Report by : Gan Yung Chyan
/ KUCINTA SETIA
WestJet, Canada's second-largest airline, announced on 13 May 2019 that it had agreed to be acquired by private equity firm Onex for $5 billion. The parties have reached a final agreement.
George Ferguson, an intelligence analyst at Bloomberg, commented, "Onex is a company that is very focused on aviation. WestJet is looking for growth opportunities, but the Canadian market is relatively small, so it is not easy to develop in Canada."
Prior to this, Onex had been trying to enter the aviation industry. In 1999, the company tried to acquire Air Canada, but was unfavorable by the court and the acquisition was terminated. In 2007, the company tried to buy an equity in Qantas, which also ended in failure.
Onex's Managing Director Tawfiq Popatia said, “WestJet is one of Canada's strongest brands and we respect its business. It is also known worldwide for its unparalleled customer experience and employee culture.”
Surprisingly, competition in the Canadian aviation industry is intensifying, and several low-cost airlines are in the field. Last month, travel operator Air Transat just announced its search for possible sales opportunities. On Monday, Air Transat shares rose 1 per cent while Air Canada rose 4.6 per cent. As of Monday's 10:23 closing, Calgary-based WestJet's share price rose 61 per cent on the Toronto Stock Exchange to $29.89 a share.
In recent years, WestJet has lagged behind Air Canada. Before the stock rebounded on Monday, WestJet's share price fell 23% in the past five years, while Montreal-based Air Canada shares rose 336%.
Due to the grounding of the Boeing 737 MAX, WestJet suspended all financial guidance this year but its CEO Edward Sims said he did not intend to change the order and delivery of Boeing aircraft.
In recent years, due to the addition of low-cost airlines, WestJet has been under pressure to increase its operating income. WestJet has taken the market share by launching its own ultra-low-cost carrier, Swoop. At the same time, it has extended its main aviation business to the European market, which is carried out by the Boeing 787.
Ferguson said: "WestJet's business has expanded to low-cost flights across the Atlantic, but mainly to large cities in Europe. Considering the interest of many partners in low-cost long-haul routes, Onex may use the WestJet as a platform for developing low-cost long-haul routes."
/ KUCINTA SETIA
WestJet, Canada's second-largest airline, announced on 13 May 2019 that it had agreed to be acquired by private equity firm Onex for $5 billion. The parties have reached a final agreement.
George Ferguson, an intelligence analyst at Bloomberg, commented, "Onex is a company that is very focused on aviation. WestJet is looking for growth opportunities, but the Canadian market is relatively small, so it is not easy to develop in Canada."
Prior to this, Onex had been trying to enter the aviation industry. In 1999, the company tried to acquire Air Canada, but was unfavorable by the court and the acquisition was terminated. In 2007, the company tried to buy an equity in Qantas, which also ended in failure.
Onex's Managing Director Tawfiq Popatia said, “WestJet is one of Canada's strongest brands and we respect its business. It is also known worldwide for its unparalleled customer experience and employee culture.”
Surprisingly, competition in the Canadian aviation industry is intensifying, and several low-cost airlines are in the field. Last month, travel operator Air Transat just announced its search for possible sales opportunities. On Monday, Air Transat shares rose 1 per cent while Air Canada rose 4.6 per cent. As of Monday's 10:23 closing, Calgary-based WestJet's share price rose 61 per cent on the Toronto Stock Exchange to $29.89 a share.
In recent years, WestJet has lagged behind Air Canada. Before the stock rebounded on Monday, WestJet's share price fell 23% in the past five years, while Montreal-based Air Canada shares rose 336%.
Due to the grounding of the Boeing 737 MAX, WestJet suspended all financial guidance this year but its CEO Edward Sims said he did not intend to change the order and delivery of Boeing aircraft.
In recent years, due to the addition of low-cost airlines, WestJet has been under pressure to increase its operating income. WestJet has taken the market share by launching its own ultra-low-cost carrier, Swoop. At the same time, it has extended its main aviation business to the European market, which is carried out by the Boeing 787.
Ferguson said: "WestJet's business has expanded to low-cost flights across the Atlantic, but mainly to large cities in Europe. Considering the interest of many partners in low-cost long-haul routes, Onex may use the WestJet as a platform for developing low-cost long-haul routes."
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