TORONTO – Air Canada has called off its planned takeover of tour operator Transat over European Union regulatory hurdles, the two announced yesterday – scuppering a deal that would have created a domestic giant with a 60% share of the Canadian travel market.
The agreement was concluded in June 2019 and approved by Transat shareholders last December, as the tour operator found itself in dire financial straits due to the precipitous drop in air travel during the Covid-19 pandemic.
Transat operates Canada’s third-largest carrier, offering through its Air Transat brand vacation packages, hotel stays and air travel to about 60 destinations in the Americas and Europe.
Canadian regulators approved the deal in February, but it also required the green light from the European Commission, which, said the companies, was apparently not going to come despite efforts by Air Canada to meet requirements.
“Following recent discussions with the EC, it has become evident, however, that the EC will not approve the acquisition based on the currently offered remedy package,” they said in a statement, adding that similar deals had been “traditionally accepted” by European authorities.
“Air Canada has concluded that providing additional, onerous remedies, which may still not secure an EC approval, would significantly compromise Air Canada’s ability to compete internationally.”
Canadian Transport Minister Omar Alghabra said the government’s top priority is to “protect jobs in Quebec and across Canada”, adding that it is in discussions about “financial support options for many Canadian airlines” including Air Transat.
EC vice-president Margrethe Vestager, who is in charge of competition policy, in a statement said Air Canada’s proposals did not “adequately address the competition concerns identified by the commission”.
“While the coronavirus outbreak has strongly impacted the airline sector, the preservation of competitive market structures is essential to ensure that the recovery can be swift and strong.” – AFP, April 3, 2021
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