By Skies Magazine | March 2, 2022 Estimated reading time 6 minutes, 27 seconds.
The WestJet Group of Companies on March 2 announced it has reached an agreement with Sunwing to acquire both Sunwing Vacations and Sunwing Airlines. The decision comes in the wake of the Covid-19 pandemic, which has had a drastic impact on air travel over the last two years — particularly in Canada.
WestJet says the combination of the companies will “protect and create jobs and rebuild strength in the Canadian travel industry at a critical time.”
The deal — which is subject to regulatory approvals — is expected to close in late 2022, at which time Sunwing Airlines will officially be included in the WestJet Group of Companies.
WestJet operates a fleet of over 180 aircraft, and employed roughly 14,000 people pre-pandemic. That number has since decreased to around 8,400 workers, but the airline is hiring. Sunwing employs fewer than 2,500 people and operates a fleet of 40 aircraft during its peak season in winter. The airline owns 18 of those planes, and leases out eight to European operators in the warmer months.
The deal with WestJet “will add increased capacity, dedicating otherwise seasonal aircraft to operate year-round in Canada, instead of Sunwing supplementing seasonal demand with imported aircraft, which translates into more jobs for Canadians,” WestJet said in a press release.
Moreover, a new tour operator business division is to be created under the WestJet Group umbrella, and will include Sunwing Vacations and WestJet Vacations Inc. as separate brands. The new division will be headed by Sunwing CEO Stephen Hunter.
Cities that WestJet currently serves will gain access to a “wider array” of vacation packages. As well, Sunwing is expecting regional growth in several of its existing markets, “particularly in Quebec where we have a longstanding presence,” the airline said.
While the WestJet Group will maintain its headquarters in Calgary, the new tour operator business will be based in Toronto, with a Laval, Quebec, head office.
For current Sunwing shareholders, the deal with WestJet means they will become equity holders in the WestJet Group.
For Canadian travelers, the news is expected to bring “more competitive airfares” and “affordable vacation packages.”
Andrew Dawson, president of tour operations at Sunwing, made a point to assure customers that any existing travel plans made with Sunwing will be honored.
“Given that the agreement is subject to regulatory approvals, we will be operating business as usual for the time being,” added Dawson.
Both Transport Canada and the Competition Bureau must review the proposed acquisition and report findings to transport minister Omar Alghabra, who will make the final call.
Alexis von Hoensbroech, who began his role as WestJet’s CEO just two weeks ago, said the acquisition “brings together Canada’s two original low-cost carriers and positions us to accelerate growth in value-oriented travel, already the fastest growing segment of the airline market. It creates new opportunities for our people, our operational partners, and supports the recovery from a global pandemic that has been particularly challenging for the Canadian travel and tourism industry — including local airports and businesses we work closely with.”
Sunwing’s Hunter added: “We have a very promising future as part of the WestJet Group, which is one of the only airlines in the world that has not issued debt or equity during the pandemic, or accepted sector-specific government aid.”
WestJet was acquired by Toronto-based private equity firm Onex Corp. in December 2019, which has the capital that helped the airline weather the storm that was Covid-19. Onex’s vision from the start has been to grow WestJet, and the deal with Sunwing signals optimism for a travel market rebound.
“The combination of their strong balance sheet and growth trajectory with Sunwing’s unparalleled expertise in creating differentiated vacation packages will ensure the success of the new vacation division,” added Hunter.
In early 2021, Sunwing obtained the Large Employer Emergency Financing Facility (LEEFF) put in place by the federal government to assist employers affected by the pandemic. The airline said when the transaction closes, it is expecting it will no longer require LEEFF, and will fully repay the loan at that time.
