Air Canada says it will go ahead with its plan to buy smaller rival Air Transat, but it will pay more than 70 per cent less than it first agreed to.
The two companies said in a release over the weekend that Air Canada will buy all outstanding shares in Transat for $5 a piece, for a total purchase price of $180 million.
But that was before the COVID-19 pandemic walloped demand for air travel, sending valuations for airlines plummeting.
“COVID-19 has had a devastating effect on the global airline industry, with a material impact on the value of airlines and aviation assets,” Air Canada CEO Calin Rovinescu said.
“Nonetheless, Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms.”
The press release made no mention as to whether or not the new purchase price is acceptable to some major Transat shareholders, including the Quebec pension plan known as The Caisse, and money managers Letko, Brosseau and Associates, which owns about one fifth of Transat’s shares.
Those investors were believed to have been a major roadblock to the original plan, until Air Canada upped their offer to make it worth their while.
Requests for comment to those stakeholders as to whether or not they support the new plan were not immediately returned.
Shares move higher on news
The reassurance from Air Canada gave some support to Transat shares, which have been selling off sharply on fears that the takeover would be scrapped entirely.
Anlayst Tim James at TD Bank says Air Canada must have been losing the motivation to go through with the deal, until Transat agreed to the lower price.
“We believe that the size of the price revision indicates that Transat could be in a weaker financial condition than anticipated, or that Air Canada was content to let the deal expire, or a combination of both, leading to a willingness by Transat to accept such a large price adjustment,” he said.
But Krista Friesen, Jessica Zhang and Kevin Chiang with CIBC said at the new price, the deal could turn out to be a win for both sides.
“We do see an opportunity for Air Canada to come out of this in a stronger position given its leading market share, the strength of its balance sheet heading into this crisis, its cost-cutting initiatives and its operational adjustments,” they said.
“All these factors should allow it to recover faster than its domestic peers. As such, having the option to convert their [Transat] share for AC shares should be viewed positively by [Transat] shareholders looking to partake in the airline recovery.”
Transat shares gained almost $1 on the TSX to change hands at $4.77. Last summer, they traded above $16 a share.
Despite the assurances from the two companies, the deal is still far from certain.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
