WestJet and Sunwing announced on March 2nd that they have reached a definitive agreement under which the WestJet Group of companies will acquire Sunwing Vacations (inclusive of SellOffVacations and Vacation Express) and Sunwing Airlines. The transaction will bring together two distinctly Canadian travel and tourism success stories to deliver new travel options and greater value for travellers in the rapidly expanding leisure and work-from-anywhere travel markets.
The combination will also enable both companies to protect and create jobs and rebuild strength in the Canadian travel industry at a critical time.
Following the close of the transaction, a new tour operating business unit will be created under the WestJet Group, to include both Sunwing Vacations and WestJet Vacations Inc., and will be led by Sunwing CEO Stephen Hunter. Sunwing’s current shareholders will become equity holders in the WestJet Group.
The tour operator business will be headquartered in Toronto, with a Quebec head office in Laval and the business will continue to market the Sunwing brand alongside WestJet Vacations. The WestJet Group will maintain its head office in Calgary.
The WestJet Group of companies will expand to include Sunwing Airlines. This 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.
This acquisition will also improve the WestJet Group’s ability to offer more affordable fares by immediately expanding its low-cost footprint in Canada.
“This is an exciting moment for WestJet, Sunwing and Canada’s travel industry,” said Alexis von Hoensbroech, CEO of WestJet. “We are bringing together two highly complementary businesses with powerhouse brands to strengthen our successful leisure business and deliver greater value to our guests.”
“This combination 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,” added von Hoensbroech.
Stephen Hunter, CEO of Sunwing, said, “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. 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. My team and I are excited for the future, and we look forward to offering even more vacation destinations to Canadians at affordable prices.”
In a statement Andrew Dawson President of Sunwing Tour Operations said, “I want to assure you that any existing plans customers have made with Sunwing will be honoured. Given that the agreement is subject to regulatory approvals, we will be operating business as usual for the time being.”
WestJet Group and Sunwing intend to build on their collective history of constructive labour relations and will respect all arrangements with union and employee associations, including those in place and those currently under negotiation.
As a result of the resiliency created by the transaction, Sunwing expects to no longer require the pandemic-related Large Employer Emergency Financing Facility (LEEFF) Sunwing obtained from the Canadian government in early 2021, which will be fully repaid upon closing of the transaction.
Both airlines are privately held. Toronto-based Sunwing is controlled by the Hunter family — Germany’s TUI Group owns the other 49 per cent of the airline — and WestJet was purchased by Onex Corp. in 2019.
The acquisition would increase WestJet’s flight footprint to sun destinations and European cities after what has been a tough two years for the airline and travel industries.
The federal government last month lifted its advisory against international travel and several airlines are hiring.
In April, Air Canada abandoned its attempted acquisition of Transat AT after the European Commission warned the country’s largest airline it would face high regulatory hurdles.
Months earlier, Sunwing acknowledged rumours about being approached for potential acquisition by an unnamed Montreal based carrier. Hunter declined to name the carrier, saying he turned it down “mainly because of culture,” stating he preferred a more growth-driven, “entrepreneurial” attitude.
With WestJet he said, “There are no exclusive routes that we operate on or would operate on as a combined entity. So, from our perspective there is there is very, very little concern.”
About 95 percent of the seats Sunwing sells are part of a vacation package, versus just five percent for WestJet, he said.
Any would-be acquisition of a major airline will be subject to approval by regulatory authorities.
Meanwhile …
Several budget carriers have been beefing up since the summer in preparation for a clash with Air Canada and WestJet — and with each other — particularly for domestic flights and sun destinations.
Flair Airlines has added more than a dozen Boeing 737s to its fleet, as WestJet subsidiary Swoop tacks on routes, and Lynx Air — set to make its maiden voyage April 7 — joins the fray as well. Jetlines is readying itself for launch as its first aircraft, an Airbus 320, arrived at Kitchener/Waterloo airport last week.
Let the games begin…