WestJet to be Acquired by Onex

Old May 13, 2019, 2:31 pm
  #46  
 
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As with any Private Equity group, the desire to improve financial performance is paramount. That can come from growing the business or reducing its costs. RBI is a good example of lazer focus on cost reductions.

I would expect to see some of the ill conceived intiatives disappearing. For example, Swoop as a brand should be gone. It was a poor idea and has not worked well for Westjet, according to Westjet. What Swoop is trying to do, can be done under the Westjet Brand, eliminating the duplicate costs of maintaining 2 brands in the same market place.

This is the kind of bottomline focus that Onex will bring to Westjet.

I would also question the new 787's with "business" pods on them. It is a heck of an effort to try to turn Westjet into a full service business airline - it requires great execution from front to back, which they are struggling with that execution these days. Just look at the comments on food service in the PE class. It is horrible. The addition of proper PE seating implementation has been abysmal.

So expect better focus on what really generates more profit $ under Onex and the stopping of all the distractions Westjet has been attempting to implement.
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Old May 13, 2019, 3:08 pm
  #47  
 
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Meh - let's see what happens rather than speculate wildly. Being a cash deal, this can go a couple of different ways.

What must be remembered is that AC has its own revamped FF program launching next year, and my sneaking suspicion is that it will continue to alienate E25, E35 and E50-level business customers in order to focus more heavily on the Super Elites and million-milers. These lower-tier and mid-tier folks may not fly long-hauls in business every other week, but they do spend a fair bit of money on travel over the course of a year, and they represent an under-served market. That's a market that WS would be wise to pursue, especially considering the relatively low cost that would be required to earn their long-term loyalty.

That, to me, would be an easy one for any owner to grasp - even an equity firm - since it's such low-hanging fruit.
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Old May 13, 2019, 3:09 pm
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Originally Posted by The Macker
So expect better focus on what really generates more profit $ under Onex and the stopping of all the distractions Westjet has been attempting to implement.
I don't expect this acquisition to turn back the clock on a transition from LCC to full service network carrier. These are hiccups and they will work through them.
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Old May 13, 2019, 4:30 pm
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For those who are interested in more in-depth analysis, BNN has a series of videos covering this developing story:...and just for giggle the Skunk thought they'd chime in:
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Old May 13, 2019, 5:16 pm
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How much WS stock did Onex own before this deal went public?
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Old May 13, 2019, 5:30 pm
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Originally Posted by j2simpso
...and just for giggle the Skunk thought they'd chime in:

Video is from 2017.
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Old May 13, 2019, 5:39 pm
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Now more than ever, we are going to need a passengers bill of rights.
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Old May 13, 2019, 6:40 pm
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Originally Posted by YXUFlyboy
I don't expect this acquisition to turn back the clock on a transition from LCC to full service network carrier. These are hiccups and they will work through them.
Me neither. I don't see enough margin or market size to turn away from the current path and retrench as more of an LCC. In fact, I see exactly the opposite - Onex will accelerate the transformation of Westjet.
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Old May 13, 2019, 8:22 pm
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Originally Posted by ajeleonard

I work in private equity. What you described is pretty much the opposite of reality.
And my employer is owned by private equity It's fairly hands off except for what some could say is the sucking sound of the investor group draining off of the profits that should instead be invested in the business.

There is usually a honeymoon in first 6 months or so and then the hammer falls. If Onex is looking for quicker profits, then I expect we will see a slight shift in focus towards more premium services and new Asian routes. Unfortunately, in my experience service levels rarely improve when a venture capital /private equity company takes over. Service and quality is not seen as profitable.
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Old May 13, 2019, 8:42 pm
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Originally Posted by Transpacificflyer
....sucking sound of the investor group draining off of the profits that should instead be invested in the business.

.... Service and quality is not seen as profitable.
and the irony is that for those profiting, they will will seek service and quality when they go on their own personal trips (eg. go and fly SQ F).
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Old May 13, 2019, 8:51 pm
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Originally Posted by The Macker
Wow, there goes "We are owners and we care" tag line. Business like Onex are not long term owners, typically they will own it for less than 5 years. During their ownership, the focus is on increasing profit so they can resell the business for much higher price down the road. I guess the turmoil with all the changes (which in my opinion) have been poorly implemented. Oh well, I will watch the turmoil continue.
ONEX is not a strip and sell equity fund. They build businesses and work with line staff to improve companies. They have an exemplar track record in this regard and should only make WS a stronger and better company that through this expansion and refining period will insulate the company from dealing with short horizon shareholders. WS employees should be happy with the new owners as they've been getting shares over the years and now will get $31 a share when the deal closes. As well, ONEX has a pretty good rep with unions. When it bought Boeing's Wichita plant (now Spirit Aerosystems), it improved systems and had positive relations with the unions, something Boeing was unable to do. When it took the company public, staff were given shares and have done very well with the increased valuation. Same happened with staff when ONEX sold SkyChefs to LH. With the flight attendants just unionized, along with pilots, a new owner could sooth the waters.

As noted, ONEX was hoping to buy CP in 1999/2000 (with AA as a partner) but ultimately AC ended up doing the takeover and merging the two airlines. Rumours had it that ONEX wanted to purchase Aeroplan when ACE was considering either selling it outright, or spinning it off..
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Old May 13, 2019, 9:00 pm
  #57  
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Originally Posted by Shareholder
WS employees should be happy with the new owners as they've been getting shares over the years and now will get $31 a share when the deal closes.
I know a few that I talked to today are quite happy indeed.
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Old May 13, 2019, 10:03 pm
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Originally Posted by tcook052
I know a few that I talked to today are quite happy indeed.
I flew on a YUL to YYC flight today, the crew was very happy with the deal.

As a WestJet Retiree with a decent amount of WS shares, I will definitely be at the July special shareholder meeting to vote “yes”.
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Old May 13, 2019, 10:51 pm
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Originally Posted by aerobod

I flew on a YUL to YYC flight today, the crew was very happy with the deal.

As a WestJet Retiree with a decent amount of WS shares, I will definitely be at the July special shareholder meeting to vote yes.
Yes indeed. IME the ones who benefit most from these deals are the ones who can cash out and go on their merry way, smiling all the way to the bank.

Good for you. In my own case I did okay, but could have done a lot better if Id played my hand a bit differently. Live and learn.
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Old May 13, 2019, 10:53 pm
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Originally Posted by Shareholder
ONEX is not a strip and sell equity fund. They build businesses and work with line staff to improve companies. They have an exemplar track record in this regard and should only make WS a stronger and better company that through this expansion and refining period will insulate the company from dealing with short horizon shareholders. WS employees should be happy with the new owners as they've been getting shares over the years and now will get $31 a share when the deal closes. As well, ONEX has a pretty good rep with unions. When it bought Boeing's Wichita plant (now Spirit Aerosystems), it improved systems and had positive relations with the unions, something Boeing was unable to do. When it took the company public, staff were given shares and have done very well with the increased valuation. Same happened with staff when ONEX sold SkyChefs to LH. With the flight attendants just unionized, along with pilots, a new owner could sooth the waters.

As noted, ONEX was hoping to buy CP in 1999/2000 (with AA as a partner) but ultimately AC ended up doing the takeover and merging the two airlines. Rumours had it that ONEX wanted to purchase Aeroplan when ACE was considering either selling it outright, or spinning it off..
do you work for ONEX ?
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