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Thursday, 26 January 2012

This move means Transat will have two-thirds of the market share in QC
André Désiront

Jean-Marc Eustache, president & CEO, Transat A.T. Inc
Anna Malito, president & general manager, Tours Mont-Royal

In a statement released this morning, Transat A.T. Inc has confirmed its acquisition of Vacances Tours Mont-Royal (TMR), a move that had for some time been suspected as reported in our Tuesday edition.

The acquisition will be effective as of Feb. 1, 2012.

Anna Malito, who was previously the vice president, strategy and development — product at Transat, will assume the role of president and general manager, Tours Mont-Royal.

The statement says that Transat sells 180,000 seats per year to Tours Mont-Royal, but makes no mention of the purchase price, stating "details of the transaction are confidential."

But, they may not be that way long, since Transat is a public company hence required to disclose details of any major acquisition. Nevertheless, the statement indicates that TMR has 80 employees based in Montreal and nearly 50 at its destinations.

Transat’s market share exceeds 60%

Yvon Michel, Tours Mont-Royal

This acquisition puts the issue of market share in the spotlight. According to our calculations, the duo formed by Transat Tours and Tours Mont-Royal will sell nearly 700,000 seats to sun destinations departing from Quebec during the winter, which is more than 60 per cent of all sun packages marketed in the province.

The turnover of Transat would amount to nearly $4 billion after the inclusion of Tours Mont-Royal, which reports annuals sales revenue to be approximately $280 million.

Here, after weighing the estimates of some observers, we estimate how to allocate the seats currently sold this winter by each of the major players selling sun destinations:

Transat: between 450,000 and 550,000 seats (sold under the Transat Holidays and Nolitours).

Tours Mont-Royal: between 150,000 and 160,000 seats.

Sunwing: between 250,000 and 300,000 seats (sold under the Sunwing Vacations and Signature Vacations).

Air Canada Vacations: between 40,000 and 60,000 seats.

Thomas Cook: 25,000 seats (sold under the Sunquest brand).

Caribe Sol: 36,000 seats.

WestJet Vacations: 10,000 seats? (although this is a great unknown, since WestJet Vacations is new to the Quebec market).

This gives a total of between 961,000 and 1,141,000 seats. With an inventory of between 600,000 and 710,000 seats, the market share Transat would amount to 63 per cent. The only competitor who holds a position of strength is Sunwing, although its market share amounts to less than half of Transat’s.

On its website, Tours Mont-Royal reports a annual turnover of $280 million. Transat totaled $3.658 billion for the 2011 fiscal year.

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