March 27, 2020 / 10:19 PM / 3 months ago

UPDATE 1-Air Canada-Transat deal to likely reduce competition - Canadian agency

(Adds response from Transat and Air Canada, detail on lay offs by the companies)

March 27 (Reuters) - Air Canada’s proposed C$720 million acquisition of tour operator Transat A.T. Inc will result in a substantial lessening or prevention of competition, the Canadian Competition Bureau said on Friday.

The deal would result in increased prices, less choice, decreases in service and a significant reduction in travel on routes where their existing networks overlap, the agency said here

Transat AT shareholders in August overwhelmingly voted in favor of Air Canada’s bid for the leisure group after the country’s largest carrier sweetened its bid.

Transat, which runs leisure carrier Air Transat, remained confident of the deal with Air Canada, saying one must “not draw any direct conclusions from (the bureau’s report) with regard to the final decision.”

Air Canada in an emailed statement said it would review the report in due course and that its current priority was its employees, customers and implementing cost savings to conserve cash during the coronavirus outbreak.

Air Canada and Transat have recently laid off thousands of workers on dwindling demand for flights because of the global coronavirus outbreak.

Reporting by Nishara Karuvalli Pathikkal in Bengaluru; Editing by Ramakrishnan M. And Sriraj Kalluvila

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