Air Canada's Transat takeover 'raises public interest issues,' says transport minister

Canada's Transport Minister Marc Garneau said Air Canada’s proposed takeover of Transat A.T. Inc. raises issues related to public interest. (Adrian Wyld/The Canadian Press via AP)

Air Canada’s (AC) proposed takeover of Transat A.T. Inc. (TRZ.TO) raises issues related to public interest and requires additional time to conduct a thorough analysis, says Canada’s transport minister.

Transport Canada released a statement after markets closed Monday that said Minister Marc Garneau had determined the potential deal – which could increase Air Canada’s market share of some routes to Europe to as much as 68 per cent – “raises issues related to national transportation.”

“A public interest assessment of the proposed transaction will be conducted with input from the Commissioner of Competition, who will assess impacts on competition,” Transport Canada said in the statement.

Transat shareholders overwhelmingly approved Air Canada’s bid to acquire the company last Friday, with nearly 95 per cent of the 70.28 per cent of shareholders that voted approving the deal.

With Transat under its wing, Air Canada’s control of transatlantic seat capacity would jump by 18 per cent to 60 per cent. On some routes, the concentration would be more pronounced, raising questions about the impact the deal will have on competition and consumers. For example, in 2019, Air Canada had 53 per cent of the seat capacity for direct routes between Toronto and London. With the Transat takeover, Air Canada’s share of that route would jump to 68 per cent.

Transport Canada typically has 150 days to complete a public interest assessment of such deals, but Garneau has allotted an additional 100 days “to ensure sufficient time for thorough analysis and assessment.” Transport Canada has until May 2, 2020 to complete its assessment of the potential transaction.

Consultations with the air industry, government, public, are scheduled to begin Nov. 4.

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