Transat Stock: Should You Buy/Sell/Hold?

Transat A.T. Inc. is an international tourism and travel company that has its headquarters in Montreal, Canada. The company was established in 1987 and it has grown to become big enough to offer travel and tourism packages to 60 destinations across 25 countries in Europe, North America and South America. The company develops and markets holiday travel services in packages, including air travel and hotel stays and air-only formats. Transat is also famous for being an outgoing tour operator to purchase various components of a trip. This process is carried out across Canada and abroad. It’s done through tie ups with travel agencies, or through the Web. Transat is also involved in the retail distribution activities. It also provides a lot of advice to travellers who are travelling to areas unknown to them. Transat is also a provider of value added services at different destinations, along with full fledged air transportation services. Some of the destination services offered by Transat include hospitality and representation, passenger transfers, excursions, tours, sports and other activities; and specialty services, including destination weddings, teambuilding, etc. The firm operates in Canada, France and the UK with the Transat and Air Transat brands. Let’s find out a little more about its stock.

Transat Stock: Key things to know

Is Air Transat publicly traded?

Transat A.T. Inc. is an international, vertically integrated tour operator.. It has a presence in more than 20 countries. It is listed for trading on the Toronto Stock Exchange. 

What is the Transat stock symbol?

Transat is a Canadian stock which trades on the Toronto Stock Exchange with the symbol TRZ-T.

Should you buy Transat stock?

In 2020, the opinion of stock analysts over the Transat stock was split between buy and sell. As per the current stock analyst recommendation, it’d be better to sell Transat stock right now. The company’s average rating score is 1.20, and is based on no buy ratings, 1 hold rating, and 4 sell ratings.

What is Transat AT Inc. stock price?

As of 25th May, 4:00 PM GMT-4, Transat AT Inc. (TRZ-T) stock closed at a price of $5.09, which was a 2.3% drop from the previous day.

What happened to the Transat-Air Canada Deal?

The first announcement of the fact that Air Canada and Transat were in acquisition talks came out on May 16th, 2019. Air Canada offered to buy the firm for $13 per share. Group Mach proposed a price of $14.

The talks seemingly reached a conclusive phase on 27th June 2019. The Board of Transat AT accepted Air Canada’s all-cash bid of C$520 million. The firm refused to comment on the C$527.6 proposal from Group Mach because the talks with Air Canada were still exclusive. In order for the deal to go through, it needed to get an approval of two-thirds of shareholders. Along with a few major investors and financial analysts, the offer was lower than the company’s actual value.CBC News reported that “regulatory approvals are no sure thing”. Even if Air Canada purchased Air Transat, the latter would’ve continued to operate separately. In late August 2019, 94.77% of shareholders voted in favour of accepting Air Canada’s final offer of $18-per-share, a $720 million deal. However, according to CBC News, “the plan was expected to face intense scrutiny from the Competition Bureau and other regulatory authorities, including in Europe”.

In October 2020, Transat AT’s sale price was slashed from $18 to $5 per share. The deal was expected to be closed during the first few months of 2021. However, the acquisition was mutually terminated by the parties involved after the European Commission refused to approve it.

What happened to Transat stocks after the $700 million government bailout?

Transat AT Inc., the Montreal-based vacation operator which had been struggling massively in the wake of the COVID lockdown heaved a huge sigh of relief as the Canadian government bailed it out with a generous stimulus package of $700 million.

Transat received loans of $390 million for operations and another $310 million to finance customer refunds. A lot of trips and flights were cancelled because of flight and travel restrictions across the globe. Transat has also announced that it will be issuing 13 million warrants to the government to buy shares at $4.50 each.

After the news of the government bailout became public, Transat shares steadily rose up by as high as 13 per cent in Toronto, before levelling out. They ended the day at a cumulative gain of 4.4%.

Just a fortnight ago, the Canadian government had bailed Air Canada out with a stimulus package of $5.9 billion. Prime Minister Justin Trudeau has chosen to go case-by-case in his quest to save the Canadian economy. 

All Transat flights had been cancelled on January 29th and the bailout is expected to help the firm survive until widespread vaccination drives alleviate the COVID crisis and provide at least a portion of the summer travel season.

“With this support, we now look forward to resuming operations as soon as safe travel is possible and travel restrictions can be lifted,” Chief Executive Officer Jean-Marc Eustache said in a statement. “We will then be able to implement our plan to make Transat a solid and profitable company once again, one that will continue to symbolize leisure travel for its many customers in Quebec and elsewhere.”

There is one key difference between the Air Canada bailout and the Air Transat bailout, the government isn’t buying Transat’s shares right away. According to Transat Chief Financial Officer Denis Petrin, it wasn’t even a part of the negotiations. But the warrants may still mean dilution of as much as 25 per cent for existing shareholders.

The government won’t receive all the warrants at once. They’ll vest as the company draws down the loans. If Transat’s business picks up and the firm is able to repay the full money within one year, half of the warrants will be annulled. 

Transat is seeking to further bolster its borrowing costs and plans to seek help from the Quebec government as well. The Quebec government was waiting for federal aid before pitching in.

Will Air Transat survive?

Yes, especially after the $700 million bailout from the Canadian Government, Air Transat should be able to stay afloat and perhaps even thrive in the future.

Has Air Transat been sold?

No, the Air Transat-Air Canada merger has been cancelled. Both the parties mutually agreed to termination of the deal. When it was first announced in June 2019, Air Canada was poised to take over Air Transat for $520 million.

Is Transat stock a good investment?

Transat stock has been recommended as a good investment by many analysts.

Is Transat stock worth watching?

Yes, the Transat stock is definitely a stock that is worth watching.

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