After a failed takeover, Air Transat is seeking help as debt crunch is imminent

Ottawa / Montreal — Struggling tour operator Air Transat is discussing aid with the federal government, but close-knit sources say Quebec may not reach an agreement by April’s debt deadline. A state aerospace brand that is putting pressure on the rescue of people with other problems.

Air Canada said it withdrew its plans to merge with Transat on Friday, suggesting that European regulators were unlikely to pass antitrust concerns.

Canada’s largest airline first bid on Transat in 2019 and discounted its offer last year as the pandemic drastically reduced the travel and tourism sector.

The airline has been discussing the possibility of aid packages with Ottawa since last year. Transat’s abandoned deal adds new urgency to the negotiations given the work at risk in the event of a career failure and the political importance of Quebec ahead of the expected federal elections this year. I will.

Transat, which suspended flights until June due to pandemic guidelines last month, said it needed to raise at least $ 500 million this year.

We have a $ 50 million turnover facility on April 29 and a short-term loan debt of $ 250 million that matures on June 30. Creditors can accelerate their repayment obligations if they do not meet the requirements of April 29 or if they obtain another extension.

A source close to the situation referred to the federal budget scheduled for April 19, “negotiations are underway, the budget is approaching, and there is no guarantee that it will reach it before the budget at this time.” Said.

“I think it’s politically a problem in Quebec, so the federal government must come up with a solution,” the source added, “Transat has more retreats in Quebec (than Air Canada). I have it. “

Both airlines are based in Montreal, but Air Canada was founded in Winnipeg before relocating its headquarters to Quebec in the 1940s. Founded in 1986 by a group of Quebec businessmen, including the current Prime Minister of the state, Transat has grown to become the third largest airline in the country.

The airline was “confident that it would have the necessary funding in the coming weeks,” spokesman Christoph Hennebel said on April 4 in a discussion with Ottawa on access to sector aid and certain pandemic aid. He reiterated that he was in the “advanced stage”. To the company.

A spokeswoman for Canada’s Finance Minister was asked about the status of government talks with Transat, saying: As a private sector, they are in the best position to answer. “

Ottawa said on April 2 that protecting employment and ensuring the long-term viability of Transat were government priorities. The airline employs 5,000 people, mainly in Quebec, where much of Canada’s aerospace sector is based.

“Collective interest”

The survival of Transat, its Montreal headquarters, and its employees is putting great pressure on the Quebec government to secure its future.

Quebec has previously come to support aerospace companies that are struggling. In 2015, the former state government invested US $ 1 billion in the Bombardier CSeries program, which was struggling at the time. Two years later, Airbus paid Bombardier $ 1 to manage the commercial jet program.

John Gradeck, a former airline executive and program coordinator for McGill University’s air traffic control program, said:

“There will be a lot of pressure [Premier Francois] Coming lego [Quebec businessman] Financial assistance from Pierre Karl Perado. “

Perado, who offered to buy Transat for $ 5 a share, said on April 2 his offer was still available. Transat had previously stated that the bids lacked the necessary levels of funding.

In a statement, Quebecor Inc. CEO Péladeau said in his proposal, “A rigorous business plan focused on the areas of high-growth companies, expertise and job creation in Quebecor. “It includes an ongoing Montreal headquarters.”

Another source familiar with the matter said the Péladeau offer did not seek funding from the Quebec government and was considering a Transat scenario “with or without Air Canada” in February. ..

A spokesman for Quebec’s Minister of Economy declined to comment on April 4.

Separatist Bloc Québécois said he wanted Quebec’s ownership to be in the airline’s favor and accused Ottawa of delaying the air aid package when it approved the merger in February.

“Air Transat is the flagship of the Quebec people while providing a career in the aviation industry in the French-speaking world,” BQ transport critic Xavier Barsalou-Duval said in a statement.

“It is in our collective interest that the decision center and its control remain in Quebec.”

By David Ljunggren and Allison Lampert