Transat warns of ability to remain ‘going concern’, eyes Air Canada lifeline

Transat AT, owner of Canadian leisure carrier Air Transat, has warned investors about its ability to remain in business “as a going concern” if a planned acquisition by Air Canada falls through. “At October 31, 2020, there exists material uncertainty that may cast significant doubt on the corporation’s ability to continue as a going concern,” Transat said Monday. The warning came as Transat reports losing C$238m in Q4 of its 2020 fiscal year, which ended on 31 October. Montreal-based Transat lost C$497m in the full fiscal year. The company’s liabilities exceeded assets by C$163m on 31 October, and it held cash and cash equivalents valued at C$426m. “Our results reflect Covid-19’s devastating impact across the travel industry,” Transat CE Jean-Marc Eustache said. “The upcoming completion of the transaction with Air Canada should give us the solidity to face the crisis and capitalise on the recovery.” Due to the pandemic’s effect on travel demand, Transat suspended Air Transat’s operation entirely from 1 April to 22 July. The company recently secured up to C$250m in new short-term financing, and lenders have agreed to suspend some finance-related requirements tied to Transat’s debt. However, if lenders do not extend those suspensions beyond a 30 January 2021 expiration, Transat “could be in default of its obligations”, it warns. Transat continues working to close its planned acquisition with Air Canada. Due to the Covid-19 pandemic, Air Canada in August secured a huge discount. The deal now calls for Air Canada to buy Transat for C$190m, down 74% from about C$720m.<br/>