Air Canada, Transat revise takeover agreement, Transat adds $250m in cash

[Maverick]

1 hour ago, anonymous said:

yeah...like when the senior VP stole AC data and told the founder about it????

 

So, since you're dragging up sh!t from 20 years ago you must feel that Ed Sims has a point then, no?

 

[boestar]

They didn't have an issue with it 12 months ago

 

[Specs]

Westjet knows the Air Canada plan retains aircraft and employees in Quebec and will appeal to the Provincial and Federal Governments so they can't have much hope for their protest.  I suppose they're really just hoping to get some of AC's European airport slots?

 

[Maverick]

9 hours ago, boestar said:

They didn't have an issue with it 12 months ago

 

Do you think that maybe, just maybe the trans-Atlantic world might have changed a wee in the last year? 

[AIP]

8 minutes ago, Maverick said:

Do you think that maybe, just maybe the trans-Atlantic world might have changed a wee in the last year? 

In that case, divestiture of slots shouldn't be an issue should it ???

Slots in LGW are available

 

[Vsplat]

I think I have to call BS on Mr. Sims. 

WestJet has gone into the corners elbows up any time I have ever had to deal with them out of the public eye.   That's fine, it's a competitive business, but a statement about lilly whiteness is too Trumpian for my taste.

The flip side of this - if the innuendo here is that there is government help putting a thumb on the scale, asking that government to give you slots, etc, seems like doing the same thing to me.  Either the Transat deal is good or it is not.  It is not made good with a loot bag like some kid's birthday party.

Vs

[spreadsheet]

On 1/20/2021 at 5:47 AM, boestar said:

They didn't have an issue with it 12 months ago

 

Just because you didn't see it doesn't mean there wasn't opposition.  And let's not kid ourselves, if the tables were turned you know AC would have issues as well.  Every carrier has issues with things their competitors do.

[Fido]

Market share is not a worry if there is no market

[Jumpy]

20 hours ago, Vsplat said:

I think I have to call BS on Mr. Sims. 

WestJet has gone into the corners elbows up any time I have ever had to deal with them out of the public eye.   That's fine, it's a competitive business, but a statement about lilly whiteness is too Trumpian for my taste.

The flip side of this - if the innuendo here is that there is government help putting a thumb on the scale, asking that government to give you slots, etc, seems like doing the same thing to me.  Either the Transat deal is good or it is not.  It is not made good with a loot bag like some kid's birthday party.

Vs

Did you read the Delta/WJ joint venture ruling? 

[Airband]

Sunwing CEO says Transat takeover vital to fend off foreign airlines

Fri Jan 22, 2021 - The Globe and Mail
Eric Atkins - Transportation Reporter

Air Canada’s proposed takeover of smaller rival Transat AT Inc. has won support from an unlikely source – the head of leisure carrier Sunwing Airlines Inc.

The combination of Canada’s No. 1 and No. 4 airlines will be good for the domestic aviation industry, bolstering the global clout of Canada’s flag carrier amid heightened competition with foreign airlines, says Stephen Hunter, chief executive officer of Sunwing, a Toronto-based carrier that flies to southern sun destinations.

Air Canada’s takeover of Transat, under review by regulators in Ottawa and Europe, will ensure Canada’s main airline can withstand competition from Air France, Lufthansa and other global carriers, Mr. Hunter said. Those carriers, propped up by their home countries in the pandemic with billions in loans, grants and other aid, are increasing their shares of the Canadian market as Canadian carriers slash routes to reduce their losses and stay alive.

Mr. Hunter said he supports the deal even though Sunwing and Transat are direct rivals that sell airfare and tour packages, and the takeover would allow Air Canada to solidify its status as Canada’s dominant airline.

“Unless we want Canada completely controlled by foreign carriers, we have to allow this,” Mr. Hunter said by phone. “Our main fear is, and what we’ve got to watch out for, is all the European and other international carriers coming in and taking market share away from Canadian airlines. And this is one way to defend them.”

Ottawa has provided wage subsidies to thousands of laid-off airline employees, and access to loans, has yet to conclude aid talks with airlines.

Jacques Roy, a professor of transportation and logistics at HEC Montreal, said a combined Air Canada-Transat would pose a formidable rival to Sunwing. “It would have an impact,” Prof. Roy said. “Air Canada is also selling seats to Mexico and the Caribbean and so on, and so is Transat. If you put the two together it makes for stronger competition.”

Mr. Hunter said Sunwing has asked the government for greater access to airport gate slots in Montreal, where Air Canada-Transat would command a majority presence. But the airline has not opposed the deal, even though Air Canada will become the biggest Canadian player in southern markets should it proceed.

Sunwing is dominant in Mexican, South American and Caribbean markets. Transat flies south but has a greater presence in Spain, Portugal and other European vacation spots.

Mr. Hunter is confident the airline founded by his father, Colin Hunter, will persist. “Competition is healthy,” Mr. Hunter said. “I don’t mind whether it’s Transat, Air Canada or WestJet. We will compete as we’ve done in the last 20 years with any of them.”

Privately owned Sunwing employed about 2,700 people before the pandemic upended the global aviation business and sent global demand for seats down by about 90 per cent. Sunwing halted flights in late March and resumed in November. Sunwing’s fleet consists of 12 leased Boeing 737-800s, half of which are in storage, and four leased Boeing 737 Max jets, none of which are in service, according to aviation consultancy Cirium.

Air Canada’s $180-million takeover of Transat is awaiting approval by the European Commission’s antitrust regulator and Canada’s federal cabinet. Decisions, which could include rejection or approval with attached conditions, are expected in the coming days or weeks. Feb. 15 is the date on which the deal could fall apart without agreement from both companies.

Sunwing’s support, made in submissions to the government, contrasts with that of WestJet Airlines Ltd., the second-biggest airline. The Calgary-based carrier has urged regulators on both sides of the Atlantic to reject the deal, or impose conditions that would loosen Air Canada’s grip on seat sales and airport slots.

Canada’s Competition Bureau in March criticized the takeover as bad for consumer choice, noting the combined companies would command 60 per cent of transatlantic travel from Canada and reduced competition or a monopoly on 83 routes between Canada and Europe, Mexico, Central America, the Caribbean, Florida and South America.

[Vsplat]

19 hours ago, Jumpy said:

Did you read the Delta/WJ joint venture ruling? 

Are you talking about the US DoT one that they then withdrew from?

I seem to recall they objected to some of the same conditions WJ now wants.  Maybe I'm not referring to the same thing you are though.

Vs

[Kargokings]

What Will The Air Transat-Air Canada Merger Mean For Flight Prices?

• byChris Loh
• January 26, 2021

We often see the presence of competition on routes result in lower fares for travelers. Therefore, when a merger is on the horizon, it might be something for airline customers to worry about as their airfares could be at risk of increasing. This then begs the question, what will the acquisition of Air Transat by Air Canada do for airfares on the routes where they once competed?

Link to complete article: What Will The Air Transat-Air Canada Merger Mean For Flight Prices? - Simple Flying

[moeman]

https://www.985fm.ca/nouvelles/politique/367931/ottawa-sur-le-point-dannoncer-la-vente-dair-transat-a-air-canada-selon-bernard-drainville

Google translation:

"The Trudeau government is said to be about to approve the Air Transat acquisition by Air Canada.

According to what 98.5 political columnist Bernard Drainville learned, 
Ottawa does not believe in a takeover scenario for the Quebec airline company.

The acquisition by Air Canada would therefore be a "lesser evil", 
even if competition would be lessened in the country, in the air transport sector."

[GDR]

 

Here is a TD Waterhouse report, I have no idea why WJ isn't mentioned.

 

TD Investment Conclusion Canadian air transportation companies will start reporting calendar Q4/20 results on February 12. Our Air Transportation coverage group includes companies that are more dependent on the recovery in air travel (Air Canada and Transat) and those that are less dependent due to contractual revenues (Chorus Aviation) and revenue diversification (Exchange).

As a result, we recommend that investors without a stomach for short-term volatility lean towards Chorus and Exchange, and those who are focused on 12-month returns and beyond also consider Air Canada and Transat. Air Canada: Although we forecast that the decline in Air Canada's revenue will improve slightly to 78% y/y in Q4/20 (relative to -86% in Q3/20), we believe that the improvement will be temporary, with conditions worsening again in Q1/21 before beginning a more sustainable recovery in Q2/21. We believe that Air Canada has sufficient liquidity to deal with the setback in cash flow from ticket sales in late-2020 and early-2021. We believe that investors should remain focused on improvements in the second wave and potential government support for determining short-term share-price direction, while focusing on the 2022 and 2023 earnings for those taking a 12-month view. Exchange: Our Q4/20 revenue forecast is in line with consensus, while we believe that EBITDA will be slightly above. We forecast that revenue will decline 20% following the 16% decline in Q3/20. This is due to the impact of greater declines in Aerospace, while Manufacturing remains positive, primarily due to acquisitions. In our view, Exchange's diversified business model, limited exposure to commercial air travel, dividend, and balance sheet make it an attractive opportunity, given the uncertain state of the economic recovery. Chorus Aviation: Our Q4/20 forecasts are relatively in line with consensus. We forecast that revenue will decline 39% y/y, a slight improvement from the 44% decline in Q3/20. EBITDA is forecast to be flat y/y, a positive result that reflects the value in the business model, which is benefiting from the stability of the CPA with Air Canada, and the more moderate (relative to airlines) downside to regional leasing revenue during the pandemic. We believe that CHR's liquidity is sufficient to sustain it through a slow recovery and should allow it to return to lease portfolio growth in 2022 and beyond. Transat A.T.:

We continue to believe that Transat's earnings will be secondary to the expected focus on its cash and its ability to survive the pandemic if the pending acquisition by Air Canada is rejected by regulators. We believe that the benefits of Transat's leisure focus, offset the risks for Air Canada related to acquiring an airline during the current environment of depressed profitability and uncertainty.

[rudder]

5 minutes ago, GDR said:

 

Here is a TD Waterhouse report, I have no idea why WJ isn't mentioned.

 

Because WJ is not a publicly traded stock.

[GDR]

Of course. Forgot. I wonder how Shwartz is feeling now about his investment.?

[rudder]

3 minutes ago, GDR said:

Of course. Forgot. I wonder how Shwartz is feeling now about his investment.?

ONEX has already taken a full write down on their investment in WJ.

For a massive multinational corporation, it just balances the loss against other gains in order to avoid taxes.

[dagger]

On 2/5/2021 at 2:45 PM, rudder said:

ONEX has already taken a full write down on their investment in WJ.

For a massive multinational corporation, it just balances the loss against other gains in order to avoid taxes.

The cash calls, mind you, must be interesting.

[FA@AC]

Am hearing that the deal was just approved.  EU regulatory approval still needed.

[rudder]

AC Q4/YE2020 analyst call Friday morning. I am certain there will be some updates provided.

[rudder]

Here it is:

https://www.canada.ca/en/transport-canada/news/2021/02/government-of-canada-approves-proposed-purchase-of-transat-at-inc-by-air-canada.html/url.html

[FA@AC]

The requirements of this and that staying in Quebec almost sound like the Air Canada PPA Part Two.  The conditions otherwise don't appear to be onerous.

[AIP]

The first two sentences may be the funniest thing I have ever read !!!

Air travel is essential to Canada's economic growth and prosperity. Travellers and businesses alike benefit from a safe, efficient and resilient air industry.

[rudder]

https://www.newswire.ca/news-releases/transat-announces-approval-of-its-arrangement-with-air-canada-by-canadian-authorities-839468097.html

[rudder]

13 hours ago, FA@AC said:

The requirements of this and that staying in Quebec almost sound like the Air Canada PPA Part Two.  The conditions otherwise don't appear to be onerous.

Cannot figure out a way to post the term sheet but some of the terms are fairly onerous. Most to do with release of slots if requested and competitor access to aeroplan and Maple Leaf lounges. Also mandatory maintenance contracts in QC. I assume AC had some input?