Air Canada is looking to dodge a planned takeover of Air Transat, according to reports in the Journal de Montreal.
The flag carrier had originally announced plans to acquire Air Transat, the country’s third largest airline, in May 2019. An offer was subsequently made at C$13 per share, or an all-cash bid of C$520 million.
However, amidst a number of changes made to Air Canada’s business model aimed at dealing with the coronavirus pandemic, it appears that Air Canada may be looking to walk away from the tee-up.
According to the Journal, multiple sources have said that Air Canada is lobbying the Canadian government to block the deal.
Air Canada has recently announced a number of measures aimed at strengthening its balance sheet. On Tuesday, Reuters reported that the company had raised nearly $1.6 billion by selling shares and convertible debt. Chief financial officer Michael Rousseau said in a statement that these moves were aimed to “better manage debt leverage and risk.”
However, as Transat’s share value has fallen analysts have speculated that Air Canada may also look to avoid the Transat sale. The transaction has already been under scrutiny from Canadian competition watchdogs. Back in March, the Competition Bureau announced that it had “competition concerns,” about the deal, which were echoed by rival airline Westjet.
EU antitrust regulators were also sceptical of the merger, stating that the deal could significantly reduce competition on 33 routes between Europe and Canada.
In May, the European Commission announced that it is opening an investigation into the acquisition, which could take as long as 90 days.