Air Canada has concluded a cut price deal to acquire Air Transat.

The flag-carrier will now acquire all shares in the smaller airline for C$5 each, payable to shareholders in cash or shares of Air Canada at a fixed exchange ratio of 0.2862 for each Transat share.

The value of the transaction is approximately C$190 million.

However, this is sharply down from the originally-agreed offer, approved by Transat shareholders more than a year ago.

The amended transaction reflects the unprecedented impact of Covid-19 upon the global air transport industry, which has endured a severe decline in air travel since the initial agreement.

The transaction remains subject to shareholder approval, court approval and the approval of the Toronto Stock Exchange, aa well as certain other conditions.

Regulatory approvals, including the ongoing process of regulatory authorities in Canada and the European Union, will also need to be completed.

If such approvals are obtained and the conditions are met, the transaction is expected to be completed in late January or early February.

“Covid-19 has had a devastating effect on the global airline industry, with a material impact on the value of airlines and aviation assets.

“Nonetheless, Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms,” said Calin Rovinescu, chief executive of Air Canada. 

“This combination will provide stability for Transat’s operations and its stakeholders and will position Air Canada, and indeed the Canadian aviation industry, to emerge more strongly as we enter the post-Covid-19 world.”