Wednesday,  September 28, 2022  8:33 am

“We have to allow this”: Sunwing CEO says Air Canada-Transat deal vital to preventing foreign takeover

“We have to allow this”: Sunwing CEO says Air Canada-Transat deal vital to preventing foreign takeover
Stephen Hunter, President & CEO, Sunwing Travel Group. (Supplied)
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

Earlier this week, it was reported that WestJet is urging Ottawa to prevent the pending Air Canada-Transat deal from taking off, or implement some conditions that would limit the combined companies’ dominance in the market.

Now, the head of Sunwing Airlines is sounding off, sharing a perspective of a different tune.

In a Jan. 22 story in the Globe and Mail, Stephen Hunter, chief executive officer of Sunwing, spoke in favour of the $180 million-dollar transaction, which has yet to receive a green light from Canadian and European regulators. 

Combining Air Canada and Transat would be good for the domestic aviation industry, said Mr. Hunter, and ensure Canada’s flagship carrier can withstand competition from Air France, Lufthansa and other foreign airlines.

READ MORE: WestJet asking Ottawa to reject Air Canada-Transat deal or enforce conditions

“Unless we want Canada completely controlled by foreign carriers, we have to allow this,” Mr. Hunter told the Globe. “Our main fear is, and what we’ve got to watch out for, is all the European and other international carriers coming in and taking market share away from Canadian airlines. And this is one way to defend them.”

The CEO noted that “competition is healthy,” suggesting that Sunwing will prevail, regardless of the transaction’s outcome.

“I don’t mind whether it’s Transat, Air Canada or WestJet. We will compete as we’ve done in the last 20 years with any of them,” Hunter told the Globe.

Rejections & approvals

Air Canada’s proposed takeover of Transat AT has been a long and drawn-out saga.

The European Commission (EC), which oversees competition policy in the 27-member European Union, is studying the deal to determine if it will hinder competition, increase prices and lead to fewer choices for consumers.

The regulatory body has already delayed their decision to approve the purchase several times. 

Meanwhile, Air Transat shareholders, in December, accepted a takeover bid from Air Canada in a deal worth $5 per share.

The transaction then received final approval of the Superior Court of Québec on December 18, 2020.

Earlier this month, Quebec businessman Pierre Karl Péladeau called on the Canadian government to block the sale of Air Transat, highlighting a reported offer to purchase Transat for $6 per share, or for approximately $233 million.

But Transat was quick to issue a clarification, stating that Mr. Péladeau’s unsolicited proposal was not supported by binding, fully committed financing, that it was actually $5.00 per share (not $6.00) and that it lacked financing to support Transat's 2021 working capital requirements of approximately $500 million.

“We continue to believe that Air Canada's proposal continues to be the best option for Transat's future, especially in the context of the pandemic and its devastating effect on airlines,” said Jean-Yves Leblanc, president of the special committee of the Board of Directors of Transat on Jan. 13.

Last March, the Competition Bureau of Canada was unfavourable to the deal, but it should be noted that their analysis was done before the COVID-19 pandemic outbreak.

The EC is expected to announce its ruling by Feb. 9, 2021. If nothing transpires, the deal will dissolve on Feb. 15 (unless Air Canada and Transat agree to an extension).

Don't miss a single travel story: subscribe to PAX today!