An Air Transat plane is seen as an Air Canada plane lands at Pierre Elliott Trudeau International Airport in Montreal on Thursday, May 16, 2019. THE CANADIAN PRESS/Ryan Remiorz

Transat shareholders approve Air Canada takeover, deal now in regulators’ hands

The approval from shareholders comes after months of turbulence

The fate of Air Canada’s $720-million takeover bid for Transat A.T. Inc. rests with regulators after shareholders overwhelmingly approved the acquisition offer Friday.

In a special meeting, shareholders of the Quebec-based tour operator voted 94.77 per cent in favour of accepting the $18-per-share transaction from the country’s largest airline.

The deal will narrow the field of airline competition, securing for Air Canada about 60 per cent of the Canadian transatlantic market and helping the company maintain a firm hold on Montreal air travel.

The takeover is expected to face intense scrutiny from the Competition Bureau and other regulatory authorities, including in Europe. Transat said it expects the deal to close early next year.

“Today, we are very confident that we will get the approval of these different regulatory authorities,” Transat board member Jean-Yves Leblanc said at a news conference, citing “the best advisers that we can have on this planet.”

Chairman and chief executive Jean-Marc Eustache, who co-founded Transat’s predecessor in the early 1980s, tamped down fears of higher fares on flights to Europe.

“I have 42 years’ experience in that field. I never saw the price going up,” he told reporters, pointing to competitors on the Montreal-Paris route such Air France, Level Airline and Corsair International. “Plenty of competition, there’s no problem with that.”

READ MORE: Transat warns of ‘abusive’ bid to stop sale to Air Canada, files complaint with regulator

While the price of Caribbean flights remains relatively low among ample competition from budget airlines such as Sunwing Airlines Inc. and WestJet Airlines Ltd. subsidiary Swoop, the consumer cost of transatlantic travel threatens to slide upward.

“If you are interested in travelling to Rome, London or Paris, the price is going up, because Air Canada and Transat really control this market,” said Michel Nadeau, executive director at the Institute for Governance of Private and Public Organizations. “The temptation will be to boost the price.

“Up to now it’s possible to buy a ticket to Paris or London for less than $1,000, but there’s a danger that after the transaction the price will go above $1,000,” Nadeau said.

Both Air Canada and Transat are headquartered in Montreal, but worries persist around Transat’s head office and potential job losses.

“While imperfect, this transaction could allow Transat to be included in a larger group, thus allowing it to better deal with growing international competition. It is now up to Air Canada to seize the opportunity to increase jobs and economic spinoffs in Quebec,” the Quebec Labour Federation Solidarity Fund — the investment arm of the province’s largest labour group — said in a statement.

The fund, Transat’s second-biggest shareholder at 11.6 per cent, voted in favour of the transaction. Kim Thomassin, head of legal affairs at la Caisse, Quebec’s pension fund manager and the No. 3 shareholder at 5.8 per cent, said in a letter to Air Canada this week it would vote for the deal due in part to the lack of another offer and “a market where competition continues to intensify.”

Eustache took pains to quell anxiety over job cuts if Air Canada absorbs Transat, whose subsidiary Air Transat operates a roughly 40-plane fleet.

“You need the pilots, you need the flight attendants, you need the mechanics,” he said. ”When you know that it takes between seven to eight crews to fly one plane, that means 14 to 16 pilots to fly one plane. That gives you an idea…Those jobs will not disappear.

“The people of Air Canada will not take over what the people of Transat are doing today. But for sure you don’t need a CEO,” Eustache added, alluding to his impending retirement.

The approval from shareholders comes after months of turbulence.

Air Canada’s initial proposal of $13 per share prompted other expressions of interest from players such as Group Mach, whose partial bid of $14 a share resulted in a securities tribunal ruling that barred the Quebec developer’s offer.

Meanwhile, Transat’s biggest shareholder at 19.3 per cent, Letko Brosseau and Associates, said it would vote against Air Canada’s offer until the airline raised its bid by $200 million.

Quebec business magnate Pierre Karl Peladeau also hinted last week he planned to make an offer of his own if the vote failed, and to use his 1.6 per cent stake in Air Transat’s parent company to vote against the Air Canada deal, which the former politician had said is “contrary to the public interest.”

Air Canada chief executive Calin Rovinescu applauded shareholders’ decision. “We will build a combined company greater than the sum of its parts that we can all be proud of,” he said in a statement.

Transat shares fell nearly three per cent or 42 cents to close at $16.19.

Christopher Reynolds, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

George Gage was an ardent Ponoka businessman and sports fan

By Mike Rainone for the News George Hawey Gage and his wife… Continue reading

Ponoka food grains growing project swathed

150 acres was swathed in three hours

Airport runway issue remains grounded

Matter deferred after lengthy discussion

First Nations given max compensation for Ottawa’s child-welfare discrimination

2016 ruling said feds didn’t give same funding for on-reserve kids as was given to off-reserve kids

Red Deer-Lacombe incumbent says he will run a clean campaign

Blaine Calkins, Red Deer-Lacombe MP, says he is excited for the six-week election period

VIDEO: Liberals make child care pledge, Greens unveil platform on Day 6 of campaign

Green party leader Elizabeth May unveils her party’s platform in Toronto

National weather forecasters predict average fall, cold winter

The Weather Network says precipitation will about average in most parts of Canada

Federal party leaders address gun violence after weekend shooting near Toronto

One teen was killed and five people injured in the shooting

Conservatives promise tax cut that they say will address Liberal increases

Scheer says the cut would apply to the lowest income bracket

Fewer trees, higher costs blamed for devastating downturn in B.C. forestry

Some say the high cost of logs is the major cause of the industry’s decline in B.C.

Federal food safety watchdog says batch of baby formula recalled

The agency says it’s conducting a food safety investigation

Red Deer Rebels drop preseason tilt to Tigers 5-3

Rebels fail to score after three first period goals

Canada Post has unfair advantage in distributing flyers: news group

Crown corporation argues newspapers, private operators deliver majority of flyers in Canada

Most Read