As per the media release by Air Canada, we hear that they have mutually agreed to terminate the Arrangement Agreement for the proposed acquisition of Transat by Air Canada.
This comes nearly two years after talks initially started in 2019, with the original agreement on June 2019, changes to the terms in August 2019 and then due to COVID, further amendments were made recently in October 2020.
A key point to keep in mind was that this acquisition was conditional on the approval of various regulatory authorities, including the European Commission. Air Canada, despite making many changes was unable to get the European Commission to approve the acquision.
In the end, it cost Air Canada $12.5 million as a termination fee that it had to pay Air Transat.
This development looks good for the general flying public as its almost never a good idea when monopolies are created and competition is eliminated. Competition encourages improvements by the seller to lure in customers and also provides choices to the buyers.
Air Canada will no doubt survive as a result of this, but its a bit concerning hoping that Air Transat can survive in this environment. Air Transat should perhaps look outside Canada to partner up with – someone who can pump in finances and take the carrier up a notch in offering better soft-products and make some upgrades to the hard product a la Etihad style.
It will be interesting to see how this shapes out.
Written by Dominic Fernandes aka CanadaPointsGuy.