Hello everyone, my name is Alex, and as you may have heard by now, Calgary-based WestJet
Airlines has been sold to Onex Corporation, a private equity firm based in Toronto, for
5 billion dollars Canadian.
Onex was founded in 1984, and "manages and invests capital in its private equity and
credit platforms on behalf of investors from around the world."
In total, Onex has 31 billion dollars of assets under their management, along with
6.6 billion dollars of shareholder capital.
The deal was announced early on Monday, May 13th, and following this, WestJet shares jumped
60%, to $30 a share, at the time of uploading.
According to a press release from WestJet, “Under the terms of the agreement, Onex
Corporation and its affiliated funds will acquire all outstanding shares of WestJet
for $31.00 per share, after which WestJet will operate as a privately-held company.”
This is something that had apparently been in the works since March, when Onex approached WestJet
about a potential deal.
Following a recommendation from a special committee, WestJet’s Board of Directors
determined that the transaction was ultimately, in the best interests of WestJet.
They unanimously recommended that WestJet shareholders vote in favour of the deal at
a special meeting to be held in July.
On the announcement, WestJet CEO Ed Sims said: “We are delighted to continue the
journey of building an airline based on a growing network, providing competitive airfares
and more choice to, from and within Canada, for communities large and small.
Integral to this relationship is a commitment to our employees, and our unique ownership-driven culture."
WestJet founder and chairman Clive Beddoe (which their first 787 is named after) also
had this to say.
“Since our first flight in 1996, WestJet has been singularly focused on providing better
options for the Canadian travelling public and this transaction retains that commitment,
I am particularly pleased that WestJet will remain headquartered in Calgary and will continue
to build on the success that our 14,000 WestJetters have created.
Onex' aerospace experience, history of positive employee relations and long-term orientation
makes it an ideal partner for WestJetters, and I am excited about our future.”
Tawfiq Popatia, a managing director at Onex, had this to say: “WestJet is one of Canada’s
strongest brands and we have tremendous respect for the business that Clive Beddoe and all
WestJetters have built over the years.
WestJet is renowned internationally for its unparalleled guest experience and employee culture.
We’re thrilled to be partnering with WestJetters and continuing this remarkable Canadian success story."
This transaction is planned to close towards the end of 2019 or the beginning of 2020,
pending regulatory approval from the Government of Canada, under the Canada Transportation Act.
So what does this mean for the general public?
Well, it remains to be seen how this deal will affect WestJet in the long run, if it's approved.
For the moment, WestJet will still be Canada’s second largest airline, operating a fleet
of Saab 340s, Bombardier Q400s, Boeing 737s, 767s, and 787 Dreamliners.
They’ve stated in multiple comments on their Facebook page that “you will not see any
changes in flight schedule or routes as [a] direct result of this transaction, and there
are no changes to the frequent flyer program and credit card partnership.”
No comment was made regarding Swoop, WestJet’s ultra-low-cost subsidiary, which is wholly
owned by WestJet, but it appears to remain unaffected.
It is worth mentioning that in 1999, Onex unsuccessfully attempted to purchase and merge
Air Canada and Canadian Airlines in a bid worth over 2 billion dollars.
That deal was blocked by a Quebec court nearly 20 years ago.
What are your thoughts on this interesting bit of news?
Let me know in the comments below.
As always, thank you very much for watching, leave a thumbs up if you enjoyed, hit the
subscribe button with notifications on for more, and I’ll see you in the next video.
Until then, safe travels.