As some others have pointed out, this is just an "exclusivity" deal for face to face negotiations, and is not a done deal. The due diligence exercise for others continues.
I am a "naysayer", but the proposed deal reflects a few things that recently intensified;
1. Politics: Never estimate the meddling of a government sagging in the polls and desperate to hang on to seats in Quebec. The sale of Air Transat to a non Quebec presence would cause political damage. Even the premier of Quebec, despite playing coy in public, can't afford to lose a Quebec brand.
2. Despite the embellishments in the media about the sale price, 20% isn't much of a premium. In comparison, Onex is buying West Jet at a 67% premium. A closer look IMO suggests that this is a low ball offer, and reflects the actual value, of a sick operation. I find it odd that CBC tosses out a value of $520 million, while other financial media report the offer as $488 million. Not mentioned is the impact of income tax credits and other credits that attach to a money losing operation.
If Air Canada purchases Air Transat, it will not be as the company we know today as Air Transat. Air Canada has already said it doesn't want the hotels and other real estate and this is in the announcement. If Air Transat sells to Air Canada it is because it can't do better. It will be more like Air Transat light.
I expect that the competition bureau will come down hard on some of the routes. Air Transat kept airfares down. This is best illustrated by the YUL-CDG route. This is one of the more affordable PE routes and it is all because of Air Transat. I would expect that some slots would need to be given up, perhaps to West Jet who would like a presence on the routes. However, at the end of the day, I expect that if AC is allowed to proceed, the average joes who save all year for their junkets down south will be paying significantly more next year. This will hurt the little people most, the folks who do not fly in J,
I still see this as a bad deal for Air Canada, because the assumption of low end business detracts from the mainline brand. I just can't see Air Canada abandoning its debt reduction strategy, which means that assets would have to be sold off to make this deal viable.