Air Canada-Transat deal faces uncertainty as deadline expires

The day after the deadline for the planned arrangement between Transat and Air Canada, Transat was informed by Air Canada that it will not agree to extend it. 

The “Arrangement Agreement” nevertheless remains in force in all its provisions "as long as it is not terminated by one of the parties."

In an update on the arrangement published today (Feb. 16), Transat recalls that, even if the Canadian government has approved the Arrangement, it still has to receive the approval of the European Commission.

However, the Commission has requested additional information from the parties and a decision is now expected only in the first half of 2021.

Up in the air 

The deadline set at February 15, 2021 has therefore now passed and without the approval of the Commission having been obtained “each of Air Canada and Transat are currently entitled, at any time, to terminate the Arrangement Agreement upon notice to the other party. 

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In the meantime, Transat and Air Canada continue to discuss potential modifications that may be required to the Arrangement Agreement. It was during these discussions that Transat was informed that Air Canada will not agree to extend the deadline. 

In these circumstances, even if the Arrangement Agreement were amended, Air Canada and Transat would retain the right to terminate it at any time. 

"There can be no assurance that an agreement on any such amendments will be reached, or that Air Canada or Transat will not terminate the Arrangement Agreement if the relevant circumstances so warrant," Transat said in a statement. 

The Government of Canada approved the pending $190 million-dollar transaction on Feb. 11.

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