Air Transat (TS, Montréal Trudeau) parent Transat A.T. will lay off around 2,000 employees, 40% of its total staff, after having posted a 99% drop in revenues for the quarter ended July 31, 2020.
Speaking during a quarterly investor call, Chief Executive Jean-Marc Eustache indicated that the layoffs would come into effect after December 19, 2020, when the Canadian federal wage subsidisation programme is scheduled to expire, subject to the improvement in the market environment until that time.
The Canadian tour operating and airline group said that it would seek additional financing to bolster its cash position, which amounted to CAD576.4 million Canadian dollars (USD437.5 million) at the end of July 2020. Air Transat said it was in "advanced discussions to set up additional financing", without going into details about the terms and the type of financing. It did, however, warn that the ongoing takeover by Air Canada (AC, Montréal Trudeau) could jeopardise the transaction.
"The covenants undertaken under the arrangement agreement with Air Canada restrict and govern the Corporation's capacity to obtain additional sources of financing and may require Air Canada's prior consent. Although the agreement provides that Air Canada's consent may not be unreasonably withheld, there is no certainty that Air Canada will consent to the obtaining of additional sources of financing by the Corporation," Transat said.
Regarding the takeover, Transat said that it still had no decisions from either the Canadian or the European Union authorities. The deadline for obtaining necessary regulatory approvals can be extended up to December 27, 2020, while the EU authorities set their deadline for a decision on December 11, 2020. The Canadian investigation is expected to conclude soon, although no firm deadline has been announced.
