Air Canada is in talks to acquire Quebec-based travel business Transat and its carrier Air Transat in a deal worth C$520 million (€345 million).

Transat and Air Canada revealed they have entered a tentative agreement and agreed a 30-day period of exclusive negotiations, with Air Canada signing a letter of intent to purchase its rival.

The deal is subject to agreement on the final terms and to shareholder and regulatory approval.

Transat announced it was seeking a buyer at the start of this month.

Air Canada president and chief executive Calin Rovenescu said: “The acquisition presents a unique opportunity to compete with the very best in the world when it comes to leisure travel.

Montreal-based Air Transat, originally a charter carrier for tour operator Transat, is now chiefly a scheduled operation. It carried five million passengers last year, flying to 60 destinations in 25 countries.

Transat chief executive Jean-Marc Eustache said a deal with Air Canada represented the best prospect for maintaining jobs at the company.

Air Transat operates flights from London Gatwick to Toronto, Montreal, Vancouver and Calgary.

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