Westjet, AC and Transat
Apr 12, 2021, 7:20 am
#46
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WS staying on the sidelines is the smart move to me especially given the current circumstances as there's a not insignificant cost to keep things as separate as you outline and so some of the benefits of acquiring TS and merging the two companies are mitigated.
TS downsizing or emerging from the pandemic in a smaller form or disappearing altogether is only good for WS picking up market share to leisure destinations from Quebec which as has already been pointed out is already capacity saturated.
TS also was unable to secure financing while in its 2-year deal with AC so is now facing a short-term cash crunch with a $250M loan coming due in June and will require a reported $500M in financing to survive so there's much short-term TS money troubles beyond just the purchase price and all those obligations come at the worst time in the airline industry when WS is hemorrhaging money and will continue to do so for the coming 6 months before a travel rebound hopefully begins in earnest.
TS downsizing or emerging from the pandemic in a smaller form or disappearing altogether is only good for WS picking up market share to leisure destinations from Quebec which as has already been pointed out is already capacity saturated.
TS also was unable to secure financing while in its 2-year deal with AC so is now facing a short-term cash crunch with a $250M loan coming due in June and will require a reported $500M in financing to survive so there's much short-term TS money troubles beyond just the purchase price and all those obligations come at the worst time in the airline industry when WS is hemorrhaging money and will continue to do so for the coming 6 months before a travel rebound hopefully begins in earnest.
Apr 12, 2021, 7:31 am
#47
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That is my point (to some extent). WestJet does not know how to position itself in the Quebec market. It has tried several times. We are talking an airline who has asperations of its main European partner being Air France and is not going to be able to operate effectively operate anything on the Montreal-Paris route.
If I was doing it I would keep AirTransat as a separate company (however offer full codeshare, loyalty programs, lounges etc. with WestJet). I would see two roles for AirTransat in a WestJet world:
What I am proposing is not much different than what they are trying to do with the corporate structure of Swoop.
If I was doing it I would keep AirTransat as a separate company (however offer full codeshare, loyalty programs, lounges etc. with WestJet). I would see two roles for AirTransat in a WestJet world:
- Operate the Montreal hub under the AirTransat banner, with crew based in Montreal.
- Sell package tours across Canada using AirTransit flights for departures out of Montreal and WestJet for departures out fo the rest of Canada.
- AirTransat outside of Quebec can be moved over to westjet.
- Keep its Quebec culture when it comes to customer service etc.
What I am proposing is not much different than what they are trying to do with the corporate structure of Swoop.
Apr 12, 2021, 9:14 am
#48
Join Date: Dec 2008
Location: Delta, BC
Posts: 1,646
WS staying on the sidelines is the smart move to me especially given the current circumstances as there's a not insignificant cost to keep things as separate as you outline and so some of the benefits of acquiring TS and merging the two companies are mitigated.
TS downsizing or emerging from the pandemic in a smaller form or disappearing altogether is only good for WS picking up market share to leisure destinations from Quebec which as has already been pointed out is already capacity saturated.
TS also was unable to secure financing while in its 2-year deal with AC so is now facing a short-term cash crunch with a $250M loan coming due in June and will require a reported $500M in financing to survive so there's much short-term TS money troubles beyond just the purchase price and all those obligations come at the worst time in the airline industry when WS is hemorrhaging money and will continue to do so for the coming 6 months before a travel rebound hopefully begins in earnest.
TS downsizing or emerging from the pandemic in a smaller form or disappearing altogether is only good for WS picking up market share to leisure destinations from Quebec which as has already been pointed out is already capacity saturated.
TS also was unable to secure financing while in its 2-year deal with AC so is now facing a short-term cash crunch with a $250M loan coming due in June and will require a reported $500M in financing to survive so there's much short-term TS money troubles beyond just the purchase price and all those obligations come at the worst time in the airline industry when WS is hemorrhaging money and will continue to do so for the coming 6 months before a travel rebound hopefully begins in earnest.
Why buy TS (at least now) when financial conditions could lead to it folding or for the bones to be sold-off cheap in an asset sale out of creditor protection? Or simply let TS limp along as a crippled competitor. More short-term upside for WestJet in preserving cash, limiting debt and being ready for the eventual resurgence of air travel.
Apr 12, 2021, 9:35 am
#49
Join Date: Jun 2010
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So it seems that WestJet's potential acquisition of Transat boils down to assuming enormous debt and tremendous operational headaches in terms of employee seniority integration and absorbing a new fleet type, simply in order to gain a stronger presence in an already over-saturated and price-sensitive (i.e. no margins) holiday travel market operating out of basically one airport.
Wow - I can't imagine why they're not jumping all over that one. What could possibly go wrong?
@24left - thanks for posting that AvCan link, definitely some worthwhile reading there.
Wow - I can't imagine why they're not jumping all over that one. What could possibly go wrong?
@24left - thanks for posting that AvCan link, definitely some worthwhile reading there.
Apr 12, 2021, 11:13 am
#50
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@Fiordland @Symmetre
Thanks. I've been reading various pilot forums for a few years. The Tech Log subforum on PPRuNe is always interesting. But unless our red leaf friends hit a runway or miss one 
, Canada gets little attention there. Still, always useful insight.
AvCan is more "local". The only challenge is thread wander to the point where something like a possible WS-TS ends up being discussed in multiple threads on at least 3 different subforums. Some of these guy have some very interesting insight for e.g. on the issue of finances and of course fleets. And quite a few of these guys can be nutty funny.
.
.....@24left - thanks for posting that AvCan link, definitely some worthwhile reading there.
, Canada gets little attention there. Still, always useful insight.AvCan is more "local". The only challenge is thread wander to the point where something like a possible WS-TS ends up being discussed in multiple threads on at least 3 different subforums. Some of these guy have some very interesting insight for e.g. on the issue of finances and of course fleets. And quite a few of these guys can be nutty funny.
.