Air Canada To Purchase Air Transat

[dagger]

Talk about worthless CUPE press releases. 

 

Anyway, I wouldn't be shocked if another bid for Transat emerges, although I am inclined to think it would be from some ego-driven blowhard Quebec industrialist like PK Peladeau.

Westjet is on credit watch now for a possible downgrade, and adding another $600 million in debt for AT would not be especially helpful. 

If AC reaches a formal deal with AT, I'd be interested to see what the Competition Bureau wants in terms of divestitures. Meanwhile, the A321neos are a nice get for Rouge, which presumably can operate them off the east coast against WS or any foreign operators. 

[better4me]

4 minutes ago, dagger said:

If AC reaches a formal deal with AT, I'd be interested to see what the Competition Bureau wants in terms of divestitures. Meanwhile, the A321neos are a nice get for Rouge, which presumably can operate them off the east coast against WS or any foreign operators. 

I expect the 310s and 737NGs to get removed from the fleet. That will pull down the overlap in YUL to a great extent. 

The big question is how does the TS purchase and consolidation with Rouge go for gate space in YYZ. I could see Calin making a deal that includes TS giving up gates in T3 to WS to expand their international widebody operations. In exchange TS/RG go to the infield terminal with a better bus connection to T1. This would likely solve the competition issues in YYZ. 

Another question is will Garneau use his new powers from the Transport Canada Modernization Act to overrule the Competition Bureau? 

[AIP]

9 hours ago, J.O. said:

... and there it is. The first slam at a group of hard working people who are just like the rest of us. They go to work each day and do their best to serve the customers. We should be better than this. Like it or not, we're all small puppets in someone else's sideshow. IMHO we should try to remember that and keep it civil.

All you have to do is consider the source, little experience and lots of fear and anxiety.  If I were Thinair, I would be more concerned about Mr. Schwartz, he obviously needs to do some more homework on him.

[J.O.]

3 hours ago, dagger said:

Meanwhile, the A321neos are a nice get for Rouge, which presumably can operate them off the east coast against WS or any foreign operators. 

I read that TS is doing Montreal to Nantes with the A321 NeoLR. That’s impressive range. 

[Guest]

1 hour ago, J.O. said:

I read that TS is doing Montreal to Nantes with the A321 NeoLR. That’s impressive range. 

I wonder what the takeoff weight is.  I don't expect they carry cargo so it would (in addition to fuel etc.) only the passengers and their baggage.  

[thinair]

10 hours ago, AIP said:

All you have to do is consider the source, little experience and lots of fear and anxiety.  If I were Thinair, I would be more concerned about Mr. Schwartz, he obviously needs to do some more homework on him.

Considering the source, i shouldn't bother replying to this. 30 years in this business so I've got a wee bit of experience.

 Fear and anxiety? Yep pretty much since the day I started in this roller coaster of a business without the security of knowing that I have the Canadian government to backstop my company when they fail. Good for you buddy.

I'm assuming you're just a peon like the rest of us AIP or are you someone special with insight as to the motivations of a very successful business such as ONEX.

 As far as Mr. Schwartz is concerned, i would imagine he is no more or less ruthless than Clive or any other billionaire business person.

Have a nice day.

 

[Homerun]

10 hours ago, J.O. said:

I read that TS is doing Montreal to Nantes with the A321 NeoLR. That’s impressive range. 

From Airbus

 

The A321LR – a new variant of Airbus’ A321neo, deliveries of which began in 2018 – has the longest range of any single-aisle jetliner, able to fly routes of up to 4,000 nm with 206 passengers while utilising extra fuel stored in three Additional Centre Tanks (ACTs).

Ideally-suited to transatlantic routes, the A321LR allows airlines to tap into new long-haul markets that were not previously accessible with current single-aisle aircraft. Operators can outfit it in state-of-the-art two-class configurations with full-flat seats for true long-haul comfort, or in a single-class layout.

[Turbofan]

On 5/16/2019 at 2:37 PM, dagger said:

Westjet is on credit watch now for a possible downgrade, and adding another $600 million in debt for AT would not be especially helpful

What about intervening at the competition bureau?  Pushing for a piece of Transat to be divested.

 

[rudder]

AC not a big player in packaged vacations. Not sure that consolidation with the transat tour business results in excess market share.

Only issue might be transatlantic route authorities. They could be offered to WJ but it does not have the resources......

I don’t see where the competition bureau can go with this. Most international route competition comes from foreign carriers. And that is the purview of the CTA.

[moeman]

Related?

Duncan Bureau Leaves Air Canada

https://ca.travelpulse.com/news/people/duncan-bureau-leaves-air-canada.html

Duncan Bureau has left Air Canada.

Air Canada today confirmed industry reports that Bureau, a long-time Air Canada employee and popular figure in the Canadian airline industry, has left the company.

Bureau was named president of Air Canada Rouge in May of last year. Prior to that he had been Vice President, Global Sales, for roughly four years.Air Canada spokesman Peter Fitzpatrick confirmed Bureau's departure.

"It is correct Duncan Bureau is no longer president of Air Canada Rouge," he said an email to Travel Pulse Canada. "For agents and customers it is business as usual. Beyond that I have no additional comment."

Fitzpatrick later confirmed Bureau has left Air Canada.

Bureau, who was unavailable for comment, was posting images of himself with Rouge crew in Montreal on Sunday.

[Fido]

The article does not mention that Duncan started with Westjet.

[j.k.]

10 hours ago, moeman said:

a long-time Air Canada employee 

Not a very long time employee at all... less than 5 years... he was at Westjet (10 years) but didn't start there... immediately prior AC, Malaysian (2 years,)... and before Westjet he worked at Canadian (2 years) and Air Miles (2 years).

Anyway, good riddance I say, as a shareholder, I see all management positions at Rouge as redundant and a waste of money.

"*President*" LOL, right... forgot who he was until this story ran...

[moeman]

Quote

"It is correct Duncan Bureau is no longer president of Air Canada Rouge," he said an email to Travel Pulse Canada. "For agents and customers it is business as usual. Beyond that I have no additional comment."

Not the rousing farewell Ben Smith got..."Yeah, he doesn't work here anymore. Goodbye."

[MD2]

Considering the sizeable market share of each of these carriers over the Atlantic and Sun destinations, Competition Bureau likely requires considerable divesture of assets and routes to protect Canadian consumers. It may even look into Aeroplan again with some recommendations and restrictions.

For its part, Air Canada may eliminate certain aircraft types and consolidate certain routes. It has already generated some spicy exchange on the issue of merging seniority lists, especially with Transat being fairly old and last of the "charter" airlines. They will likely demand to maintain their YUL base and fly their WB aircraft. It will be interesting and likely take a few years to sort out. As long as the economy and expansion holds, it might work out, otherwise it could translate into overleveraging (with foreign carriers) again. Although there seems to be ample cash reserves, an airline of that size, especially before operations are merged and streamlined, could eat through cash very quickly. This is why this deal, even though much cheaper, bears greater risk.

The advantage in this deal is that it will likely expedite applications of other airlines for Atlantic and Pacific routes, which will be good for consumers. 

WestJet/Onex deal in contrast is much more straight forward and is simply a change of ownership to one that has more than enough cash and is eager to grow the business. With some discussions on their plans mainly no reduction in service or workforce, rather quite possibly an expansion in both; government agencies will be happy to endorse the deal. It will also be good for consumers who will have more choices in travel at a reduced price, particularly on many transborder city pairs.  

[blues deville]

I think the AC/TransAt merger is only going to increase leisure package ticket pricing. TransAt were the ones keeping the fares competitive and now that will soon be gone. 

[thor]

I agree blues. We’ve used Air Transat many times paying for club out of YYZ and YUL. Excellent way to go.

I think that for this deal to go thru some politician is going to get their hands greased.

[Guest]

Quebec firm Group Mach makes rival offer for Transat worth $14 per share | CTV News Page 1 of 2 Quebec firm makes rival offer for Transat

The Canadian Press

Published Tuesday, June 4, 2019 9:54AM EDT

MONTREAL -- A Quebec real estate developer has made a takeover offer for Transat AT Inc. worth $14 per share in cash, which is above what Air Canada has proposed.

The offer from Group Mach Inc. comes after Transat announced last month it was in exclusive talks to be acquired by Air Canada, which was proposing to pay $13 per share.

Trading in Transat shares has halted ahead of the announcement. The shares closed at $11.84 on the Toronto Stock Exchange on Monday.

 Mach says the offer is the culmination of a process that began when it approached Transat in January.

Under its offer, the company committed to keep Transat's head office, executive team and centre of  decision-making in Montreal.

Groupe Mach Inc. acquires, develops, and manages real estate properties. It specializes in the rental of commercial, industrial, and office spaces in Montreal. The company was founded  in 1999.  http://www.groupemach.com/en/real-estate-development.html

[dagger]

Groupe Mach seems to want the hotel side and has no competence in running an airline. AC not much interested in becoming a real estate developer and hotelier. So is there a deal between the two?  

[Guest]

12 minutes ago, dagger said:

Groupe Mach seems to want the hotel side and has no competence in running an airline. AC not much interested in becoming a real estate developer and hotelier. So is there a deal between the two?  

That would make sense but

[dagger]

I note that Groupe Mach also wants $120 million in financing from the Quebec government.

[Guest]

2 hours ago, dagger said:

I note that Groupe Mach also wants $120 million in financing from the Quebec government.

OK as long it is not from our Federal Government.  Re their expertise, I wonder if they have any international hotel / resort experience.

[mo32a]

1 hour ago, Marshall said:

OK as long it is not from our Federal Government.  Re their expertise, I wonder if they have any international hotel / resort experience.

No, it will be from Alberta.

[dagger]

3 hours ago, Marshall said:

OK as long it is not from our Federal Government.  Re their expertise, I wonder if they have any international hotel / resort experience.

Air Canada says a deal is getting close - and it won't need any government funding

https://www.newswire.ca/news-releases/air-canada-provides-update-on-exclusive-agreement-with-transat-a-t-inc-to-pursue-a-combination-of-the-two-companies-827210016.html

Air Canada Provides Update on Exclusive Agreement with Transat A.T. Inc. to Pursue a Combination of the two Companies 

 

Due diligence on binding agreement due to be completed by end of June

MONTREAL, June 4, 2019 /CNW Telbec/ - Air Canada today said that it is in the process of finalizing its binding agreement to purchase all of the issued and outstanding shares of Transat AT Inc. and its combination with Air Canada to create an industry leading, Quebec-based leader in the global leisure travel industry. Air Canada announced on May 16, 2019 that it had entered into an exclusive agreement with Transat regarding the proposed transaction and that the agreement was subject to Air Canada completing a 30-day due diligence period now expected to be complete towards the end of June.

Air Canada's acquisition will result in job creation and economic growth in Quebec, given the travel and tourism opportunities. Moreover, Air Canada has all necessary funding to complete the transaction and therefore it is not subject to financing conditions and does not require government or taxpayer assistance.

The transaction, valued at $520 million, remains subject to the finalization of definitive agreements, confirmatory due diligence, regulatory and shareholder approvals and other closing conditions usual in this type of transaction. There is no assurance that the transaction will be completed as described in this news release or at all.

Air Canada presence and investment in Montreal and the Province of Quebec.

Air Canada is proud to have been named one of Montreal's top employers for each of the last six years. Headquartered in Montreal since 1949, Air Canada maintains one of the largest global head offices in Quebec. Air Canada employs 36,000 employees globally, with close to 10,000 of those in the province of Quebec where it has created over 2,600 new jobs over the last five years. 

Air Canada's Executive Committee members (President and Chief Executive Officer, Chief Financial Officer, Chief Commercial Officer and Executive Vice-President, Operations) in addition to many other key members of the Executive Management team are all based in the Montreal Headquarters. 

 Air Canada serves 11 airports across Quebec. The international reach of Air Canada's network makes Quebec a gateway to the world and is an important tool for economic development, including tourism.

Montréal-Trudeau Airport is a strategic hub for Air Canada connecting its Quebec and Atlantic Canada domestic network, with its U.S. transborder, Caribbean, European, North African, Asian and South American flights. To the U.S. alone, Air Canada connects Montreal-Trudeau to some 24 cities.

Since 2012, Air Canada has launched 35 new routes from Montréal-Trudeau to global markets including Shanghai, Beijing, Tokyo, Tel Aviv, Lima, Sao Paulo, and Casablanca. This growth has allowed Montreal to rank amongst the top 50 most internationally connected cities in the world and to become one of the largest North American hubs.

Air Canada served more than 10 million passengers in Montreal in 2018. 

 

 

[MD2]

Well, this will likely force Air Canada into a bidding war which is a lose-lose scenario.  New bidders may yet emerge.

If it does get Transat, likely it is at inflated prices which make no economical sense and then is busied for a decade merging the operations and losing money in the process. Likely it will come with restrictions from Competition Bureau too, complicating things further.

If it does lose the deal, it serves a s a set-back while breathing new life into the new Transat and increasing competition against it.

The latter is likely to happen though, because of the requirement for Quebec government involvement, which has already signaled its willingness. A deal that has the Quebec government "invested" will be more appealing for Transat and for Quebec because it is seen as a guarantee to secure those jobs and keep them in Quebec. Much like the Bombardier deal, the more entities involved and invested in the deal, the better it is for the company!

[deicer]

If AC doesn't do the deal with Transat, they still stand to walk away with the $15 million break fee?