Air Canada has announced that it has entered into an exclusive agreement to acquire all outstanding shares of Transat AT, parent company of low-cost carrier Air Transat.

The transaction is valued at CAD$520 million (nearly £300 million) and Air Canada says it will create a Montreal-based global travel services company in leisure, tourism and travel distribution.

Air Canada CEO Calin Rovinescu said the acquisition “represents a great opportunity for stakeholders of both companies”. He added: “This includes the shareholders of both Transat and Air Canada, employees of both companies, who will benefit from increased job security and growth prospects, and Canadian travellers, who will benefit from the merged company’s enhanced ability to participate as a leader in the highly competitive leisure travel market globally.

“The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel. It will also allow us to further grow our hub at Montreal-Trudeau airport, where we have added 35 new routes since 2012 to the benefit of the Montreal and Quebec communities, and from which we carried 10 million customers in 2018 alone.”

Air Transat has made moves to appeal to business travellers in recent months, launching special fares for SMEs on routes between the UK and Canada.

The airline also announced plans to add its new Airbus A321neoLR aircraft to its transatlantic flights from Gatwick, Glasgow and Manchester later this year. The plane will feature the carrier’s Club Class (premium economy) product, as well as 187 economy seats.

Jean-Marc Eustache, president and CEO of Transat AT, said: “This announcement is good news for Transat. This is an opportunity to team up with a great company that knows and understands our industry and has had undisputable success in the travel business. This represents the best prospect for not only maintaining, but growing over the long term the business and jobs that Transat has been developing in Quebec and elsewhere for more than 30 years.”

Transat says customers can continue to book Air Transat flights as normal in the meantime.

The acquisition is subject to regulatory approval. There is no estimate as to when the transaction might be completed.;

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