Airline Merger Grounded
CBJ — A $190 million deal that would have seen Air Canada acquire Transat AT has been grounded after receiving word that the merger would not be approved by the European Commission, which was the final regulatory hurdle that needed to be cleared in order for the transaction to have been made official.
Air Canada released a statement of response:
“Following recent discussions with the EC, it has become evident, however, that the EC will not approve the acquisition based on the currently offered remedy package. After careful consideration, Air Canada has concluded that providing additional, onerous remedies, which may still not secure an EC approval, would significantly compromise Air Canada’s ability to compete internationally, negatively impacting customers, other stakeholders and future prospects as it recovers and rebuilds from the impact of the COVID-19 pandemic.”
Air Canada must now compensate Transat AT with a termination fee of $12.5-million. Transat, on the other hand, will not be obligated to pay any portion of that termination fee back to Air Canada if the former reaches another deal in the future.