the terms merger proposal.

The deal is worth approximately $520 million (Canadian), according to an Air Canada press release.

“We are very pleased to join forces with such a successful player in our industry. The combination with Air Canada will give Transat new perspectives of growth, with the support of a strong network offering many options for connecting traffic,” Jean-Marc Eustache, Transat’s president and CEO said in a statement.

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Air Transat is a leisure-focused airline and will remain as a standalone brand even after the merger is completed. That includes maintaining Transat’s Montreal offices. While executives at both airlines say this is a move to help retain customer loyalty and differentiate their products, the “airline-within-an-airline” model can be a risky business proposition. The Lufthansa Group, for example, recently announced that it would terminate long-haul service on Eurowings, its low-cost subsidiary.

The deal, which was formally announced in May, still has to go through a court-approved plan under Canada’s Business Corporations Act before being finalized. It comes amid broader shakeup in the Canadian airline industry. Also in May, WestJet — Canada’s No. 2 carrier — announced its intention to go private after it agreed to a friendly acquisition from Toronto-based private-equity firm Onex Corp.

Featured image by BriYYZ via Flickr.

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