Transat A.T. Inc. has again delayed the closing deadline of its takeover by Air Canada, amid mounting questions about the future of the $720-million deal.
The agreement approved by Transat shareholders in August allows either side to delay three times the date on which either side can walk away if the deal has not been completed.
Transat said on Monday it has delayed the closing date of the deal until August 27, after pushing it back until July 27, as both sides await approvals by Canadian and European Union regulators.
“Since the European Union’s decision is now expected between September 30 and November 19, and there is no defined date for Canada’s decision, we intend to use as many of those one-month periods as necessary,” said Christophe Hennebelle, a spokesman for Montreal-based Transat.
Transat’s share price fell by more than 2 per cent to about $5.30 on Monday on the Toronto Stock Exchange, well below the $18 Air Canada agreed to pay. The shares plunged in March as the COVID-19 pandemic spurred governments to close borders and advise against travel.
Transat halted operations and laid off much of its workforce in response, but recently resumed a small number of flights.
Air Canada spokesman Peter Fitzpatrick confirmed in an email the date has been extended but did not address questions about how the pandemic has changed the business case for the deal.
Transat shareholders in August approved Air Canada’s takeover, after the larger carrier raised its offer from $13 a share amid pressure from Transat shareholders and would-be rival bidders. Transat’s updated fleet of fuel-efficient Airbus planes made it an attractive target for Air Canada, which found itself facing the prospect of stiffer competition from WestJet, recently purchased by deep-pocketed Onex Corp.
The combined companies would control about 60 per cent of transatlantic traffic and 45-per-cent of seats to Caribbean holiday destinations, warned Canada’s Competition Bureau, which said the combination of the two companies would limit travellers’ choices and drive up air fares. The Competition Bureau’s report and an assessment by Transport Canada will inform a decision on the merger by the Canadian government.
As it launched a closer study of the deal, the European Union’s competition regulator said in May the takeover could limit competition on 33 routes, and that Calgary-based WestJet Airlines is too small to present much of an alternativ
However the Canadian government has not withdrawn its travel quarantine requirements and advisory against non-essential travel, saying the measures are needed to limit the spread of the deadly virus.