Air Canada, Transat call off $190 million deal after European approval denied

·1 min read

MONTREAL — A deal that would see Canada's largest airline acquire rival carrier Transat AT is officially dead.

Air Canada and Transat both released statements on Friday announcing the mutual termination of the $190 million deal.

The companies cite regulatory barriers as the reason, noting European authorities have indicated their unwillingness to follow the lead of Canadian officials and approve the transaction.

The deal that would have seen Air Canada acquire Transat was first announced in 2019, before the COVID-19 pandemic ravaged market conditions across the transportation and tourism industries..

The value of the merger changed multiple times and was last revised in October 2020.

But Air Canada says resistance from the European Commission, tasked with signing off on the acquisition, is what ultimately sounded the deal's death knell.

"Following recent discussions with the EC, it has become evident, however, that the EC will not approve the acquisition based on the currently offered remedy package," the company said in a statement.

"After careful consideration, Air Canada has concluded that providing additional, onerous remedies, which may still not secure an EC approval, would significantly compromise Air Canada's ability to compete internationally, negatively impacting customers, other stakeholders and future prospects as it recovers and rebuilds from the impact of the COVID-19 pandemic."

Air Canada says it till pay Transat a termination fee of $12.5 million, while the other airline no longer has any financial obligations related to the deal.

This report by The Canadian Press was first published April 2, 2021.

Companies in this story: (TSX:AC, TSX:TRZ)

The Canadian Press