Transat AT, the owners of Air Transat have given Air Canada an exclusive 30 day opportunity to place an acceptable bid for the airline, valuing it at around US$500m.
The offer was 47% higher than the actual value of the airline in order to ensure the Transat board accepted the bid as viable.
If another airline now makes a bid, it’s got to be $1per share higher than the AC bid to be considered.
In the meantime Air Transat will carry on as usual and it seems AC is looking at operating it as a separate brand.
Air Transat is facing a number of challenges as the likely sale of Thomas Cook’s aircraft and the agreement they have to cross-supply during seasonal changes is part of Air Transat’s business plan. That will have to change.
In addition while Air Transat has a value image in Europe and Canada, it’s found it hard to grow its market up against more and more low-cost opposition.
As with so many airlines, it’s just not big enough to make serious inroads into many markets without expending capital and taking on huge debts and risk, which it’s decided not to do.
In many ways Air Transat is stagnant, but a viable business that hasn’t over stretched itself.
Any deal will have to be approved by regulators.
There’s been significant change in the Canadian aviation market lately with WestJet being de-listed from the stock exchange and taken into private ownership, insulating it from this type of buy out. Air Canada could be seen as becoming too dominant.