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Air Transat and an Air Canada aircrafts are seen on the tarmac at Montreal-Trudeau International Airport in Montreal, on April 8, 2020. Transat AT has reconfirmed its unanimous support for its proposed acquisition by Air Canada while issuing a clarification about a proposal from telecom owner Pierre Karl Peladeau.Paul Chiasson/The Canadian Press

Transat AT Inc.’s largest shareholder says he will not sell his shares at the price offered by Pierre Karl Péladeau, and the airline should be able to go it alone if it receives government financing.

Peter Letko, vice-president of Letko Brosseau and Associates, said he supports the Montreal-based airline’s plan to seek $500-million in loans and to operate independently rather than sell at a reduced price.

Last Friday, Air Canada and Transat said they agreed to abandon Air Canada’s $180-million takeover bid, citing insurmountable demands from the European Commission’s antitrust regulator.

Transat has taken steps to dispel doubts about its future, saying it will hold talks with Mr. Péladeau, who has offered $5 a share for the tour operator. Transat is in discussions with lenders to extend an April 29 debt deadline. And negotiations with the federal government for loans totaling $500-million are at an “advanced” stage, said Christophe Hennebelle, a Transat spokesman.

Air Canada’s offer was for cash and stock in the company, which made it more attractive, Mr. Letko said. He added that Mr. Péladeau’s offer would amount to “giving the company away.”

“We would not sell our shares at this price,” Mr. Letko said from Montreal.

Letko Brosseau owns about 13 per cent of Transat’s shares and is also an Air Canada investor. Transat’s share price fell by 4 per cent to $4.51 on the Toronto Stock Exchange on Tuesday.

A spokeswoman for Mr. Péladeau did not immediately respond to a request for comment.

Mr. Letko said he has confidence in Transat’s management and future, and believes demand for leisure travel will return when COVID-19 vaccinations have been widely administered and government quarantine restrictions are eased. “The company has a very nice franchise,” he said. “People will fly again.”

Air Canada and Transat announced the deal in June, 2019, but the price was reduced from $720-million, or $18 a share, in October, 2020. The takeover received approval from the Canadian government, but was awaiting the okay from the European Commission when the airlines called it off.

Transat is seeking loans from two federal government programs, the sector-specific aid expected to be announced shortly, and the large-employer loan program unveiled last year. The province of Quebec could also provide assistance, Mr. Letko said.

He added that he would support other ways of bolstering the company’s finances, including purchasing new shares, and allowing the government to own equity.

Before Transat shareholders voted for the first Air Canada offer in 2019, other bidders were circling. One of those, FNC Capital’s Dominik Pigeon, said on Tuesday he had no interest in making an offer. “Things have changed,” he said.

The other would-be bidder was Montreal’s Groupe Mach Inc. Alfred Buggé, a Mach executive, declined to comment on the company’s plans.

Mr. Hennebelle said Transat’s options include operating stand-alone, negotiating with Mr. Péladeau, and other plans he declined to name. “Everything’s possible, of course,” he said.

The airline suspended all flights in late January and has said it will resume flying in June. Transat halted operations for four months in 2020 as the pandemic weakened demand for travel. Most of its 5,000 employees have been laid off. The company posted a loss of $60-million in the latest quarter.

Transat has a credit facility worth $250-million and has said it will require more to enable it to be prepared for the resumption of operations.

Mr. Hennebelle said the company could tap the sectoral aid to repay customer credits, which were worth $519-million on Jan. 31. Forty-four per cent of this amount is held in trust owing to the different provincial laws on the sale of tour packages.

Ottawa has said any aid to airlines would come with the requirement that consumers receive refunds for tickets cancelled in the pandemic.

With the exception of WestJet Airlines Ltd., carriers have refused to provide refunds. Air Canada has said it would require government aid to do so. And WestJet’s refund policy does not extend to tickets that customers cancelled.

Pierre Fitzgibbon, Quebec’s Economy Minister, said at a news conference that Transat has drawn the interest of investors other than Mr. Péladeau but did not name them.

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