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WestJet Sold For All-Cash Deal Worth C$5 Billion

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WestJet Sold For All-Cash Deal Worth C$5 Billion

WestJet Sold For All-Cash Deal Worth C$5 Billion
May 13
15:12 2019

MIAMI — Calgary, Alberta’s airline, Westjet, announced Monday that it has accepted an all-cash offer of close to $5 billion from Toronto-based private equity firm Onex Corporation.

The acquisition includes all outstanding shares, assumed debt and assets the passenger airline has obtained since its inaugural 1996 flight and plans to take the company private going forward.

History is made, as the first WestJet Boeing 737 MAX 8 lands at Toronto Lester B. Pearson International Airport (YYZ/CYYZ) on October 12, 2017, on its first revenue flight from Calgary (YYC/CYYC) as WJA662. Andrew H. Cline.

“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,” said Clive Beddoe, WestJet’s Founder and Chairman said in a statement.

“Onex’ aerospace experience, history of positive employee relations and long-term orientation make it an ideal partner for WestJetters, and I am excited about our future.”

The takeover, which is expected to close in late 2019 or early 2020, includes a $31 share price representing a 67% premium to Friday’s closing price on the stock market and has been carefully reviewed by the airline’s board of directors and an independent committee since they were first approached by Onex in March of this year. 

The second largest carrier in Canada saw its first sign of trouble during second-quarter results last year, taking its first loss in 13 years for a medley of factors, including a drawn-out recession in Alberta, rising fuel costs, and fierce competition on the home front. 

“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,” said Tawfiq Popatia, a Managing Director at Onex. 

The firm says it will continue to honor the WestJet legacy of guest experience and employee culture. “We’re thrilled to be partnering with WestJetters and continuing this remarkable Canadian success story,” added Popatia.

Onex which has been around since 1984 and manages about $31 billion in assets has previously attempted to purchase and merge Air Canada and Canadian Airlines but the deal fell through after a Quebec court decision in 1999.

This news comes in a few days after WestJet reported a 33.4% increase in first-quarter net earnings and a record load factor for the month of April.

In a report released on May 9, the company announced its first quarter results for 2019, with net earnings of $45.6 million, a 5.5% increase in profit margin, among a minimal 0.3- percentage point decrease in operating margin from the same time last year.

Also, boosting confidence in the future of Canada’s second-largest airline is its load factor—a closely watched metric that tries to measure how full the planes are of paying passengers. WestJet scored a record-breaking 87.7% performance, welcoming an additional 99,000 guests in April.

Overall, it’s been a tremendous week for WestJet and its shareholders. Airways will keep an eye on any future developments.

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Leila Chaibi

Leila Chaibi

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