This turns into quite a week for Canadian aviation. At the beginning of the week, it was announced that the WestJet was acquired by a private equity firm in a $ 5 billion deal. Now there is additional flight operations, this time in the form of consolidation among Canadian airlines.
Air Canada intends to acquire Air Transat
It has been announced today that Air Canada has entered into an exclusive agreement with Air Transat
The proposed transaction is valued at approximately $ 520 million or $ 13 per share. "A combination with Transat represents a good opportunity for stakeholders in both companies. This includes the shareholders of both Transat and Air Canada, employees of both companies, who will benefit from increased job security and growth prospects and Canadian travelers who will benefit from it. merging the company's increased ability to participate as a leader in the competitive leisure-time travel market globally The acquisition offers a unique opportunity to compete with the very best in the world in terms of leisure travel, and will also enable us to further develop our hub at Montréal-Trudeau airport, where we have added 35 new routes since 201
I take on Air Canada takes over Air Transat
Most are probably familiar with Air Canada, although Air Transat is an airline that not everyone is familiar with. The Montreal-based airline has a fleet of about 40 planes, and they have a fairly varied fleet, including the A310s (!!!), A330s, A321s and 737s, and they have A321LRs in order to update their fleet in the long term ( replaces A310).
Air Transat A321LR
Air Transat operates mainly recreational routes, most of which are seasonal. They operate on a lot of transatlantic markets, and also to the Caribbean, Mexico and flights within Canada.
What makes it interesting is that Air Canada has its own low-cost airline, Rouge, which operates in some of the same destinations.
It would be interesting to see if Air Canada is planning to throw Air Transat into Rouge and eliminate a competitor in the process or whether they would keep the brand separate.
My guess would be that Air Transat would become part of the Rouge, but maybe some of the plans would go to Air Canada's main line, so that the airline could maintain a certain consistency.
Based on Air Transat's current fleet:
- While Rouge currently uses 767s for long-haul air transport, I could see them using the Air Transat A330s for long-haul flights
- Air Transats A310s are likely to be retired soon and replaced with A321LRs.
- Air Transat has a small fleet of 737s; Air Canada has only 737 MAX, so I wonder if Rouge would actually start a small sub-fleet in the 737's, or if they were just going to retire
- I almost wonder if Air Transat's A321LR order might just go to Air Canada- the main line, as it does not seem to fit in with Rouge's business model, and I could see the merits of A321LRs in Air Canada's fleet
Air Canada acquires Air Transat seems like a good fit, because Air Transat could join the Rouge fleet. With such a deal, Air Canada could eliminate a competitor.
While Air Canada talks about the benefits of such a deal, it would hardly benefit consumers. Air Canada's CEO says that consumers would "benefit from the merged company's increased ability to participate as a leader in the competitive leisure travel market globally."
The much greater reality for consumers is that Canadian aviation is not so competitive and we would see an airline eliminated. It leads to higher airfare …
What do you do with Air Canada's plans to take over the Air Transat? Do you think they would just fold the airline into Rouge or?