Two scenarios(keeping in mind they paid over $5 bil for a company that was worth $3 bil a couple days ago.Duke Point wrote: ↑Tue May 14, 2019 8:53 amGrowing is not necessarily the only way to add value. Taking WestJet back to its core strategy, and selling of components would impress potential investors just as well.
Why would they make a "big order" for 787's? You order just 6 and that's a billion dollars. That expenditure "must" make money....lots in order to justify it. The overseas market is already saturated from Canada to a degree, and a "guaranteed return" on international expansion is a crapshoot at best. Onex is shrewd, not stupid. They will not throw hundreds of millions or billions at an operation unless they see an airtight business case for that particular model.
They are absolutely looking at the current operation, and will likely look for immediate efficiency improvements. They will likely sell assets and leaseback based on the PE model. Guessing there will be a "settling period", with nothing drastic happening for some time so as not to spook anyone. Once they are the owner, there's nothing that can be done about any business decision they make. Only one man knows for sure what the plan is......and he isn't likely talking.
DP.
1. Short term investment. Sell of the components and return to core stategy. Hard to imagine that they will be able to sell Encore and the maintenance division for enough to justify that $2 bil differential. And “returning to their core stategy” might help a little but it’s a little hard to see how. Certain things have changed permanently, like wages for instance. So using this strategy, I believe, would be a very short term gamble to eek out a very small profit. Possible but not likely considering the sums of money and time commitment involves.
2. Medium to long term investment. Hope to reach a $10 bil market cap(similar to AC). They only way to do this would be to grow substantially. Growth within Canada and to the US and Caribbean, certainly could grow a little more but not enough to justify a $10 bil market cap. The way to get there would be to copy some of the larger airlines around like AC or Delta or the Emirates. That would involve large wide bodies and a world wide schedule. It could still mean Encore spun off to create some finance power.