MIAMI – The Canadian government has approved Air Canada’s (AC) purchase of Transat A.T. Inc., including rival Air Transat (TS), citing the impact of COVID-19 as a factor in the long-awaited decision.

“Given the devastating impact of the COVID-19 pandemic on the air industry, the proposed purchase of Transat A.T. by Air Canada will bring greater stability to Canada’s air transport market,” said Transport Minister Omar Alghabra in a media statement.

“It will be accompanied by strict conditions which will support future international competition, connectivity and protect jobs. We are confident these measures will be beneficial to travelers and the industry as a whole.”

Those conditions include, in part, maintaining Transat’s corporate headquarters in the province of Quebec, ensuring aircraft maintenance contracts remain in Canada, and committing 1,500 employees to the merged company’s new travel business.

Air Transat C-GKTS Airbus A330-342. Photo: Tony Bordelais/Airways

Transat A.T. Inc

More than just an airline, Transat is an international, vertically integrated tour operator with nearly 20 business units in eight countries, including travel agencies. Its brands include Club Voyages, Voyages en Liberté, Marlin Travel, and TravelPlus.

Founded in 1986, TS is the country’s third-largest airline, operating scheduled and charter flights, serving 60 destinations in 25 countries. Its fleet of Airbus A321s and A330s will add to AC’s portfolio as the largest airline in Canada.

“The proposed acquisition offers the best probable outcomes for workers, for Canadians seeking service and choice in leisure travel to Europe, and for other Canadian industries that rely on air transport, particularly aerospace,” Alghabra said in the statement.

WestJet C-FZWS Boeing 737-76N(WL). Photo: Kochan Kleps/Airways

WestJet Opposition

Not surprisingly, other Canadian carriers expressed their opposition to the decision. In a statement, Calgary-based WestJet (WS), the nation’s second-largest carrier, said the transaction means Canadian airline travelers will have fewer choices.

“This decision shows a blatant disregard for all Canadians who believe in healthy competition,” said Ed Sims, WS President and CEO. “When Canadians look to explore the world and reunite with family and friends once again, they will face fewer choices and higher fares.

“It is hard to imagine a deal as anti-competitive in any industry where the number one player buys number three without meaningful remedies,” Sims added. “This is a serious setback to Canada’s economy.”

In December, Transat shareholders approved a sharply discounted C$188.7m (US$149m) buyout offer from AC after the pandemic derailed travel demand.

The deal is still pending approval from the European Union, which halted its investigation into the deal on Dec. 22, according to news reports.

Featured image: Air Canada C-FSOI Boeing 737 MAX 8. Photo: Brando Farris/Airways