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Summary
- Deadline for Air Canada’s takeover of Canadian tour operator Transat A.T. Inc. expires.
- Both parties are still in talks over some amendments to the original deal.
- Air Canada may walk out of the agreement given the deteriorating business environment.
A deadline set for the takeover of Transat A.T. Inc. by Air Canada expired on February 15, putting the first significant attempt to resolve the financial crisis surrounding the transport sector in a jeopardy.
The government had approved the deal to prevent a likely layoff of scores of employees of the loss-making tour operator, which may have led to a humanitarian crisis in the middle of a pandemic.
Transat is a leading tour company that specializes in holiday packages to around 25 countries across Europe and the Americas. The pandemic had caused widespread disruptions in its operations, leading to losses. The deal value had also been reduced as a result.
Still, missing the deadline would pose new challenges to the merger plan; and at worst, they may have to cancel the agreement altogether.
Transat said on Tuesday that an approval needed from the European Union to execute the deal did not come on time which kept the final agreement at bay.
The Montreal-based company has around 5,000 employees. In 2018, it was awarded the Travelife Certificate for its sustainable business practices.
Transat stocks (TSX:TRZ) were trading at C$5.00 apiece on Wednesday. The stocks have seen high volatility over the past few months and shed their value by more than 200 percent in the past year.
Picture Credit: Pixabay.
Air Canada-Transat Talks Continue
The tour company said that talks are continuing for some amendments to the original deal approved by the Canadian regulators on February 11.
However, the country’s largest airline still had the option to extend the deadline, but it did not. So, while the talks are still on for a new deadline, still it can pull out of the agreement.
Industry experts opine that a fast-changing business environment would make it hard for the airline to decide now. Moreover, the federal government had recently canceled all flights to Caribbean destinations amid the virus threat until April 30, which makes the prospects of a deal less likely.
Besides, a mandatory hotel quarantine for air travelers entering Canada will go into effect on February 22. Transat has also suspended almost all its operations until April 30.
Air Canada stocks (TSX:AC) were trading at C$23.56 at close on Wednesday.
