Air Canada has reached a new deal to buy competitor Air Transat for a fraction of the price the two airlines agreed upon last year.
Air Canada says Air Transat has agreed to be sold for a price of $5 per share, or a total of $190 million. That’s less than half of the $520 million sale price the two airlines agreed on last year.
The sale would merge the two airlines, meaning Air Canada and WestJet would be the only remaining major Canadian carriers.
In a news release Saturday, Air Canada said the reduced price comes after the COVID-19 pandemic pummelled airline values worldwide.
“The amended transaction reflects the unprecedented impact of COVID-19 upon the global air transport industry, which has endured a severe decline in air travel,” Air Canada said.
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The sale still needs to be approved by shareholders, the courts, the Toronto Stock Exchange, and airline regulators in Canada and the European Union.
“Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms,” said Calin Rovinescu, president and CEO of Air Canada. “This combination will provide stability for Transat’s operations and its stakeholders.”
Transat’s board of directors has unanimously approved the sale.