Could AC Buy Transat? 16May19 Update: AC enters into agreement to buy Transat
Mar 28, 2020, 7:24 pm
#376
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It made no sense for WS to buy TS a year ago and it makes even less than no sense for WS to be interested in it today.
AC should have absolutely no concerns that if they walk, WS will waltz in and “steal it”.
There are dozens of drop dead strategic reasons why that, if you know anything about what makes WS tick, were extremely obvious 30 days ago. Add in what’s happened with Covid and I’m sure WS, (and AC), management would prefer to be put on a strict lifetime diet of raw haggis than have to deal with such an acquisition now.
What on earth does TS have that WS would possibly want / and or won’t get anyway should they collapse? TS’s fleet is 100% incompatible with WS’s, and it’s not as if there won’t be a lot of dirt cheap, compatible airplanes available for WS, (and AC), in the months to come, if indeed either need them, (and they won’t).
WS managed to make the proposed acquisition more expensive for AC. Typical behavior. Fun and games. They were never serious.
WS recognized long, long ago that trying to hub Montreal was a pointless exercise. WS’s hubs are Calgary and Toronto. Vancouver will eventually see focus city status, only for trans pacific aspirations at some point way down the road.
Hubbing YUL would make as much sense as Southwest trying to hub Atlanta. Montreal is a spoke for WS now, and it will be a spoke down the road. Operating hubs 300 miles apart in a linear country like Canada with a population less than California doesn’t make a whole lot of sense. Having two airlines trying to do the same would be insane.
Many observers, including me, assume that these events will give AC the opportunity to save face, wind Rouge down and roll it into mainline.
I suspect Transat is going to have to figure out a forward strategy for at least 3-5 years that does not involve a merger with anyone, other than possibly Sunwing. Even that merger wouldn’t make a lot of sense when the “devil is in the detail” issues are assessed.
AC should have absolutely no concerns that if they walk, WS will waltz in and “steal it”.
There are dozens of drop dead strategic reasons why that, if you know anything about what makes WS tick, were extremely obvious 30 days ago. Add in what’s happened with Covid and I’m sure WS, (and AC), management would prefer to be put on a strict lifetime diet of raw haggis than have to deal with such an acquisition now.
What on earth does TS have that WS would possibly want / and or won’t get anyway should they collapse? TS’s fleet is 100% incompatible with WS’s, and it’s not as if there won’t be a lot of dirt cheap, compatible airplanes available for WS, (and AC), in the months to come, if indeed either need them, (and they won’t).
WS managed to make the proposed acquisition more expensive for AC. Typical behavior. Fun and games. They were never serious.
WS recognized long, long ago that trying to hub Montreal was a pointless exercise. WS’s hubs are Calgary and Toronto. Vancouver will eventually see focus city status, only for trans pacific aspirations at some point way down the road.
Hubbing YUL would make as much sense as Southwest trying to hub Atlanta. Montreal is a spoke for WS now, and it will be a spoke down the road. Operating hubs 300 miles apart in a linear country like Canada with a population less than California doesn’t make a whole lot of sense. Having two airlines trying to do the same would be insane.
Many observers, including me, assume that these events will give AC the opportunity to save face, wind Rouge down and roll it into mainline.
I suspect Transat is going to have to figure out a forward strategy for at least 3-5 years that does not involve a merger with anyone, other than possibly Sunwing. Even that merger wouldn’t make a lot of sense when the “devil is in the detail” issues are assessed.
Mar 28, 2020, 7:51 pm
#377
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Too bad for Transat that they didn’t already have AC’s money. Then they could simply make the following CTA-approved move:
Cancel the purchase and issue AC a credit for $700 million, redeemable for the airline any time in the next two years. If at redemption TS is worth more, AC would pay the difference. If TS is worth less, any residual value would be kept by TS shareholders. If AC walks away, TS keeps the full $700 million.
It’s only right: Transat’s very survival may depend on keeping AC’s cash, common law and AC’s current financial situation be damned.
Cancel the purchase and issue AC a credit for $700 million, redeemable for the airline any time in the next two years. If at redemption TS is worth more, AC would pay the difference. If TS is worth less, any residual value would be kept by TS shareholders. If AC walks away, TS keeps the full $700 million.
It’s only right: Transat’s very survival may depend on keeping AC’s cash, common law and AC’s current financial situation be damned.
Mar 28, 2020, 8:54 pm
#378
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....
There are dozens of drop dead strategic reasons why that, if you know anything about what makes WS tick, were extremely obvious 30 days ago. Add in what’s happened with Covid and I’m sure WS, (and AC), management would prefer to be put on a strict lifetime diet of raw haggis than have to deal with such an acquisition now.
What on earth does TS have that WS would possibly want / and or won’t get anyway should they collapse? TS’s fleet is 100% incompatible with WS’s, and it’s not as if there won’t be a lot of dirt cheap, compatible airplanes available for WS, (and AC), in the months to come, if indeed either need them, (and they won’t). .....
There are dozens of drop dead strategic reasons why that, if you know anything about what makes WS tick, were extremely obvious 30 days ago. Add in what’s happened with Covid and I’m sure WS, (and AC), management would prefer to be put on a strict lifetime diet of raw haggis than have to deal with such an acquisition now.
What on earth does TS have that WS would possibly want / and or won’t get anyway should they collapse? TS’s fleet is 100% incompatible with WS’s, and it’s not as if there won’t be a lot of dirt cheap, compatible airplanes available for WS, (and AC), in the months to come, if indeed either need them, (and they won’t). .....
TS has brand recognition in Montreal. Add a flight or two from Montreal to Calgary and Toronto to augment the existing WS flight and you start to have a reasonable domestic network. TS and WS collaborating the same way as Alaska/American, KLM/Air France, Lufthansa/Swiss, BA/Iberica makes sense.
The fact the staff in both companies have different cultures, values and fly different brands of aircraft become less relevant.
As a consumers and frequent flyer what we need for AC to have a strong viable competitor. We live in unique times. The level of involvement the government is exercising in the market is unprecedented. I would not be surprised to see a merger between TS and either AC or WS forced on them as a condition for government support.
Mar 30, 2020, 3:19 pm
#380
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https://www.ctvnews.ca/business/airl...deal-1.4874144
MONTREAL -- The Competition Bureau's warning about Air Canada's proposed takeover of Transat AT Inc., which owns Air Transat, should be taken in context, analysts say.The watchdog said Friday that eliminating the rivalry between the two Montreal-based carriers would discourage competition by prompting higher prices and fewer services, ultimately resulting in less travel by Canadians on a range of competing routes.
The $720-million deal proposed in August would hand Canada's largest airline 60 per cent of transatlantic travel from Canada and 45 per cent of passenger capacity to sun destinations, according to the federal agency's report.
Desjardins Securities analyst Benoit Poirier said he believes the purchase will still be approved "considering the companies' willingness to address the bureau's competition concerns," such as potential dominance of airport slots.
WestJet Airlines Ltd., which has tried to challenge Air Canada's dominance on international routes by adding transatlantic flights, wide-body planes and premium fares, may be interested in Transat's slots -- scheduled landing and takeoff times, Poirier said.
"More importantly, the impact of COVID-19 on the airline industry will be a significant factor to consider in this analysis. We believe the proposed transaction will help the Canadian airline industry recover from this crisis -- an element that works in its favour."
MONTREAL -- The Competition Bureau's warning about Air Canada's proposed takeover of Transat AT Inc., which owns Air Transat, should be taken in context, analysts say.The watchdog said Friday that eliminating the rivalry between the two Montreal-based carriers would discourage competition by prompting higher prices and fewer services, ultimately resulting in less travel by Canadians on a range of competing routes.
The $720-million deal proposed in August would hand Canada's largest airline 60 per cent of transatlantic travel from Canada and 45 per cent of passenger capacity to sun destinations, according to the federal agency's report.
Desjardins Securities analyst Benoit Poirier said he believes the purchase will still be approved "considering the companies' willingness to address the bureau's competition concerns," such as potential dominance of airport slots.
WestJet Airlines Ltd., which has tried to challenge Air Canada's dominance on international routes by adding transatlantic flights, wide-body planes and premium fares, may be interested in Transat's slots -- scheduled landing and takeoff times, Poirier said.
"More importantly, the impact of COVID-19 on the airline industry will be a significant factor to consider in this analysis. We believe the proposed transaction will help the Canadian airline industry recover from this crisis -- an element that works in its favour."
Mar 30, 2020, 5:57 pm
#382
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Somehow, I can't see AC trying very hard to address any competition concerns right now.
Mar 30, 2020, 10:53 pm
#383
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The Competition Bureau says Air Canada's proposed acquisition of Transat AT Inc., which owns Air Transat, likely will hinder competition and result in less choice for Canadian travellers.
In a report delivered to Transport Minister Marc Garneau, the watchdog says eliminating the rivalry between the two carriers would result in higher prices, fewer services and ultimately less travel by Canadians on a range of competing routes.
In a report delivered to Transport Minister Marc Garneau, the watchdog says eliminating the rivalry between the two carriers would result in higher prices, fewer services and ultimately less travel by Canadians on a range of competing routes.
As a consumers and frequent flyer what we need for AC to have a strong viable competitor. We live in unique times. The level of involvement the government is exercising in the market is unprecedented. I would not be surprised to see a merger between TS and either AC or WS forced on them as a condition for government support.
As I said earlier, AC may be pretty happy with this outcome, but they still have to work at completing this.
Apr 28, 2020, 8:25 am
#384
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https://montreal.ctvnews.ca/air-tran...ebec-1.4913820
Air Transat and Air Canada looking for a boost from Quebec
MONTREAL -- Air Canada and Transat A.T. seem to be banking on a boost from the Quebec government in order to weather the turbulence caused by the COVID-19 pandemic.
Separately, the two companies modified their registration in the Registre des lobbyistes du Quebec in order to request, in particular, the adoption of “tax measures to promote the retention of workers in employment.”
Air Transat and Air Canada looking for a boost from Quebec
MONTREAL -- Air Canada and Transat A.T. seem to be banking on a boost from the Quebec government in order to weather the turbulence caused by the COVID-19 pandemic.
Separately, the two companies modified their registration in the Registre des lobbyistes du Quebec in order to request, in particular, the adoption of “tax measures to promote the retention of workers in employment.”
May 5, 2020, 6:30 pm
#385
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Stranger , The Lev , since your posts are related to the Transat acquisition rather than fleet strategy, I'm replying here...
Where do you get that Boeing doesn't have a case at all? Have you read the Master Transaction Agreement between Boeing and Embraer? Or just Embraer's press release? These things are extremely complicated, with documents running to hundreds of pages. I've already done a lengthy analysis of AC's agreement with TS upthread. The bottom line is that for the moment they look kind of stuck, and will likely continue to be if Transport Canada overrules the Competition Bureau's objection. But if the regulators turn the deal down, it's quite easy for AC to walk.
Let's hope not. With rouge, it has been seamless.
There's also a possibility that, if AC folds rouge in to TS and keeps TS out of *A, that it works out okay for AC status holders. For instance, QF runs Jetstar (JQ) pretty much separately, and QF is not part of OW. OW members can't earn miles towards BA, CX, etc from flights on JQ flights. But QF members can credit JQ flights to QF's program. I don't know what the rates are, but there are a few examples like that out there. So those of us who credit our flying to AC might do okay while those crediting to *A partner programs might not.
But who knows.
Still, I highly doubt the merger will go through.
If the competition issue survives, AC will end up with a reasonably easy way out. Just look at the Boeing-Embraer deal that fell apart. Where it does not appear Boeing had a case at all. Except that the ceal did no longer make sense and that whatever penalty they would end up getting in court would still be better than the deal.
If the competition issue survives, AC will end up with a reasonably easy way out. Just look at the Boeing-Embraer deal that fell apart. Where it does not appear Boeing had a case at all. Except that the ceal did no longer make sense and that whatever penalty they would end up getting in court would still be better than the deal.
There's also a possibility that, if AC folds rouge in to TS and keeps TS out of *A, that it works out okay for AC status holders. For instance, QF runs Jetstar (JQ) pretty much separately, and QF is not part of OW. OW members can't earn miles towards BA, CX, etc from flights on JQ flights. But QF members can credit JQ flights to QF's program. I don't know what the rates are, but there are a few examples like that out there. So those of us who credit our flying to AC might do okay while those crediting to *A partner programs might not.
But who knows.
Last edited by Adam Smith; May 6, 2020 at 2:38 pm Reason: Corrected typo
May 9, 2020, 1:04 pm
#386
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Stranger , The Lev , since your posts are related to the Transat acquisition rather than fleet strategy, I'm replying here...
Where do you get that Boeing doesn't have a case at all? Have you read the Master Transaction Agreement between Boeing and Embraer? Or just Embraer's press release? These things are extremely complicated, with documents running to hundreds of pages. I've already done a lengthy analysis of AC's agreement with TS upthread. The bottom line is that for the moment they look kind of stuck, and will likely continue to be if Transport Canada overrules the Competition Bureau's objection. But if the regulators turn the deal down, it's quite easy for AC to walk.
Where do you get that Boeing doesn't have a case at all? Have you read the Master Transaction Agreement between Boeing and Embraer? Or just Embraer's press release? These things are extremely complicated, with documents running to hundreds of pages. I've already done a lengthy analysis of AC's agreement with TS upthread. The bottom line is that for the moment they look kind of stuck, and will likely continue to be if Transport Canada overrules the Competition Bureau's objection. But if the regulators turn the deal down, it's quite easy for AC to walk.
The Competition Bureau did most of its analysis prior to the events of the past few months. If they did their analysis today it would be an airline operating a small fraction of its fleet buying an airline that is not operating any flights.
Let's hope not. With rouge, it has been seamless.
There's also a possibility that, if AC folds rouge in to TS and keeps TS out of *A, that it works out okay for AC status holders. For instance, QF runs Jetstar (JQ) pretty much separately, and QF is not part of OW. OW members can't earn miles towards BA, CX, etc from flights on JQ flights. But QF members can credit JQ flights to QF's program. I don't know what the rates are, but there are a few examples like that out there. So those of us who credit our flying to AC might do okay while those crediting to *A partner programs might not.
But who knows.
There's also a possibility that, if AC folds rouge in to TS and keeps TS out of *A, that it works out okay for AC status holders. For instance, QF runs Jetstar (JQ) pretty much separately, and QF is not part of OW. OW members can't earn miles towards BA, CX, etc from flights on JQ flights. But QF members can credit JQ flights to QF's program. I don't know what the rates are, but there are a few examples like that out there. So those of us who credit our flying to AC might do okay while those crediting to *A partner programs might not.
But who knows.
Nothing would stop Air Canada from code sharing on the AirTransat flights as it codeshare on non-star airlines currently.
What would be idea is AirTransat keeps its current A330 and 737-800 aircraft to use on restart letting AC takeover the 320/321 aircraft. Then AirTransat can have the MAXs when they are finally fixed in a year or two. By that time the leisure market may have recovered.
May 9, 2020, 1:18 pm
#387
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An attempt by AC to terminate the Transat deal will likely also end up in court (in Quebec), barring ironclad grounds to do so, for the same reason.
The Competition Bureau did most of its analysis prior to the events of the past few months. If they did their analysis today it would be an airline operating a small fraction of its fleet buying an airline that is not operating any flights.
May 25, 2020, 3:05 pm
#388
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https://www.cbc.ca/news/business/air...nsat-1.5583583
European regulators are launching an in-depth investigation into Air Canada's deal to buy travel company Transat A.T. amid European Commission concerns the deal may reduce competition and result in higher prices.
...
The commission said in a news release on Monday that it was giving itself until Sept. 30 to decide whether to approve the deal.
...
The commission said in a news release on Monday that it was giving itself until Sept. 30 to decide whether to approve the deal.
May 25, 2020, 5:06 pm
#389
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To take into account the resulting longer delays, Transat has informed Air Canada of its decision to activate the first one-month extension of the outside date set for the transaction, provided for in the Arrangement Agreement. It is therefore postponed for the time being to July 27, 2020, from June 27. The Arrangement Agreement provides for the possibility of postponing the deadline for three one-month periods simply by notification from one of the parties, and then for three additional periods under certain conditions.
May 25, 2020, 6:18 pm
#390
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Music to AC's ears. TS has put out a press release to try to calm the market, and also notifying that it has invoked the first one-month extension of the deadline by which approvals were originally required to be obtained. Key text is below.