The Lev

Big advantages I can see:

1. Remove its biggest Canadian competitor on flights to Europe (and likely Caribbean) = increased pricing power (hello competition bureau is anybody listening)
2. Ability to consolidate some destinations where both carriers are not able to fill planes because they have competing flights
3. Create increased scale in the vacations market (but is there any money to be made there) - maybe ACV can learn from Transat vacations
4. Own multiple brands so if a consumer is unhappy with one, they still choose another of "your" brands.
5. Opportunity to consolidate back-office expenses (but they claim they will be keeping both head offices - hello Quebec are you buying that bit of swampland?
6. Opportunity to squeeze vendors for lower prices (AC will compare what they pay vs. what Trnsat was paying and will force vendors to sell to both at the lower (or even lower) price
7. Eventually figure out which are your strongest brands and potentially eliminate overlap (so for example Rouge might be absorbed into Transat (goodbye Altitude benefits to us and cost to AC). AC Vacations might be shut down and merged into Transat vacations - AC might even decide to diversify into leisure hotels (hopefully not).
8. see #1 (again and again)

24left

Second bidder for Air Transat says it is withdrawing $14 per share offer

The Canadian Press · Posted: Jul 03, 2019 3:30 PM ET

https://www.cbc.ca/news/business/tra...mach-1.5198909

ridefar

So they bid with money they didn't have. And they lost. And *after* they lost they are withdrawing their offer. W. T. F.

Bohemian1

It adds to the drama.

Kinda like flying a family on Transat during the holidays when things go wrong.

jerryhung

manipulation only to drive up the stock price (or make AC pay more)
do they have to pay a break-up fee?

I don't even know why TRZ is trading higher than $13, the final offer ($13.48?), people hoping for a higher bid? now they won't get it
and the risk of regulator saying NO is now bigger

The Lev

Smart move actually - they tried the $14 offer to pry Transat away from AC and failed. But... there is some probability that the competition bureau nixes the deal. If that happens, the Transat share price tanks and the bidder may be able to come back with a new bid at a lower price rather than being stuck with the $14 still on the table.

tcook052

G&M OpEd

https://www.theglobeandmail.com/busi...t-best-option/

Air Canada purchase of Transat best option

tracon

AC must be buying the planes.
There doesn't appear to be much flying going on.

Admittedly it was late afternoon between the European Arrival/departure times.

YVR72

WestAust

It's simply that there isn't enough gates at YUL to keep the planes parked there between arrival and later departures to europe, so they move them to Transat own hangar for preparation and then move them back to a gate

YOWCDNFF

According to this article on La Presse's website, and in the information circular sent to Transat shareholders today, Transat had greater confidence that AC could actually complete the acquisition of Transat due primarily to better liquidity and their ability to conduct proper financial due diligence in a set timeframe. These are the primary reasons why Transat ignored the superior offer from MACH who had never provided Transat with proof that they could actually afford to buy them. Another interesting nugget in the article is that AC had been negotiating since at least January a potential acquisition, so this was well before the 7M8 issues and WS acquisition by Onex.

Article is in French

tracon

Onex had been courting WS for years.
https://www.bnnbloomberg.ca/how-the-...onex-1.1277729

July 2016 – Onex expresses initial interest in WestJet investment

tcook052

https://montrealgazette.com/business...-board-members

Air Canada deal could put $35 million in pockets of Transat execs, board members

24left

QUOTE from Routesonline blog post:

"While Air Canada already has a low-cost leisure brand in Air Canada Rouge, it is right to ask what Air Transat brings, especially when Air Canada is saying that it will preserve the Air Transat brand. While there is some overlap – 35 routes in July 2019 – there are plenty of routes where the two brands don’t coincide and creating new opportunities for Air Canada to have a low fare offering aimed at leisure travellers. While Air Canada Rouge has network strength in Europe and the Caribbean, the focus of the Air Transat network is stronger in Canada as well as in the US and Latin America. It too has a significant operation to the Caribbean but many of the destinations differ."

https://www.routesonline.com/supplie...t=Air%20Canada

****

The full article is interesting.....the route map and (my personal favourite ), the Venn Diagram of intersection routes, among others

OAG - 18 Jul 2019 - by Becca Rowland

QUOTE:

While Air Canada already has a low-cost leisure brand in Air Canada Rouge, it is right to ask what Air Transat brings, especially when Air Canada is saying that it will preserve the Air Transat brand. While there is some overlap – 35 routes in July 2019 – there are plenty of routes where the two brands don’t coincide and creating new opportunities for Air Canada to have a low fare offering aimed at leisure travellers. While Air Canada Rouge has network strength in Europe and the Caribbean, the focus of the Air Transat network is stronger in Canada as well as in the US and Latin America. It too has a significant operation to the Caribbean but many of the destinations differ."




..........

"One of the main obstacles for the transaction will be the dominance that a merged Air Canada and Air Transat operation will have on the Transatlantic and also in Montreal. With both airlines based in Quebec, it’s not surprising that they have a strong presence in Quebec’s main city. Air Canada, including Air Canada Rouge which flies with the ‘AC’ code, operates 55% of outbound scheduled capacity from Montreal which means it is already dominant. Add another 13% capacity share with Air Transat and there will be real concern that with more than two-thirds of capacity in the hands of a single airline group passenger choices will be affected."







Full article:

https://www.oag.com/blog/air-canada-...of-air-transat

YVR72