TORONTO – Air Canada and Transat A.T. have “mutually agreed to terminate” a deal that would have seen Canada’s largest airline take over the vacation operator.
Canada’s largest airline doesn’t believe it can get European regulators to approve the deal on terms that would be acceptable for the long-term viability of the company.
Resistance from European Commission regulators comes two years after the deal was first announced.
#Breaking Air Canada and Transat A.T terminate deal citing resistance from European Commission regulators.
Air Canada originally announced plansl to buy Transat A.T in June 2019 and cut the price in Oct 2020 due to the Covid-19 pandemic. pic.twitter.com/rogpB1p2nT
— mike eppel (@eppman) April 2, 2021
Air Canada agreed to buy Transat A.T., one of the country’s largest sellers of vacation packages, in June of 2019.
It subsequently raised its bid to win over shareholders, but then had to cut the offer price by more than half late last year because of the COVID-19 pandemic and its damage to the aviation industry.
Air Canada says after revising the deal already twice, it would still likely not secure European Commission approval and it would significantly compromise the company’s ability to compete internationally.
Air Canada will pay Air Transat a termination fee of about $12.5 million.
This raises some serious questions about the future viability of Transat A.T., which said it would require government assistance if this deal didn’t go ahead.