Fiordland

We don't know yet.

That said, AC has made some decisions going into the pandemic that may help set the stage. With the 767 fleet gone, Rouge does not have an aircraft that can fly to Europe. The Rouge pilots and in flight crew positions were eliminated and staff with sufficient seniority moved back to mainline. The Rouge fleet (if/when re-staffed) as it stands today would not be able to do the Air Transit mission. It may make sense for Rouge to simply disappear.

Despite both Rouge and AirTransat having equipped their aircraft with torture seats the associated reputation and negative perception sticks to Rouge but not Air Transat. Clearly Air Transat has a better marketing team in this regard. More reason to get rid of Rouge.

AC and Transat also have labour pools that are going to be grumpy (and they are well justified in being grumpy). The company and unions have recognized this significant cuts in the number of people on staff. Merging the union contracts and staff from these two organizations is going to be panful. Best thing is to defer this for a decade or two and keep them as separate companies.

My prediction is they keep the companies separate. Merge the back office stuff. Perhaps have AC airport staff handle the Air Transit flights outside of Montreal and Toronto. Start to give out Aeroplan points for AirTransat and also codeshare. When things open up again, Air Transat restarts and competing Rouge flights just don't come back.

That said, I don't work for AC, I am just one of their passengers that is more WestJet leaning these days so what do I know.

ACYYZ/SD

TS 330's were recently updated and reconfigured with new seating/IFE/mood lighting, etc. Don't see them being reconfigured to AC standards/colours as they will operate as Rouge did as a stand-alone fleet.

The Lev

They still have the competition hurdles to cross. In normal times, no way would this pass, but I think COVID might be enough to convince regulators that without AC, AT would founder.

From a competitive standpoint, it would have been better for WS to buy Transat.

robsaw

I'd think the fact that they were on the hook for $520M vs $190M now also plays into the affordability issue. They've also gone from all-cash to cash or share-swap.

Transpacificflyer

We are probably looking at a 3-5 month delay for the impact of the EU trade regulator position. It only resumed its review a few weeks ago after suspending that review in June while the revised transaction percolated. The EU regulators provided a target date of December 11 for its decision. It think it is reasonable to expect that the EU will allow the transaction. It had initially expressed concern that there would be reduced competition on the 33 Transat routes between Canada and the EU. That being said, Covid19 has changed everything as airlines are in survival mode now. Competition may not be a major concern for the next 2-3 years. The argument being that higher airfares would mean that governments might be able to reduce the money needed to support the airline sector. It's easier if the travelers support an airline through airfares, rather than governments spending money they do not have, to do so.

Much of how Air Transat will be reorganized depends on when the wave of Covid19 devastation recedes. Even if the travel restrictions start to ease in mid 2021, consumer finances will need time to recover. Air Transat's customer base are in the demographics hit hardest and a large number may not have the money to buy the Air Transat /Air Canada vacation. I do however, agree that it would make sense for Air Transat and Rouge to merge, except, instead of Rouge going away, Air Transat would disappear. It is AC purchasing Air Transat, not Air Transat purchasing Air Canada. As disappointed as the AT workers will be, they will be grateful if they still have jobs once the deal closes. Air Canada has invested in a new reservation system and revision of its FF and CCs program. This has value and should be used for AT. Anyway, no point in my speculating as the Covid situation is fluid.

EdmFlyBoi

I would be rather surprised if this doesn't get by regulators. The impact of COVID has really changed the landscape and it seems likely that there may be more mergers and acquisitions as the days and months pass. Agree that reduced competition may allow the healthier carriers to survive the road back.

EdmFlyBoi

There is one oddball that is configured 2-4-2 - C-GTSD. Has that bird been refurbished?

The A321LR's present a great opportunity for lie flats in J to do the thinner routes from YYZ/YUL to Europe that have J demand, especially with the new Airbus reverse herringbone J seat specifically for the LR/XLR. AC would have a pretty efficient narrow body fleet with A220/Max8/A321neo/A321LR. Maybe not right away, but could be interesting as people start to fly again post-COVID.

tcook052

I understood TS whole A330 fleet had been refurbed as 2017.

32-33 inches Economy seat pitch on C-GTSD is generous compared to as little as 30 inches on some of AC's new 87's.

jerryhung

For me, lessons learned

- never own Airline stock LOL, it's too much of roller coaster ride, and usually downhill :P Instead, own tech stocks. Sadly I owned AC stocks (and sold WJA as it was downtrending, before ONEX $31 buyout)
- For M&A, always always sell if you're already near the buyout price (like $13 or $18).. don't hold until last minute because it could get blocked, Covid could happen, anything goes. Again, I sold TRZ before Buyout happened, boo
- Strong win for AC for sure, picking up TRZ for CHEAP and if they can survive, will come out much stronger IN MANY YEARS. Be Greedy when others are fearful

At least I dumped my JETS or HA (Hawaiian) at $20+, never investing in airlines again

ACYYZ/SD

J International demand is going to be flat for some time to come, and don't see lie-flats even being considered. Premium Rouge/Club Transat will continue to be a challenging sell in the days ahead. The one surprise was ATH this Summer. A route which traditionally never had a business class market, seemed to generate very reasonable front cabin loads.

YYCCL3

That doesn't seem to jive with AC's pricing on international J... they certainly aren't doing much to stimulate demand in this area. Trying to avoid "cheapening the product" perhaps? They've already made it almost as cheap as possible!
(this wasn't directed at you personally)

EdmFlyBoi

It may have to do with the ability to actually go there and enjoy a holiday despite having to quarantine on return. I suspect leisure routes to places that are allowing tourists and have reasonable case numbers will be in demand. I am booked to Costa Rica over the winter holiday - just hoping we don't see a further schedule change (which seems likely).

Adam Smith

To be clear, AC still owns (or has on lease) the rouge 763 fleet. I'll make a more detailed post in the fleet updates thread, but they're definitely not gone.

In large part, it's a question of expectations. While TS has always been a low-frills holiday operator, the AC name likely leads people to have certain expectations of rouge that they may not have of a TS/WG/etc.

To the extent it's more than expectations, it's more likely to be better customer service on the ground/in the air than it is about marketing.

$700MM, actually. $520MM was the initial price, which was revised upwards after certain Transat shareholders objected.

Unlike the milquetoast regulators in Canada in the US, the EU competition authorities actually seem interested in doing their job. It's far from a sure thing that they'll wave this through.

That's not the purview of the EU's competition authorities. That same rationale didn't prevent the EU from reiterating airlines' obligations under EU261 early in the COVID days and pushing them to refund customers.

And they certainly don't care about whether the Canadian government might have to bail out a Canadian airline.

EdmFlyBoi

With about as much a chance of returning as BA�s 747�s.

StuMcIlwain

There may be demand for flights to leisure destinations, but most of these passengers won't pay for lie-flat J. That's why Rouge and Transat never offered the product.

Most of the demand for lie-flat J came from corporate accounts, and that market segment is not returning anytime soon.
There are flights that can't be covered by the A321s. It really depends on how fast the market rebounds.