article-aa

The appeal, filed to the Canadian Transportation Agency (CTA), argues that the deal could result in WestJet being majority owned by foreign investors, which would violate federal foreign-ownership rules. It claimed that Onex’s private equity structure is “opaque,” and that the “fluidity” of its shareholder base could lead to the violation of federal ownership limits. (Globe and Mail)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The news follows last week’s announcement from Transport Minister Marc Garneau that Air Canada’s acquisition of Transat, which shareholders approved on August 23, will face a “public interest assessment.” That deal is set to face regulatory scrutiny in Canada and Europe, where both airlines offer direct routes. Onex’s shareholders backed the $3.5-billion takeover of WestJet in July. Garneau approved the deal on July 24 and the Competition Bureau on August 13. Its final hurdle is CTA approval. Clive Beddoe, WestJet’s founder and chairman, said in May, when the deal was first announced, that the company will remain headquartered in Calgary.

article-aa

The transaction, which was approved by Transat shareholders on Friday, raises “public interest issues related to national transportation,” according to a Monday release from Transport Canada. The assessment will include input from the competition commissioner on the acquisition’s potential impacts other companies’ ability to compete in the industry. (The Logic)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The deal will face scrutiny from regulators not just in Canada, but in Europe, as well, where both Air Canada and Transat offer direct routes. However, after Transat’s shareholders approved the sale, board members said they were confident the deal would obtain regulatory approval. Jean-Marc Eustache, chairman and CEO, has argued against competition concerns around European routes, pointing to competitors on the Montreal-Paris route, for example, such as Air France, Level and Corsair International. Eustache co-founded Transat’s predecessor, Air Transat. He alone is reportedly set to make over $17 million from the deal.

article-aa

Canada’s largest carrier predicts the move will reduce capacity and earnings growth in its third quarter. The carrier had initially planned to ground 737 Max flights until July. The company also reported a 3.6 per cent increase in traffic in the second quarter, and net income of 88 cents per share, above analysts’ consensus estimates of 76 cents per share, according to Refinitiv. (Bloomberg)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Air Canada is the second airline to ground flights involving the jetliner until at least 2020, following Southwest. The Canadian carrier set its initial target after Transport Canada temporarily banned the planes from Canadian airspace in March. At the time, it wasn’t clear whether software problems in the jetliner fleet were behind two deadly crashes over the past year. Boeing has since acknowledged that the plane’s software malfunctioned in both of the air disasters. The company said a timeline for the fix—and subsequent regulatory approval—remains uncertain, but it expects the fleet to remain grounded globally until at least October. On July 25, Boeing announced that delays may force the company to temporarily halt production of the planes.

article-aa

Vincent Chiara, Groupe Mach president and owner, said his bid is less likely to draw monopoly scrutiny from the Competition Bureau than Air Canada over to the increase in market share it would create. The Montreal real estate investor group is offering $1 more per share than Air Canada. Montreal-based FNC Capital is also exploring a rival bid. Air Transat shares rose 0.45 per cent on the news, hitting $13.45 in late afternoon trading. (Globe and Mail)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: For Air Canada, buying Air Transat is a way to shore up its dominance over WestJet in the European, Mexican and Central American markets, following private equity giant Onex’s offer to buy Air Transat for $3.5 billion. If Groupe Mach is successful, it will keep Air Transat’s current air offerings while expanding the resort side of the business, alongside Spanish real estate developer TM Grupo Inmobiliario, which has offered to cover the $15-million break fee Air Transat will need to give Air Canada if the two don’t ultimately sign a deal. Whichever deal is ultimately selected will need to get two-thirds approval from shareholders. So far, two Air Transat shareholders—who collectively own about 22 per cent of the firm—have said they oppose the Air Canada offer.

article-aa

Mach is offering $14 per share in cash for the Montreal-based tour operator, $1 per share more than Air Canada’s bid to buy the parent company of Air Transat in May. The offer is worth more than $1 billion, and would give Mach a 75 per cent stake in Transat. Mach is seeking a grant of $120 million from the Quebec government as part of its offer. (La Presse)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Despite posting a $24.5-million loss in 2018, Transat has had a number of suitors, including financial services company FNC Capital and Quebecor CEO Pierre Karl Péladeau. Only details of Mach and Air Canada’s offers have been made public. The interest comes as Transat builds out its network of travel businesses, including hotel chains in vacation destinations, to compete with other discount airlines. Those lodging ambitions align with Mach’s commercial real estate business. Mach said it wants to expand Transat’s hotel business to 12,000 rooms within six years of closing the deal; that’s more than double what Transat currently has planned.

article-aa

The two companies have agreed to negotiate exclusively for the next 30 days. Air Transat employs about 5,000 people and owns 40 planes. If the two companies reach a deal, it will need to be approved by shareholders, and potentially Canada’s Competition Bureau. (Globe and Mail)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The news comes three days after private-equity firm Onex announced it would pay $3.5 billion to buy WestJet. WestJet is trying to lure lucrative business travellers away from Air Canada, while simultaneously competing with growing discount carriers Flair Airlines and Enerjet. This deal would allow Air Canada to add more flights in the lower end of the market, particularly in the lucrative markets of Mexico and Central America, where Air Transat and WestJet both have 22 per cent market share, and Air Canada has 24 per cent. The purchase would also shore up the European market for Air Canada, of which it has a 43 per cent share in, compared to second-place Air Transat’s 20 per cent. WestJet has just six per cent.

article-aa

Despite disruptions caused by the grounding of Boeing’s 737 Max jets, Air Canada posted a quarterly profit Monday which saw its shares rise—up over five per cent at close.. Revenues reached $4.45 billion, up from $4.07 billion in the first quarter of 2018. Analysts were expecting a loss of 18 cents per share and revenue of nearly $4.39 billion, according to Thomson Reuters Eikon analyst estimates. An increase in passengers and the airline’s purchase of the Aeroplan loyalty program were large contributors to the positive quarter. (Reuters, Canadian Press)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The quarterly profit was surprising, given the turmoil many airlines have faced in the grounding of Max jets, of which Air Canada has 24. That’s about 20 per cent of its single-aisle planes; the airline was due to receive another 12 by June. Michael Rousseau, the company’s CFO, said it still faces financial uncertainty over the matter: “The impact on our unit cost is expected to increase the longer the grounding persists, particularly heading towards the busy summer season,” he told The Canadian Press, noting that less fuel-efficient replacement planes and lower seat capacity will hurt Air Canada’s bottom line next quarter.

article-aa

Canada’s largest carrier is telling investors to disregard the rosey financial report it posted in February “in light of current uncertainty” following two deadly plane crashes involving Boeing 737 Max 8 jets within five months. Air Canada is also halting plans to grow its fleet of 24 Max 8 aircrafts to 36 by the end of 2019. The company had predicted that the fuel-efficient jets would have a cost per available seat mile—an important industry metric of efficiency and profitability—11 per cent lower than its other aircraft. Meanwhile, Boeing’s shares bounced back slightly on Friday on news that the company will roll out a fix to the software problem linked to the crashes sooner than expected. (Reuters)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Air Canada is the first major airline to suggest the Boeing groundings will hurt its finances. In an industry with paper-thin profit margins, however, it won’t be the only carrier to readjust its financial outlook for the year. The company did say that the disruption would be “short-term” and is maintaining its outlook for 2021.

article-aa

The airline’s new rewards program will launch in 2020. Aimia used most of its gross proceeds from the sale—approximately $497 million—to repay debt. Around half of its 1,500 employees will move to Air Canada as a result of the deal. TD Bank and CIBC paid Air Canada about $822 million—in addition to an undisclosed payment from Visa Canada; they also made prepayments of $400 million to Aeroplan. The banks and Visa agreed to stay with the program until at least 2030; American Express Canada also signed on for continued participation. (Globe and Mail)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: For Calin Rovinescu, Air Canada’s president and CEO, the reunion confirms that his hardball negotiation with the points program paid off. Prior to the two companies’ initial split in April 2017, Aimia’s market cap was $1.35 billion. The deal marks the end of a tumultuous period for Aimia, whose future was up in the air just last summer. It also means Air Canada will have better access to customer data—Aeroplan currently has about five million members—giving it a chance to compete against Loblaw’s PC Optimum loyalty program, which currently has about 16 million members.