WestJet to Go Private in Deal With Private Equity Firm
WestJet will go private after Canada’s second-biggest airline agreed to a friendly acquisition from Toronto-based private-equity firm Onex Corp.
It’s unclear what changes might lie in store for customers a result of the deal, which still must be approved by regulators and shareholders. WestJet and Onex predicted the deal would close in “the latter part of 2019 or early 2020.”
The move comes after WestJet faced a series of challenges in 2018.
Canadian broadcaster CBC summed up the carrier's year, writing “soaring fuel costs, labor unrest, and steep competition at home and abroad caused the airline to incur its first loss in 13 years during the second quarter of last year, followed by a steep year-over-year drop in the third quarter — which nonetheless bounced back into the black.”
For now, WestJet founder and chairman Clive Beddoe struck an optimistic tone about the deal, calling Onex an “ideal” partner for the airline.
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"I am particularly pleased that WestJet will remain headquartered in Calgary and will continue to build on the success that our 14,000 WestJetters have created," Beddoe said in a statement.
Onex approached it in March about a potential deal, according to the companies.
"WestJet is one of Canada's strongest brands and we have tremendous respect for the business that Clive Beddoe and all WestJetters have built over the years," Tawfiq Popatia, a managing director at Onex, said in WestJet’s statement.
The sides valued the deal at approximately CA$5 billion, “including assumed debt.”
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There were no immediate details about how – or if – WestJet’s new owner might reshape or remake the airline if the deal is approved.
In the US, one recent example of a carrier going private came with Frontier Airlines, which accelerated its shift to a no-frills, "ultra low-lost" model after it was acquired in 2013 by private-equity firm Indigo Partners.
For now, WestJet seems to be projecting a business-as-normal message.
“We are delighted to continue the journey of building an airline based on a growing network, providing competitive airfares and more choice to, from and within Canada, for communities large and small,” WestJet CEO Ed Sims said in the company’s statement. “Integral to this relationship is a commitment to our employees, and our unique ownership-driven culture.”