Air Canada’s $520 CAD deal to buy Transat, a deal that was first announced in 2019 and had already cleared a number of major regulatory hurdles, is off.
Air Canada broke the news on Friday, announcing that it and Transat had “mutually agreed to terminate” the deal after difficulties with the final major regulatory hurdle, which came from European officials.
According to Air Canada, in order to secure approval of the European Commission, it had “offered and enhanced a significant package of remedies, which went beyond the commercially reasonable efforts required by Air Canada…and what has been traditionally accepted by the EC in previous airline merger cases.”
In its statement, Air Canada said that as the process moved along, it “has become evident” that the European Commission would not approve the acquisition based on the currently offered remedy package, and so it had made the decision, along with Transat, to terminate the deal.
“After careful consideration, 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, negatively impacting customers, other stakeholders, and future prospects as it recovers and rebuilds from the impact of the COVID-19 pandemic,” it said.
“Especially in this challenging environment, it is essential that Air Canada focus on creating the optimal conditions for its full recovery by preserving and leveraging all of its key strengths and assets including its strong employee culture.”
The deal would have created a Montreal-based global travel giant, providing services in leisure, tourism, and travel distribution across Canada and internationally.