AC and TRZ Agree to Terminate Arrangement

[LittleNelly]

Whatever the Transat CEO says is meaningless, he is not the acquiring executive. The only comments that matter is that from Air Canada. Which has been silent during the whole period on the deal.

So far this is what we know of Air Canada’s position: ‘Air Canada said its priority for the moment is to cut costs, conserve liquidity and safeguard employees and passengers. “Given the unprecedented impact of the COVID-19 crisis on the airline industry and the state of emergency worldwide, we will consider the findings of the Competition Bureau in due course,” the airline said.’

[montado]

I think merger makes sense more now than ever with covid going on. Rouge will be eliminated. Even at 18 a share Transat is a bargain. The writing in on the wall with rouge. Definitely see Transat shares taking off because investors know this deal will happen.

[tsgas]

I think merger makes sense more now than ever with covid going on. Rouge will be eliminated. Even at 18 a share Transat is a bargain. The writing in on the wall with rouge. Definitely see Transat shares taking off because investors know this deal will happen.

If it is such a bargain , than why isn't the smart money buying up the shares ?

[Victory]

There is no way Air Canada is in a financial position to buy another airline for nearly a billion dollars at this time. Even if they were the optics of dishing out that kind of cash while laying off a big chunk of your employees would be terrible. Perhaps in a couple years when things are returning to normal they'd be willing to look at it again. Right now they don't need the airplanes, they don't need the pilots, and Transat is not competition since they're not even operating.

Shuttering Rouge is not a signal of some secret plan to replace it with Transat. They simply have zero vacation travellers right now and don't plan on having any for a long while.

[flyinhigh]

Same could be said about any other stock right now. People focus on the stock price so much that when EVERY stock has plummeted they don’t look at the market for what it is, only the individual one they want.

If it is such a bargain , than why isn't the smart money buying up the shares ?

[tsgas]

Same could be said about any other stock right now. People focus on the stock price so much that when EVERY stock has plummeted they don’t look at the market for what it is, only the individual one they want.

If it is such a bargain , than why isn't the smart money buying up the shares ?

The take our price is fixed at $18.00 , which is not the case of other shares in the general market. If the market believed that the deal was a sure thing it would be reflected in the share price.

[Captnflex]

A possible solution a buyout without any cash by simply a stock/shares exchange.
For example AC 16.75 TRZ 9.49 simply exchange the stock in the same proportion 1 TRZ= 9.49/16.75 AC= 0.566AC
Yes it is less than the original offer and would require anothe vote from the TRZ shareholders but at no cash expenditure from AC.
I am sure the big wheels a looking at different scenarios.
Anybody remember how AC bought (pay for) CP?

[Fanblade]

Anybody remember how AC bought (pay for) CP?

92 million Dec 1999. Today’s dollars 145 million.

Deal consummated Oct 2000

Layoffs of the integrated group began Dec 2000.

911 Sept 2001

SARS 2002

Bankruptcy 2003.

Air Canada employees took the brunt of layoffs as they were the most junior.

READ THE BOLD BELOW.

https://en.m.wikipedia.org/wiki/Canadian_Airlines

On December 4, 1999, the board of directors at Canadian Airlines recommended the $92M offer from Air Canada to the shareholders. The offer from Air Canada originally expired at 5pm on December 7, 1999, but Air Canada extended their offer until December 23, 1999. Air Canada officially took control of Canadian Airlines, pending government approval, on December 8, 1999. The Federal Competition Bureau cleared the way for the takeover on December 21, 1999 and Canadian Airlines officially became a subsidiary of Air Canada on December 23, 1999.

Canadian Airlines operated as a subsidiary company through most of 2000. In October 2000, all of Canadian Airlines' systems and employees became fully integrated. WIth both companies fully integrated, Air Canada began massive cuts to employees starting with the announcement that there would be 3500 cuts in the workforce on December 22, 2000. September 26, 2001 saw an additional 5000 cuts primarily driven from the worldwide impact to the travel sector caused by the 9/11 attacks.

[Gilles Hudicourt]

Someone already posted a link about the report, but it was the link to an article, that contained a link to a press release, that itself contained a link to the report.

Here is a direct link

https://www.competitionbureau.gc.ca/eic ... 04522.html

[aerodude]

Anybody remember how AC bought (pay for) CP?

92 million Dec 1999. Today’s dollars 145 million.

Deal consummated Oct 2000

Layoffs of the integrated group began Dec 2000.

911 Sept 2001

SARS 2002

Bankruptcy 2003.

Air Canada employees took the brunt of layoffs as they were the most junior.

READ THE BOLD BELOW.

https://en.m.wikipedia.org/wiki/Canadian_Airlines

On December 4, 1999, the board of directors at Canadian Airlines recommended the $92M offer from Air Canada to the shareholders. The offer from Air Canada originally expired at 5pm on December 7, 1999, but Air Canada extended their offer until December 23, 1999. Air Canada officially took control of Canadian Airlines, pending government approval, on December 8, 1999. The Federal Competition Bureau cleared the way for the takeover on December 21, 1999 and Canadian Airlines officially became a subsidiary of Air Canada on December 23, 1999.

Canadian Airlines operated as a subsidiary company through most of 2000. In October 2000, all of Canadian Airlines' systems and employees became fully integrated. WIth both companies fully integrated, Air Canada began massive cuts to employees starting with the announcement that there would be 3500 cuts in the workforce on December 22, 2000. September 26, 2001 saw an additional 5000 cuts primarily driven from the worldwide impact to the travel sector caused by the 9/11 attacks.

Shareholders don't really care about employee cuts to be honest. TRZ's value is lower CASM than mainline.

After the merge, it would be a great way to unload expensive flying on a seperate OC.
I think CR still wants this, not only will they take a huge market share, this is probably the once in a generation opportunity to allow a merge with great flexibility considering employees dont have much of a say in a crisis like this.

[Fanblade]

Anybody remember how AC bought (pay for) CP?

92 million Dec 1999. Today’s dollars 145 million.

Deal consummated Oct 2000

Layoffs of the integrated group began Dec 2000.

911 Sept 2001

SARS 2002

Bankruptcy 2003.

Air Canada employees took the brunt of layoffs as they were the most junior.

READ THE BOLD BELOW.

https://en.m.wikipedia.org/wiki/Canadian_Airlines

On December 4, 1999, the board of directors at Canadian Airlines recommended the $92M offer from Air Canada to the shareholders. The offer from Air Canada originally expired at 5pm on December 7, 1999, but Air Canada extended their offer until December 23, 1999. Air Canada officially took control of Canadian Airlines, pending government approval, on December 8, 1999. The Federal Competition Bureau cleared the way for the takeover on December 21, 1999 and Canadian Airlines officially became a subsidiary of Air Canada on December 23, 1999.

Canadian Airlines operated as a subsidiary company through most of 2000. In October 2000, all of Canadian Airlines' systems and employees became fully integrated. WIth both companies fully integrated, Air Canada began massive cuts to employees starting with the announcement that there would be 3500 cuts in the workforce on December 22, 2000. September 26, 2001 saw an additional 5000 cuts primarily driven from the worldwide impact to the travel sector caused by the 9/11 attacks.

Shareholders don't really care about employee cuts to be honest. TRZ's value is lower CASM than mainline.

After the merge, it would be a great way to unload expensive flying on a seperate OC.
I think CR still wants this, not only will they take a huge market share, this is probably the once in a generation opportunity to allow a merge with great flexibility considering employees dont have much of a say in a crisis like this.

So your advocating that the brunt of furloughs get transferred to AC employees?

This rings similar to 20 years ago.

[aerodude]

So your advocating that the brunt of furloughs get transferred to AC employees?

This rings similar to 20 years ago.

Im not advocating anything. Im just stating the facts that will happen.
Air travel has been wiped out and wont recover for 1-2 years, layoffs are going to happen regardless and consolidation will have to occur. Yes, some employees will luck out with this merge but that's life.
Maybe AC can negociate a lower share price (that could explain the lower share price of TRZ)

[WhatThe?]

Transat will go to AC as a "bankrupt or merge" situation. The share price will be negated by the debt. The Quebec government and Princess Justine Trudeau will force AC to absorb AT to save jobs in Quebec.
My 2cents

[altiplano]

It will just be shuffling the EI applicants from one company to another... there is no saving jobs here with a merger, not in any department and especially not now.

The total staff needed at AC, whether combined with AT or not, in 6 months will be less than it was at AC alone when this deal was made, let alone total staffing at AC & AT. I'm not just talking FOPS, but every department.

The government knows there are too many moving parts for it to meddle and will stay out of pressuring AC with the dive the industry is in, lest they take them both down. AC will come out of this on its own with 7.5 billion cash plus LOCs and other liquidity. If it has to take on a closed down airline with no revue or bookings and a non-existent summer travel season ahead? Survival becomes questionable. Perhaps the Quebec government will bail out Transat and they will redo the deal when the fallout from covid settles.

[montado]

I think merger makes sense more now than ever with covid going on. Rouge will be eliminated. Even at 18 a share Transat is a bargain. The writing in on the wall with rouge. Definitely see Transat shares taking off because investors know this deal will happen.

If it is such a bargain , than why isn't the smart money buying up the shares ?

Actually lots of smart money right now is buying up gold. There are some smart investor's who are protecting their portfolio for a chance of a complete collapse of the US economy. If we go into negative interest rates the US dollar is going to become worth less and less and inflation will skyrocket.

Of course this sounds like fear mongering. If I told you air Canada would be laying off pilots 2 months ago I would have been laughed at and called crazy. So call me crazy and wait and see a few months.

[Fanblade]

The Quebec government and Princess Justine Trudeau will force AC to absorb AT to save jobs in Quebec.

Most of the redundancy will be in Quebec. I don’t think Quebec jobs will sway this issue. In fact with the Covid turn of events, if you want to preserve Quebec jobs, this merger is the wrong avenue. Shocking what a few weeks has done.

I do think that the Quebec government will do whatever it takes for Transat though. Probably an equity stake like BBD.

If you sell your house, but it burns down prior to completion, there is no sale.

[Fanblade]

So your advocating that the brunt of furloughs get transferred to AC employees?

This rings similar to 20 years ago.

Im not advocating anything. Im just stating the facts that will happen.
Air travel has been wiped out and wont recover for 1-2 years, layoffs are going to happen regardless and consolidation will have to occur. Yes, some employees will luck out with this merge but that's life.
Maybe AC can negociate a lower share price (that could explain the lower share price of TRZ)

I think the world has just changed far more than you realize. Leisure travel is DOA for at least the next year and a half. The unemployment rate is going to spike. Alberta is estimating 10% now. Airlines are the first hurt and last to recover.

I would say at this moment, and moving forward for the next year or two, Air Canada on its own has over 10,000 redundant positions. Maybe more.

No one spends money in this environment. No one takes on extra liability.

[FL320]

If you sell your house, but it burns down prior to completion, there is no sale.

Except if you have specified in the contract that this situation would no prevent the sale. This is the case in this transaction, it would not cost 40 millions but way more to cancel the contract.

[RippleRock]

You'd think the Quebec government would stop meddling in a private Aviation sector after Bombardiers billions, but they won't. Federal assistance will be had by all airlines, however, I guarantee you politicians are on the phone with AC using Quebec taxpayer $$$ or coercion to patch this deal up.

[Fanblade]

Guys,

Who knows what future decisions are being made. But I don’t think either of you are seeing the gravity of the current crisis. This situation is now way beyond a transaction. Maybe sometime in the future. But not now.

Everyone is running for cover and reassess after. The government is in all out crisis mode. They can’t even think straight right now. The Transat/Sunwing/Porter issue will be put on the back burner to be sorted out later. Throw money at it and deal with it later.

After, when the lay of the land can be assessed, then there will be tough decisions for the government and airlines to make.

A hasty decision right now could trigger AC/Transat to hunker down even harder. Two Quebec companies hunkering down harder. Really?

Nope, throw money at it and sort it out later.