TORONTO: Air Canada has called off its planned takeover of tour operator Transat over EU regulatory hurdles, they announced on Friday 鈥� scuppering a deal that would have created a domestic giant with a 60 percent share of the Canadian travel market.

The deal was concluded in June 2019 and approved by Transat shareholders in December 2020, as the tour operator found itself in dire financial straits due to the precipitous drop in air travel during the coronavirus pandemic.

Transat operates Canada鈥檚 third-largest carrier, offering through its Air Transat brand vacation packages, hotel stays and air travel to about 60 destinations in the Americas and Europe.

Canadian regulators approved the deal in February, but it also required a green light from the European Commission, which, the companies said, was apparently not going to come despite efforts by Air Canada to meet their requirements.

鈥淔ollowing recent discussions with the EC, it has become evident, however, that the EC will not approve the acquisition based on the currently offered remedy package,鈥� they said in a statement, adding that similar deals had been 鈥渢raditionally accepted鈥� by European authorities.

鈥淎ir Canada has concluded that providing additional, onerous remedies, which may still not secure an EC approval, would significantly compromise Air Canada's ability to compete internationally,鈥� it added.

Canada鈥檚 Transport Minister Omar Alghabra said the government鈥檚 top priority was to 鈥減rotect jobs in Quebec and across Canada,鈥� adding it was in discussions about 鈥渇inancial support options for many Canadian airlines鈥� including Air Transat.

European Commission Vice President Margrethe Vestager, who is in charge of competition policy, said in a statement that Air Canada鈥檚 proposals did not 鈥渁dequately address the competition concerns identified by the commission.鈥�

鈥淲hile the coronavirus disease (COVID-19) outbreak has strongly impacted the airline sector, the preservation of competitive market structures is essential to ensure that the recovery can be swift and strong,鈥� she added.