Government of Canada Approves Transat Sale to Air Canada

Canada’s Minister of Transport, Omar Alghabra, has approved the purchase of Transat A.T. Inc. by Air Canada, subject to terms and conditions.

“Given the devastating impact of the COVID-19 pandemic on the air industry, the proposed purchase of Transat A.T. by Air Canada will bring greater stability to Canada’s air transport market. It will be accompanied by strict conditions which will support future international competition, connectivity and protect jobs. We are confident these measures will be beneficial to travellers and the industry as a whole,” Alghabra said in a media release.

The Government of Canada says it considered a broad range of factors in making its decision, such as level of service, wider social and economic implications, the financial health of the air transportation sector, and competition.

The COVID-19 pandemic, it says, was a key factor in the final decision. As Transat itself noted in DEC 2020 that current uncertainty casts doubt on its ability to continue, as it faces significant financing challenges.

“Noting the effects of the pandemic on air service in general, and on Transat in particular, the Government of Canada has determined that the proposed acquisition offers the best probable outcomes for workers, for Canadians seeking service and choice in leisure travel to Europe, and for other Canadian industries that rely on air transport, particularly aerospace,” Transport Canada said.

Transport Canada said it conducted “rigorous” analysis and consultation with Canadians and stakeholder groups. Online public consultations ran from 04NOV, 2019, to 17JAN, 2020.

“This proposed acquisition, which was endorsed by Transat A.T.’s shareholders on 15DEC, 2020, provides clarity and stability with regard to the company’s future, despite the effects of the pandemic. It will also result in enforceable terms and conditions intended to facilitate future connectivity and competition on routes to Europe previously operated by Transat A.T. These terms and conditions reflect extensive engagement with Air Canada and Transat A.T. regarding measures they were prepared to undertake to address issues raised by the public interest assessment.”

The Government of Canada noted it is aware that some Transat A.T. customers are still waiting for refunds for flights cancelled due to COVID-19. It said refunds are “an integral part of the negotiations with airlines regarding any assistance plan, and the government will continue to take into account the needs of Transat A.T. customers.”

The terms and conditions associated with the proposed acquisition include:

  • Measures to facilitate and encourage other airlines to take up former Transat A.T. routes to Europe
  • Preserving the Transat A.T. head office and brand in Quebec
  • Employment commitment of 1,500 employees around the new entity’s leisure travel business
  • Commitment to facilitate aircraft maintenance in Canada, prioritizing contracts in Quebec
  • A price monitoring mechanism
  • Launch and operation of new destinations within the first five years
  • As per the legislative process, the final decision rests with the Governor in Council

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