Westjet

[Kip Powick]

In the real world, passengers don't care who owns the airline as long as they operate on schedule and the "price" is right. Based on what I have read here, nothing as far as the operations go, will change but there are concerns by some customers, (in the Press),  about the airline eliminating some features to make the bottom line better for Onex. 

Present execs of WJ say "nothing will change",as far as the worker bees are concerned..

Of course when WD was folded into CDN we got that same story... and a few weeks later I was on a different aircraft course, different uniform etc etc,.

Hang on........... I'm sure the ride won't be as wild as the new roller coaster at Wonderland.....

 

[vanishing point]

“Nothing will change....”

Should print that slogan on all employee t-shirts....

[J.O.]

Things will definitely change, you can bank on that. I'm interested to see how Mr. Schwartz handles employee relations. It hasn't exactly been his forte.

[AIP]

48 minutes ago, J.O. said:

Things will definitely change, you can bank on that. I'm interested to see how Mr. Schwartz handles employee relations. It hasn't exactly been his forte.

That is for certain.

What if Mr. Schwartz thinks WJ forte is not being a global cariier but more in line with its roots ??   Domestic/Holiday type operation ???

[Fido]

6 hours ago, MD2 said:

has far lower costs

What costs would those be?

Certainly not fuel or aircraft or terminal charges or ATC charges......etc

[internet]

9 hours ago, dagger said:

I'm figuring that someone might. Delta is the most logical from a US perspective.

I've read on other forums that AA connections were solid on the previous WS YYC-DFW and YYC-ORD flights.  I wonder if DL and AA could get into a tussle for a piece of the WS action?

[CanadaEH]

3 hours ago, AIP said:

That is for certain.

What if Mr. Schwartz thinks WJ forte is not being a global cariier but more in line with its roots ??   Domestic/Holiday type operation ???

Why would Onex invest a significant amount of money into an established airline and then undo everything that's been built for what is essentially this day moving forward (787, business class, premium economy, JV's, interlines/codeshares, regional airline, discount airline, rewards program, lounges, etc)? Where's the value in that? If you think going back to its roots is the solution you haven't been paying attention. 

[CanadaEH]

2 hours ago, internet said:

I've read on other forums that AA connections were solid on the previous WS YYC-DFW and YYC-ORD flights.  I wonder if DL and AA could get into a tussle for a piece of the WS action?

AA is not happy WestJet is pursuing a JV with Delta, my guess is a hard no for their involvement. 

I would think that DL would be very interested in a stake. 

[FA@AC]

54 minutes ago, CanadaEH said:

Why would Onex invest a significant amount of money into an established airline and then undo everything that's been built for what is essentially this day moving forward (787, business class, premium economy, JV's, interlines/codeshares, regional airline, discount airline, rewards program, lounges, etc)? Where's the value in that? 

The new owners might take the position that WestJet was more profitable than it is now before it expanded all over the place with the projects you mention, or they might be of the view that increased profitability will come if WestJet stays the course.  They might also decide on a new course that results in WestJet's operations being less complex than they are today, but less simple than they were during the first years.  They might expand Swoop, dump Swoop, expand long haul or dump longhaul.  Time will tell.

[moeman]

https://globalnews.ca/news/5251871/westjet-profits-swoop-737-encore/

Perhaps some foreshadowing about Swoop's future last week?

"Meanwhile Swoop, WestJet’s discount brand, continued to struggle in the shoulder season, said chief financial officer Harry Taylor.

Swoop was weaker than we expected and would have liked,” he said. “Awareness is so low. It hasn’t even had its first birthday yet.”

READ MORE: Swoop Airlines adds Kelowna to its list of airports

Competition among budget carriers is intensifying, with Swoop recently launching routes to Mexican and Caribbean hot spots to battle for customers with Transat A.T., Air Canada and Sunwing Airlines.

The rivalries have spawned a predatory pricing investigation into WestJet and Swoop by Canada’s competition watchdog, following a complaint from Flair Airlines."

[MD2]

This transaction bodes well for Onex and WestJet group, all of WestJet group. Private equity firms are very misunderstood, but their value in their investment is not increased by shrinking the business, especially Onex. Onex has been interested in getting involved with a large carrier for some time first with Canadian and then with Qantas, and now it has that opportunity. It has a plan and vision and they seem to coincide with that of WestJet. It's not going to blow it. Likely its involvement will see its investment triple in about 8 to 10 years by which point they may have already sold part of the business to another invested party, some in an IPO, and may hold a small long term interest in a global airline.

WestJet shares had been undervalued for sometime and Onex recognized this opportunity. Even at 31 it is bargain and leaves room for more investment to grow the business. Onex is very good at building synergy and increasing value and growth in quite a few areas of the business including Swoop. And this deal may not even be complete yet. There could likely other parties emerge in this deal in the weeks and months ahead. And likely Delta will become more involved. 

[Bobcaygeon]

My guess is that Encore will get sold off with have a long term CPA with WJ mainline just like nearly every other regional in North America. They already have a CPA with Pasco.

[wizard]

It will be the same as Porter in terms of not being a public company.  we will no longer know if a WestJet is making a profit or losing it’s shirt. If Swoop continues to lose money, they can roll the ULC fares and rules into Westjet and offer Swoop fares on select flights just like Air Canada did with Tango fares. Encore being sold off I can definitely see that happening.

[MD2]

Why is it so pressing for "you" to know the financials of a company? It matters not what "you" think, only the stakeholder, namely Onex. And they seem to be happy with what they see and if they find a way to run the business and unlock its true potential and value, good for them!

WestJet had recently faced too many obstacles in its path to becoming a global carrier that they had envisioned. Be it labour turmoil, be it probing "analysts", all of which no longer matter as with the (financial) help of Onex that espouses the same ideals and plans, it can grow the business and unfold its plans, likely more quickly, and then in the fullness of time when it's ready, possibly do another IPO. By then more than likely there will be other big name stakeholders involved too.

This has happened in other industries where large companies have bought all shares to go private, unfold their vision of growth and possibly someday come back to the market. DH and DELL are two names that readily come to mind. This is very smart, and very humble of WestJet leadership, unlike Milton that nearly destroyed Canadian/Air Canada for his vanity.

The same can be said about Porter. When its plans for expansion were delayed, it wisely shelved its IPO plans which allowed it to pursue alternate plans and unlock value in other areas, the largest of which was the terminal. It put it in an enviable position that for instance it could purchase Transat if it wished without any interference.  

[Airband]

Quote

"t would not be the first time Mr. Schwartz and Air Canada chief executive officer Calin Rovinescu have been on opposite sides of an airline battle. When Mr. Schwartz launched his 1999 bid, Mr. Rovinescu was the Stikeman Elliott lawyer brought in by Air Canada to thwart Onex. He crafted the legal strategy that stopped Mr. Schwartz in his tracks after a Quebec Court ruled that Onex’s bid violated a 10-per-cent ownership limit on Air Canada’s shares.

Mr. Schwartz had appeared so confident of victory that Onex’s internal code name for its takeover strategy was Project Peacock. He ended up retreating with his tail between his legs."

'With WestJet deal, Onex’s Schwartz again goes to battle with Air Canada’s Rovinescu'

[j.k.]

Your link doesn't work.

[j.k.]

Maybe it's this one?

 

https://www.theglobeandmail.com/amp/business/commentary/article-with-westjet-deal-onexs-schwartz-again-goes-to-battle-with-air/

[J.O.]

16 hours ago, MD2 said:

Why is it so pressing for "you" to know the financials of a company? It matters not what "you" think, only the stakeholder, namely Onex. 

Assuming they're an employee, they too are a stakeholder in the future of the company. Having been through a takeover by a private equity firm - one which resulted in a strategic stripping bare of the company until it failed - a little skepticism is a healthy thing.

[Airband]

18 minutes ago, J.O. said:

 - a little skepticism is a healthy thing.

O ye of little faith -

Quote

The Globe and Mail reports in its Wednesday edition that credit rating agencies have placed WestJet's debt under review for possible downgrades after Onex's friendly $3.5-billion bid. The Globe's Jeffrey Jones and Eric Atkins quotes Moody's saying it expects Onex will push some of its acquisition costs down to WestJet, increasing its debt levels. As it stands, the carrier has no room in its current rating for an increase in leverage. WestJet is already constrained by weakened profitability in its most recent fiscal year thanks to rising labour and fuel costs as well as negative free cash flow as it invests in the expansion of its aircraft fleet and destination network. WestJet has $400-million in debt due in July. It has another $400-million (U.S.) in bonds due in 2021, which contain a change-of-control clause expected to result in WestJet offering to buy them back at a slight premium. Its ratio of debt to earnings before interest, taxes depreciation and amortization is 3.6 times, up from 2.5 times in 2015. Moody's rates WestJet at Ba1, which is below investment grade. Standard & Poor's, meanwhile, said it put WestJet's debt on credit watch with negative implications. S&P rates the carrier at BBB-minus for now.

 

[Turbofan]

On 5/13/2019 at 8:07 PM, CanadaEH said:

AA is not happy WestJet is pursuing a JV with Delta, my guess is a hard no for their involvement. 

I would think that DL would be very interested in a stake. 

When Onex tried their takeover of AC the plan was to pull AC out of the Star Alliance and join oneworld.  Onex, who often uses partners, was in partnership with AA.  It wouldn’t surprise me in the least if it was Delta’s competition  behind Onex this time. 

Last time, when he tried the takeover of Canadian/AC he announced the switch from one alliance to another up front.  This caused a problem for him because Star Alliance partners moved in and drove the share purchase price way up in a bidding war to keep AC.

He won’t make that mistake again.

 

[Seeker]

On 5/13/2019 at 1:46 PM, MD2 said:

WestJet is a much better choice than Air Canada/Canadian would have been in 1999 for Onex because, as bad as some may think it is, it has far better labour relations than a merged Air Canada/Canadian would have had; it has far lower costs, stronger presence in the leisure market, a lot of room to grow, and on top of all, it knows how to make money.

Wouldn't bank too much on the "far better labour relations" - lots of discontent amongst the pilots based on my random discussions with Westjet pilots and the huge number of them that have applied, and been hired, by AC.  As for the rest of it; the "far lower" costs have become "little bit lower costs, the "stronger presence in the leisure market" has become "slightly stronger presence in the leisure market", "lots of room to grow" must be balanced against the stronger entrenched competitors and "knowing how to make money", well, not nearly as much and as easy as before.  Many, many ways this could go badly.  As the reports suggest, it's likely that some of the costs associated with the buyout will be downloaded to WS and if Onex cancels or reduces the profit-sharing or if the last vestiges of the "Owner" culture disappear the ability to make money could disappear too.  I have many friends at WS and I hope this goes well for them but on the whole I think this is a negative for the employees.

[thinair]

 

1 hour ago, seeker said:

Wouldn't bank too much on the "far better labour relations" - lots of discontent amongst the pilots based on my random discussions with Westjet pilots and the huge number of them that have applied, and been hired, by AC.  As for the rest of it; the "far lower" costs have become "little bit lower costs, the "stronger presence in the leisure market" has become "slightly stronger presence in the leisure market", "lots of room to grow" must be balanced against the stronger entrenched competitors and "knowing how to make money", well, not nearly as much and as easy as before.  Many, many ways this could go badly.  As the reports suggest, it's likely that some of the costs associated with the buyout will be downloaded to WS and if Onex cancels or reduces the profit-sharing or if the last vestiges of the "Owner" culture disappear the ability to make money could disappear too.  I have many friends at WS and I hope this goes well for them but on the whole I think this is a negative for the employees.

I see your point, but I’ve been through this rodeo 5 times now. I get it. Air Canada wins, even when they lose. 

Everyone else in the Canadian airline industry sucks the hind tit. 

Throw us a bone so at least We don’t need to be Walmart greeters in our retirement. Not that’s there is any thing wrong with being a greeter.

LOL

 

[Seeker]

7 minutes ago, thinair said:

 

I see your point, but I’ve been through this rodeo 5 times now. I get it. Air Canada wins, even when they lose. 

Everyone else in the Canadian airline industry sucks the hind tit. 

Throw me a bone so at least I don’t have to be a Walmart greeter in my retirement. Not that’s there is any thing wrong with being a greeter.

LOL

 

Well, that's not really what I'm saying.  Haha.  Just replying to MD2's comment about everything AC is bad.  AC was poorly run and hobbled with all sorts of impediments and, let's be honest, much of Westjet's success was due to those factors.  Not all of course, hardworking, energetic employees who went above and beyond was certainly key to WS's success too but as we've seen over the last few years the situation has reversed to some degree.  I don't wish anything negative for Westjet - there's certainly room for both companies.  What's that saying; the best system of government is a benevolent King, the worst system of government is an evil King.  Well, Westjet just got taken over by a King so the question is; what kind of King is he?

 

[thinair]

Sorry mate. I’m too sensitive, although my wife would disagree.

[CanadaEH]

I don't think there's ever an announcement, change, direction, plan, or concept at WJ that's ever been well received or eventually partially received on this forum. The doom and gloom isn't unexpected.