WestJet to be Acquired by Onex
May 13, 2019, 8:59 am
#16
Join Date: Nov 2017
Posts: 3,359
-James
May 13, 2019, 9:03 am
#17
Join Date: Jan 2005
Location: The World
Programs: WS Platinum, Marriott Titanium, DL Gold, UA Silver
Posts: 1,478
Perhaps Onex will make WS fares competitive once and for all rather than be priced $10 cheaper than the comparable AC fare. ... Here's to hoping we once and for all see $90 fares between YXU and YUL! Perhaps new management will see the light in having WS join an alliance like SkyTeam instead of their current sorry state which can leave travellers stranded on complex itineraries ticketed with them.
ONEX is a private equity firm. They want to own companies, not run them.
There will be no big changes visible to customers - or even most employees. It really just means that the “C suite” at WestJet will report to a new group of people.
Given how much time, effort and money WestJet has already sunk into their new strategy, they wouldn’t have been a ripe acquisition target if ONEX didn’t think they were already on the right track.
The bankers working at ONEX will not be planning new routes, or shifting focus to Toronto routes, or dictating where planes fly from, or setting fares. The people planning routes and setting fares and determining strategy are all going to be the exact same people as today. The bankers won’t be doing that now. Just like the bankers won’t be loading baggage or doing safety demos.
This is is big news if you’re a WestJet shareholder or a WestJet employee. But it’ll have little to no impact on WestJet customers.
May 13, 2019, 9:18 am
#18
Join Date: Apr 2009
Location: YYC / random hotel in YYZ
Programs: Back of the bus
Posts: 922
Doubt union negotations will be that simple either....
Pretty sure they will also either close Swoop, or sell them off to someone else. Maybe not Encore, but you can bet every option is on the table.
May 13, 2019, 9:23 am
#19
Join Date: Mar 2010
Location: Calgary
Posts: 1,444
Not sure I neccessarily agree. Run the numbers, cost of capital, rate of return, etc. You're going to see an even tighter push to cost cutting and revenue generation. Ancillary fees? Yep those will be going up. Monetize monetize monetize to pay for the cost of acquisition.
Doubt union negotations will be that simple either....
Pretty sure they will also either close Swoop, or sell them off to someone else. Maybe not Encore, but you can bet every option is on the table.
Doubt union negotations will be that simple either....
Pretty sure they will also either close Swoop, or sell them off to someone else. Maybe not Encore, but you can bet every option is on the table.
May 13, 2019, 9:28 am
#20
FlyerTalk Evangelist
Join Date: Mar 2005
Location: YYZ
Programs: AC*SE 2MM
Posts: 16,655
I didn't see this coming at all. I think it's a reflection of management's fundamental concern that they can't profitably grow and compete with AC's entrenched advantages in terms of network, lounges, alliance, etc.
Will be interesting to see how WS tries to maintain the "we are owners" mentality as a private company - will employees be able to own phantom shares or will they simply be employees going forward.
Note that Onex frequently holds companies for the long term, but when they say "Onex and its affilaited funds" are buying Westjet, I think this will be owned for a few years and then brought back to the market - possibly after selling a chunk to a US carrier.
Will be interesting to see how Onex changes the strategy to turn the business around. I am sure that change will be afoot.
Will be interesting to see how WS tries to maintain the "we are owners" mentality as a private company - will employees be able to own phantom shares or will they simply be employees going forward.
Note that Onex frequently holds companies for the long term, but when they say "Onex and its affilaited funds" are buying Westjet, I think this will be owned for a few years and then brought back to the market - possibly after selling a chunk to a US carrier.
Will be interesting to see how Onex changes the strategy to turn the business around. I am sure that change will be afoot.
May 13, 2019, 9:45 am
#21
Join Date: Aug 2003
Location: Canada
Programs: Marriott Plat; Air Canada E75K; Westjet Platinum
Posts: 1,161
You'd think there would be rumours before about this but this really came out of nowhere. Really tight lips. Those who own a lot of shares like the original founders are just cashing out now. They are done. Does anyone know who at WJ (former or current) would come out of this with a big payday? How many shares would the original founders like Clive Beddoe, Mark Hill, Donald Bell, David Neeleman, Tim Morgan, and previous CEO Saretzky still own?
When Onex owned Aeroplan for a period, all kinds of fees popped up and increased. I am guessing we are heading that way with WJ. Not good for customers.
When Onex owned Aeroplan for a period, all kinds of fees popped up and increased. I am guessing we are heading that way with WJ. Not good for customers.
Last edited by Sunny Day; May 13, 2019 at 9:52 am
May 13, 2019, 9:53 am
#22
Suspended
Join Date: May 2018
Location: ord
Programs: UA 1k SPG Platinum
Posts: 365
Onex as a stock has not done much in the last few years, ( down) however its a good value as a stock because of what they own. Its actually not a big deal for $5 billion for Onex, lets see what the stock market thinks of the deal in another week.
I wonder if Onex was chatting with Transat?
I wonder if Onex was chatting with Transat?
May 13, 2019, 9:59 am
#23
Join Date: Mar 2005
Location: YVR
Programs: AC 75K, BA Gold, Marriott Platinum, National EE, Sixt Platinum, Hertz PC, AVIS PC
Posts: 1,913
As for all kinds of fees and increases.. I think we're there already with Westjet.
Ron.
May 13, 2019, 10:01 am
#24
Join Date: Jul 2001
Location: YYC
Programs: AC Basic, UA MP Gold, Marriott Gold Elite, SPG Gold, Amex Platinum
Posts: 3,008
As this is a friendly takeover, it won’t fundamentally change the organization structure or compensation package to employees. Onex has also been trying to buy a major airline since the Canadian / Air Canada merger, so they may not just be in it for the short term. They may also be the conduit to selling 49% to Delta and/or other major airlines.
Ugh. I guess time will tell but this deal is disappointing to me. Private equity firms are notorious for buying companies, restructuring them to maximize profit, and then selling them again in about a 5-year investment window. WestJet is profitable but I can see Onex shifting WestJet away from more interesting and risky routes towards their more traditional LCC business model. I wonder how much this will impact WestJet's shift to a full-service carrier, and how much capacity now moves to YYZ as a result. They've really invested in YYC.
The major holdback for WestJet was the requirement to produce exceptional quarterly financial returns while developing the transoceanic operations. In response to YXUFlyboy concerns about risk, with WestJet going private there will be no concerns about simultaneously developing a European and Asian hub, something that will require most of the short term profits that were going to fund the dividend.
May 13, 2019, 10:20 am
#26
Join Date: Jun 2009
Location: London, United Kingdom
Programs: British Airways Gold
Posts: 2,636
None of the above.
ONEX is a private equity firm. They want to own companies, not run them.
There will be no big changes visible to customers - or even most employees. It really just means that the “C suite” at WestJet will report to a new group of people.
Given how much time, effort and money WestJet has already sunk into their new strategy, they wouldn’t have been a ripe acquisition target if ONEX didn’t think they were already on the right track.
I work in private equity. What you described is pretty much the opposite of reality.
May 13, 2019, 10:47 am
#27
Join Date: Feb 2007
Location: YVR
Programs: Erstwhile Accidental AC E35K
Posts: 2,918
As one who has been involved in several acquisitions and observed several others up close (most of them on a much smaller scale), I also call BS on the potential changes or not. One does not spend billions of dollars on a company and leave it the way it is. Just doesn't happen. They may say that to appease those affected, but after the first year things will change.
This doesn't bode well for travellers. I can't see anything good coming out of this for us frequent flyers.
It also reminds me of the adage, "The quickest way to become a millionaire is to start off as a billionaire and buy an airline."
This doesn't bode well for travellers. I can't see anything good coming out of this for us frequent flyers.
It also reminds me of the adage, "The quickest way to become a millionaire is to start off as a billionaire and buy an airline."
employee ownership?
May 13, 2019, 10:52 am
#30
Join Date: Jul 2014
Location: YVR
Programs: WS Nothing, AC Something, AS Gold. Too big for 737Max washrooms
Posts: 893
As one who has been involved in several acquisitions and observed several others up close (most of them on a much smaller scale), I also call BS on the potential changes or not. One does not spend billions of dollars on a company and leave it the way it is. Just doesn't happen. They may say that to appease those affected, but after the first year things will change.
This doesn't bode well for travellers. I can't see anything good coming out of this for us frequent flyers.
It also reminds me of the adage, "The quickest way to become a millionaire is to start off as a billionaire and buy an airline."
This doesn't bode well for travellers. I can't see anything good coming out of this for us frequent flyers.
It also reminds me of the adage, "The quickest way to become a millionaire is to start off as a billionaire and buy an airline."
I expect that Onex will see passengers are there to be milked and for no other reason. Fees, fees, fees.
I do work for a lot of different business and and over time, several of them have been acquired by private equity funds. In each case the outcome has been bad for employees and customers.