With the offer by Air Canada to purchase Air Transat now withdrawn, the charter airline issued a release outlining its plans to re-launch once the pandemic has abated. The Air Canada sale fell though when the European Union imposed restrictions on the deal that would render the merger no longer financially viable.
In connection with the termination of the Arrangement Agreement, Air Canada has agreed to pay a $12.5 million termination payment to the Corporation and to waive its entitlement to a $10 million termination fee in the event of an acquisition of Transat by a third party in the twelve months following termination of the Arrangement Agreement.
Said Jean-Marc Eustache, President and Chief Executive Officer of Transat. “now that Transat is no longer constrained by the limitations under the Arrangement Agreement, we are free to take the necessary steps to ensure a successful, long-term future, beginning by securing long-term financing to provide Transat with the flexibility to deliver on its strategic plan.”
Air Transat pursuing new financing
Air Transat says it requires new financing totalling at least of $500 million in 2021. The release says, despite the crippling losses to the carrier due to COVID it is conserving cash and hopes to secure some COVID related support from the Federal Government. The release notes, “as a smaller operator, Transat can be nimble and quickly adapt to ever-shifting market conditions. There is significant pent-up demand among customers in the Corporation’s primary segments of leisure travel and visiting friends and relatives (VFR), which are expected to recover sooner than business travel. Transat’s smaller aircraft fleet provides greater flexibility and efficiency, and the Corporation benefits from a well-respected brand that customers love, as well as committed staff members and a strong distribution network.”
Transat says it will pursue discussions with various fund operators including, including Pierre Karl Péladeau, whose investment company, Gestion MTRHP Inc., previously made (and since reiterated) a proposal to acquire all of the issued and outstanding shares of Transat for 5$ a share. “The Board intends to examine available strategic alternatives, including the pursuit of the Corporation’s stand-alone business plan.”