Air Canada / Air Transat Deal is Off

  • Post category:Articles / News

Scudrunners News | The pending Airline merger between Air Canada and vacation airline Air Transat has been scrapped. Air Canada cited European Commission regulations as a hurdle that they could not overcome.

Air Canada had offered an “enhanced package of remedies” to the E.C. Air Canada said the remedies “went beyond the commercially reasonable efforts required of Air Canada under the Arrangement Agreement”. Similar overtures to the E.C. during other airline mergers have been accepted with little concession.

Montreal businessman Pierre Karl Peladeau has been a vocal critic of the deal and reiterated his offer to purchase Air Transat. In an open letter he sent to media last month he makes his case that “Air Canada has been perpetuating uncertainty about the deal for nearly a year and a half in what he termed is a threat to Transat’s survival”. “By sinking Transat, a direct competitor for the great majority of transatlantic routes and sun destinations, Air Canada would have more than 60 per cent of the market, an unacceptable threshold in any industry,” he said in his letter.

Perhaps this was an easy way to call off the merger for both parties. It’s tough to tell but from this authors perspective the deal fell through because of the ongoing Covid19 pandemic that Canada has struggled to deal with effectively. Prime Minister Justin Trudeau hasn’t offered much if any help to Canadian airlines and with new restrictions on travelers, airlines have little hope of recovery let alone profitability.

It appears as if Justin Trudeaus strategy is to let the Canadian Aviation industry be his sacrificial scapegoat for his complete failure to secure vaccines or effectively handle the pandemic. Currently Canada has only achieved a vaccination rate of 1.9% of their population, in comparison the USA stands at 17.7% of their population fully vaccinated. On Thursday United Airlines announced it will be hiring back over 300 pilots as the US economy picks up steam and travel demand is returning

Time will tell if any airline in Canada will even survive this crisis without massive government intervention most likely with strings attached.