The revised agreement that Air Canada and Transat have just signed provides that the Quebec tour operator must put in place a “workforce reduction plan” before the closing of the transaction, expected by February.
This can be read in clause 4.2 (4) of the arrangement agreement, which was made public on Wednesday in English only. This is a provision that is rarely found in a business acquisition contract.
“We are in a situation that is not usual either, that is to say that we are in a situation where, anyway, layoffs, we think there will be. So for us, this clause […] is not an additional constraint, ”Christophe Hennebelle, vice-president of human resources and public affairs at Transat told the Journal.
Some 2,000 positions at stake
Mr. Hennebelle recalled that last month, the Montreal company indicated that it would probably have to lay off 2,000 workers by the end of the year because of the devastating effects of the coronavirus pandemic on the airline sector. This represents 40% of Transat’s workforce.
“Obviously, the extent of this plan, that is to say the precise number of layoffs, will depend on the situation when we are going to do it, but it is certain that today, there is no there is no scenario where there are no layoffs, unfortunately, ”said Christophe Hennebelle.
He assured that Air Canada had not exerted pressure for Transat to prepare a plan to lay off 2,000 workers.
“It’s a decision by Transat, absolutely,” he insisted.
Already laid off
It should be noted that most of the 2,000 positions that risk being permanently eliminated are occupied by employees who have already been laid off. Two-thirds of Transat’s workforce is currently unemployed.
Air Canada did not respond to a Journal request for information about the new arrangement agreement.
The latter also provides that Transat must regularly inform Air Canada of its level of indebtedness. Remember that Air Canada has just given permission to Transat to borrow up to $ 250 million to replenish its coffers, which the crisis has seriously stripped.
Under the new agreement, Transat shareholders will receive $ 5 per share, for a total of $ 190 million. In the agreement reached last year, before the pandemic, it was about $ 18 per share, or $ 720 million in all.
Mr. Hennebelle maintained that despite the difficult circumstances, the transaction remained the best avenue for Transat employees.
“We believe – and this is one of the reasons we entered into the transaction – that the long-term employment prospects are better with a transaction than without a transaction,” he said. But in the short term, it will involve layoffs.