WestJet to be sold in friendly deal to Onex Corp. for $5 billion

This forum has been developed to discuss aviation related topics.

Moderators: ahramin, sky's the limit, sepia, Sulako, lilfssister, North Shore, I WAS Birddog

cloak
Rank 4
Rank 4
Posts: 271
Joined: Sun Feb 11, 2018 12:08 pm

Re: WestJet to be Acquired by Onex

Post by cloak » Mon May 13, 2019 12:39 pm

Shrinking the business does not produce over 5 billions! This deal is possibly still developing!

I'm not one for shorting stocks as a general practice, but if I were a gambler, I'd be shorting AC; surprising that it rallied today!
---------- ADS -----------
  

User avatar
Arnie Pye
Rank 1
Rank 1
Posts: 17
Joined: Sun Aug 12, 2018 3:54 pm

Re: WestJet to be Acquired by Onex

Post by Arnie Pye » Mon May 13, 2019 12:45 pm

Gerry Schwartz thinks a little more globally than any of us ever will.

WestJet Vacations is proportionally tiny compared to AC Vacations or Sunwing/Transat. Lots of room for growth but WS never really put much effort or resources into funding it. Purchase and merge Transat or Sunwing and now you've got a real vacation arm.

WestJet Rewards is proportionally tiny compared to Aeroplan. Likewise, the market dictated some sort of rewards program but WS never really funded or grew this business. Amia could use a little competition.

The MRO side of the business has a 30% labour advantage over US MRO's and they're closer than ferrying a plane to South America. Could be some room to grow here too.

Quick - name another airline that fully owns their regional feeder. Look at nearly every airline out there and you'll find a feeder owned by someone else with a CPA. My guess is that Encore will get a nice 10 year CPA then be one of the first things sold off. I'm not suggesting that just because Air Canada sold theirs that WS will. Nearly every other airline out there has done this. WestJet is the exception, not the rule.

Here's hoping that long term this works out better than Skyservice and their foray with a private equity partner.
---------- ADS -----------
  

Victory
Rank 6
Rank 6
Posts: 407
Joined: Tue Sep 19, 2017 8:32 am

Re: WestJet to be Acquired by Onex

Post by Victory » Mon May 13, 2019 1:03 pm

cloak wrote:
Mon May 13, 2019 12:39 pm
I'd be shorting AC; surprising that it rallied today!
You're surprised it rallied when their biggest competitor just got sold to a corporate chop shop? Good luck with those shorts.
---------- ADS -----------
  

User avatar
pianokeys
Rank 4
Rank 4
Posts: 281
Joined: Mon Feb 22, 2010 9:35 pm

Re: WestJet to be Acquired by Onex

Post by pianokeys » Mon May 13, 2019 1:19 pm

Stratopaused wrote:
Mon May 13, 2019 11:15 am
No, there's a huge difference between changing management and finding new customers, and selling off components of the business. I'd like to know what, if any, companies they've chopped up and sold off.
Are you aware of what a "private equity" firm does? While changing management and creating an IPO are in the realm of their definition, so is selling off assets. You need to learn what a private equity firm does, because words like "reorganization" and "restructuring" can very much mean a wide spectrum. Im not going to do your own homework for you but just go look at the companies they bought and have restructured. Some of them faired off better than others.
Stratopaused wrote:
Mon May 13, 2019 11:15 am
Encore is already in a CPA with WestJet. Sure, the company could spin Encore off for a few million, but to what end? Would there be anything stopping Encore from then buying some RJs and bidding on work for, oh, AC or Transat, or even some creative new venture with Delta? Or maybe they would buy A220s and compete directly on routes they share with WS. They already operate on some common routes, like YYC-YEG and YYC-YLW, where Encore's lower cost structure would give them a huge advantage if they went head-to-head. Controlling Encore and Swoop would be a way more important goal than making a bit of cash off the top by selling them. If anything, I would see Swoop folded back into WestJet and a new fare class created to try to retain the pax, but I don't see how changing the relationship with Encore would improve anything.
First off your predictions would bust a CPA contract so that wont happen.

Second, if that was such a risk as you assume, then why is SkyWest, Air Wisconsin, Express Jet, and some other US regionals not owned by the airlines they have CPAs with?
---------- ADS -----------
  

Ah_yeah
Rank 3
Rank 3
Posts: 117
Joined: Mon Nov 21, 2011 4:50 pm

Re: WestJet to be Acquired by Onex

Post by Ah_yeah » Mon May 13, 2019 1:30 pm

Would be interesting to know how many shares Onex already owns. The numbers being thrown around are fairly crude but if Onex had been quietly accumulating in the 18's and 19's the media "value" of the deal goes down significantly.
If people recall back to the AC/CAIL days of ONEX, Schwartz had the ear of the federal Liberals whose only concern was to save face and have an optically acceptable solution. Something to think about as the next phase of the deal emerges. Also, despite CAIL teetering and AC heavily encumbered in those days, there were a lot of assets to value...like LHR,LGA,etc slots. Just a guess but, I'd bet there a few large large bits of info still to come.
Wish the WJA brethren well in unsettled times.
---------- ADS -----------
  

fish4life
Rank (9)
Rank (9)
Posts: 1678
Joined: Sun Jun 27, 2010 6:32 am

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by fish4life » Mon May 13, 2019 5:55 pm

Heliian wrote:
Mon May 13, 2019 10:44 am
Diadem wrote:
Mon May 13, 2019 10:26 am
Heliian wrote:
Mon May 13, 2019 9:17 am
Pump and dump.

Westjet has been struggling for years now and onex is absorbing 1.5 billion in debt. How they plan on making a profit on this, I don't know. Maybe push swoop and sell all wj assets as said above.

Better than wj folding and leaving everyone in the lurch, for now.
WestJet has only had one quarterly loss since 2005. If that's struggling, then boy would I sure like to struggle!
Yes, trouble started as they were rolling out encore, which they then had to scale back, then came swoop and new routes and new aircraft.

Just shows that your quarterly returns are tailored for the investor as they still have 1.5 billion in debt that they don't include in their reports. But ya, fuel prices.
Uh pretty sure they have always showed that debt on quarterly reports, an example I believe they owe 600 million for the Q400’s at encore still being paid down over 10 years. They also have roughly 1.5 billion in cash which I’m sure they are getting which will cover the debt.

It would be like if you had $500k in RRSP’s and a 500k mortgage, even though the dollar value is the same you still have 500k in debt. It would be ridiculous to pay off your debt and leave yourself with no cash because then you would have no liquidity which is even worse than having debt with liquidity.

With that in mind how would a company sell off encore when they owe 600 million on their airplanes, not a lot of cash there. This deal values WJ at about half of what AC is worth while still being less than half the operation in size so they aren’t going to just “ sell it off” because who in their right mind would buy the sold off pieces instead of just buying AC stock which is a better value?
---------- ADS -----------
  

co-joe
Rank 11
Rank 11
Posts: 3411
Joined: Mon Feb 16, 2004 2:33 am
Location: YYC 230 degree radial at about 10 DME

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by co-joe » Mon May 13, 2019 7:21 pm

Why is it a "friendly deal"? Just asking...
---------- ADS -----------
  

User avatar
confusedalot
Rank 8
Rank 8
Posts: 906
Joined: Fri Jul 03, 2009 9:08 pm
Location: location, location, is what matters

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by confusedalot » Mon May 13, 2019 7:36 pm

fish4life wrote:
Mon May 13, 2019 5:55 pm
Heliian wrote:
Mon May 13, 2019 10:44 am
Diadem wrote:
Mon May 13, 2019 10:26 am

WestJet has only had one quarterly loss since 2005. If that's struggling, then boy would I sure like to struggle!
Yes, trouble started as they were rolling out encore, which they then had to scale back, then came swoop and new routes and new aircraft.

Just shows that your quarterly returns are tailored for the investor as they still have 1.5 billion in debt that they don't include in their reports. But ya, fuel prices.
Uh pretty sure they have always showed that debt on quarterly reports, an example I believe they owe 600 million for the Q400’s at encore still being paid down over 10 years. They also have roughly 1.5 billion in cash which I’m sure they are getting which will cover the debt.

It would be like if you had $500k in RRSP’s and a 500k mortgage, even though the dollar value is the same you still have 500k in debt. It would be ridiculous to pay off your debt and leave yourself with no cash because then you would have no liquidity which is even worse than having debt with liquidity.

With that in mind how would a company sell off encore when they owe 600 million on their airplanes, not a lot of cash there. This deal values WJ at about half of what AC is worth while still being less than half the operation in size so they aren’t going to just “ sell it off” because who in their right mind would buy the sold off pieces instead of just buying AC stock which is a better value?
Spent most of my life with no debt and just a bit of cash. Overall net worth is in the positive. Not fantastic, but still a pretty big amount. Is that a fiscal problem?
---------- ADS -----------
  
Attempting to understand the world. I have not succeeded.

veni, vidi,...... vici non fecit.

:?

tps8903
Rank 3
Rank 3
Posts: 168
Joined: Mon Jan 09, 2017 8:40 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by tps8903 » Mon May 13, 2019 7:36 pm

co-joe wrote:
Mon May 13, 2019 7:21 pm
Why is it a "friendly deal"? Just asking...
Not hostile.....
---------- ADS -----------
  

Ah_yeah
Rank 3
Rank 3
Posts: 117
Joined: Mon Nov 21, 2011 4:50 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Ah_yeah » Mon May 13, 2019 8:25 pm

co-joe wrote:
Mon May 13, 2019 7:21 pm
Why is it a "friendly deal"? Just asking...
Because WJA's board (which represents the share holders) recommends its acceptance. In the AC case it was hostile because AC went to great lengths to block it.
---------- ADS -----------
  

North Shore
Rank Moderator
Rank Moderator
Posts: 5334
Joined: Mon Feb 16, 2004 3:47 pm
Location: Straight outta Dundarave...

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by North Shore » Mon May 13, 2019 9:37 pm

I can’t see how selling off Encore (even with a CPA) makes sense? Part of their recruitment draw is the One List - without that, then salaries are going to have to go up to attract and keep people. Keep the one list, and sell Encore leads to huge training bills at the subsidiary...where’s the upside?
---------- ADS -----------
  
Say, what's that mountain goat doing up here in the mist?
Happiness is V1 at Thompson!
Ass, Licence, Job. In that order.

Stratopaused
Rank 1
Rank 1
Posts: 20
Joined: Wed Mar 18, 2015 4:04 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Stratopaused » Mon May 13, 2019 11:10 pm

pianokeys wrote:
Mon May 13, 2019 1:19 pm
Second, if that was such a risk as you assume, then why is SkyWest, Air Wisconsin, Express Jet, and some other US regionals not owned by the airlines they have CPAs with?
Conversely, why does Alaska own Horizon? Why does American own Envoy, Piedmont, and PSA? Why does Delta own Endeavor? Why did AC buy a chunk of Chorus? The trend in North American regionals is the opposite of what you're claiming: the majors are buying their feeders to have more control over them and use them as suppliers of pilots.
North Shore wrote:
Mon May 13, 2019 9:37 pm
I can’t see how selling off Encore (even with a CPA) makes sense? Part of their recruitment draw is the One List - without that, then salaries are going to have to go up to attract and keep people. Keep the one list, and sell Encore leads to huge training bills at the subsidiary...where’s the upside?
Quite right. No one has actually presented a business case for selling Encore, other than "AC sold Jazz, so WestJet will do it too!" It's not a good comparison at all, as I pointed out previously; it was in the shadow of the merger and 9/11, and the primary reason Jazz existed in the first place is that it was a merger of all of AC's and CA's regionals, not a new entity created by the airline. When Jazz was spun off, AC was desperate for every bit of petty cash they could muster, and Robert Milton might not even have thought that AC was going to survive. Also, AC retained control of Jazz Air Income Fund for several years.
If Onex sells off Encore for, say $100 million, and then pays out $20 million per year in the CPA, they'll make a small lump sum initially and lose more over the long term; if they retain Encore, that $20 million/year stays within the group of companies. If they're willing to drop $3.5 billion in cash and take on $1.5 billion in debt, I doubt they much care about a one-time payment of $0.1 billion, and I don't even know if Encore would be worth that much; their assets are 47 used Q400s, which aren't exactly flying off the shelves, and they would be totally at the mercy of their single client when it came to revenue and business decisions. On top of all that, the current CPA doesn't include money for making any substantial profit, because it would just be returned to the parent company anyway, so a new contract with higher rates would have to be negotiated if any new owners wanted to actually get anything out of it. That is to say, WestJet would end up spending more per year by selling Encore.
There are very few investors who would be willing to put money into such a venture, especially under the current CPA terms. Encore's greatest value is in helping to fill WestJet aircraft with connecting passengers, and that value doesn't mean much to anyone but WestJet's management and owners. Putting Encore out for an IPO would probably turn out a lot like Porter's did a few years ago, and they wouldn't get much, if anything, for it.
---------- ADS -----------
  

User avatar
jpilot77
Rank 7
Rank 7
Posts: 507
Joined: Sun Aug 03, 2008 5:11 pm
Location: North of YMX

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by jpilot77 » Tue May 14, 2019 12:02 am

My bet isn’t that Onex sells off Encore it’s that they buy Transat and merge it into Westjet.
---------- ADS -----------
  
Welcome to Redneck Airlines. We might not get you there but we'll get you close!

User avatar
pilotbzh
Rank 7
Rank 7
Posts: 575
Joined: Sat Jan 15, 2005 7:33 am
Location: yyz

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by pilotbzh » Tue May 14, 2019 3:45 am

so no more caring owners I guess, Just employee working for a living....
---------- ADS -----------
  

goingnowherefast
Rank (9)
Rank (9)
Posts: 1588
Joined: Wed Mar 13, 2013 9:24 am

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by goingnowherefast » Tue May 14, 2019 4:58 am

I bet the recently unionized employee groups are even happier that they're in a union now. Not just the pilots, but everyone. Some solid and legally binding work rules with a major change in management.
---------- ADS -----------
  

Heliian
Rank (9)
Rank (9)
Posts: 1500
Joined: Wed Apr 29, 2009 2:14 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Heliian » Tue May 14, 2019 5:35 am

fish4life wrote:
Mon May 13, 2019 5:55 pm
Heliian wrote:
Mon May 13, 2019 10:44 am
Diadem wrote:
Mon May 13, 2019 10:26 am

WestJet has only had one quarterly loss since 2005. If that's struggling, then boy would I sure like to struggle!
Yes, trouble started as they were rolling out encore, which they then had to scale back, then came swoop and new routes and new aircraft.

Just shows that your quarterly returns are tailored for the investor as they still have 1.5 billion in debt that they don't include in their reports. But ya, fuel prices.
Uh pretty sure they have always showed that debt on quarterly reports, an example I believe they owe 600 million for the Q400’s at encore still being paid down over 10 years. They also have roughly 1.5 billion in cash which I’m sure they are getting which will cover the debt.

It would be like if you had $500k in RRSP’s and a 500k mortgage, even though the dollar value is the same you still have 500k in debt. It would be ridiculous to pay off your debt and leave yourself with no cash because then you would have no liquidity which is even worse than having debt with liquidity.

With that in mind how would a company sell off encore when they owe 600 million on their airplanes, not a lot of cash there. This deal values WJ at about half of what AC is worth while still being less than half the operation in size so they aren’t going to just “ sell it off” because who in their right mind would buy the sold off pieces instead of just buying AC stock which is a better value?
Maybe they can liquidate their entire fleet and then wet lease planes with crews from failed european airlines.

Anyway you grind it down, westjet is still massively in debt and on the precipice of losing more. If this deal doesn't go through, the company will surely have to do something to right itself.

Westjet stopped being a caring airline years ago, it's not profitable to be caring.
---------- ADS -----------
  

Biff
Rank 3
Rank 3
Posts: 110
Joined: Sun Jan 30, 2005 9:36 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Biff » Tue May 14, 2019 5:47 am

Onex bought the company to make a 2x profit over the medium term. The only way to do that is to grow. I see a pretty big 787 order coming down within the next year.
---------- ADS -----------
  

Victory
Rank 6
Rank 6
Posts: 407
Joined: Tue Sep 19, 2017 8:32 am

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Victory » Tue May 14, 2019 5:49 am

North Shore wrote:
Mon May 13, 2019 9:37 pm
I can’t see how selling off Encore (even with a CPA) makes sense? Part of their recruitment draw is the One List - without that, then salaries are going to have to go up to attract and keep people. Keep the one list, and sell Encore leads to huge training bills at the subsidiary...where’s the upside?
You don't need a One List for recruitment, just a PML to mainline. See Jazz. Also, don't forget Encore already has an unoffical PML to Air Canada :D
---------- ADS -----------
  

User avatar
Daniel Cooper
Rank 3
Rank 3
Posts: 158
Joined: Thu Dec 20, 2018 6:38 am
Location: Unknown

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Daniel Cooper » Tue May 14, 2019 5:56 am

The creation of WestJet Link is an indication that Encore was planned to be sold off even before the takeover. It's creating competition among feeders to keep the prices low. Just like Georgian, Jazz, Sky Regional. It wouldn't surprise me if WestJet also has something in the works with Georgian too actually.
---------- ADS -----------
  

Picesprick
Rank 0
Rank 0
Posts: 13
Joined: Tue Aug 21, 2018 2:59 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Picesprick » Tue May 14, 2019 6:06 am

https://www.cbc.ca/news/business/westje ... -1.5134407

Someone should let the CBC know all they need to do is head on over to Avcanada for the some "expert advice" on the matter, :roll: :roll: :lol:

For real though it is entertaining.
---------- ADS -----------
  

fish4life
Rank (9)
Rank (9)
Posts: 1678
Joined: Sun Jun 27, 2010 6:32 am

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by fish4life » Tue May 14, 2019 6:15 am

Heliian wrote:
Tue May 14, 2019 5:35 am
fish4life wrote:
Mon May 13, 2019 5:55 pm
Heliian wrote:
Mon May 13, 2019 10:44 am


Yes, trouble started as they were rolling out encore, which they then had to scale back, then came swoop and new routes and new aircraft.

Just shows that your quarterly returns are tailored for the investor as they still have 1.5 billion in debt that they don't include in their reports. But ya, fuel prices.
Uh pretty sure they have always showed that debt on quarterly reports, an example I believe they owe 600 million for the Q400’s at encore still being paid down over 10 years. They also have roughly 1.5 billion in cash which I’m sure they are getting which will cover the debt.

It would be like if you had $500k in RRSP’s and a 500k mortgage, even though the dollar value is the same you still have 500k in debt. It would be ridiculous to pay off your debt and leave yourself with no cash because then you would have no liquidity which is even worse than having debt with liquidity.

With that in mind how would a company sell off encore when they owe 600 million on their airplanes, not a lot of cash there. This deal values WJ at about half of what AC is worth while still being less than half the operation in size so they aren’t going to just “ sell it off” because who in their right mind would buy the sold off pieces instead of just buying AC stock which is a better value?
Maybe they can liquidate their entire fleet and then wet lease planes with crews from failed european airlines.

Anyway you grind it down, westjet is still massively in debt and on the precipice of losing more. If this deal doesn't go through, the company will surely have to do something to right itself.

Westjet stopped being a caring airline years ago, it's not profitable to be caring.
They aren’t in debt they have airplanes they own financed, if anything they are in a better financial position than some other airlines that just lease everything because WestJet actually owns airplanes. In fact if I remember correctly they have around 80 aircraft that are completely paid off and owned which is a great financial position to be in.

I’m also not sure how with only one quarter of loss recently and a turn around starting (clearly or Onex wouldn’t have paid 5 billion) they are on the precipice of going deep into debt. If you could explain your reasoning that would be great.
---------- ADS -----------
  

User avatar
pianokeys
Rank 4
Rank 4
Posts: 281
Joined: Mon Feb 22, 2010 9:35 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by pianokeys » Tue May 14, 2019 6:21 am

Stratopaused wrote:
Mon May 13, 2019 11:10 pm

Conversely, why does Alaska own Horizon? Why does American own Envoy, Piedmont, and PSA? Why does Delta own Endeavor? Why did AC buy a chunk of Chorus? The trend in North American regionals is the opposite of what you're claiming: the majors are buying their feeders to have more control over them and use them as suppliers of pilots.
Well exactly! You claim its better for airlines to own their feeders, but there is no uniformity across the board, thats what Im trying to tell you. If your theory was correct that there is better control then every single airline would own its feeder airlines. Which we know is simply not true, its a mix. And because its a mix its hard to say which one is better. Thats what im trying to tell you. Owning them is no guarantee of seats, sales, life span, profit, pilot flow, and control. A solid CPA contractual agreement can nail out all these issues, I dont know why you cant seem to grasp that, business 101, contracts! Duh!!!

The issue is not many are cynical enough to think about the worst case. And many seem to ignore how volatile this industry really is.
Daniel Cooper wrote:
Tue May 14, 2019 5:56 am
The creation of WestJet Link is an indication that Encore was planned to be sold off even before the takeover. It's creating competition among feeders to keep the prices low. Just like Georgian, Jazz, Sky Regional. It wouldn't surprise me if WestJet also has something in the works with Georgian too actually.
You sir are a brilliant, brilliant man. I bet Jerry Schwartz is going to merge TS and GGN in to WS somehow. Thats my new wildcard prediction.
---------- ADS -----------
  

Heliian
Rank (9)
Rank (9)
Posts: 1500
Joined: Wed Apr 29, 2009 2:14 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Heliian » Tue May 14, 2019 7:09 am

fish4life wrote:
Tue May 14, 2019 6:15 am
Heliian wrote:
Tue May 14, 2019 5:35 am
fish4life wrote:
Mon May 13, 2019 5:55 pm


Uh pretty sure they have always showed that debt on quarterly reports, an example I believe they owe 600 million for the Q400’s at encore still being paid down over 10 years. They also have roughly 1.5 billion in cash which I’m sure they are getting which will cover the debt.

It would be like if you had $500k in RRSP’s and a 500k mortgage, even though the dollar value is the same you still have 500k in debt. It would be ridiculous to pay off your debt and leave yourself with no cash because then you would have no liquidity which is even worse than having debt with liquidity.

With that in mind how would a company sell off encore when they owe 600 million on their airplanes, not a lot of cash there. This deal values WJ at about half of what AC is worth while still being less than half the operation in size so they aren’t going to just “ sell it off” because who in their right mind would buy the sold off pieces instead of just buying AC stock which is a better value?
Maybe they can liquidate their entire fleet and then wet lease planes with crews from failed european airlines.

Anyway you grind it down, westjet is still massively in debt and on the precipice of losing more. If this deal doesn't go through, the company will surely have to do something to right itself.

Westjet stopped being a caring airline years ago, it's not profitable to be caring.
They aren’t in debt they have airplanes they own financed, if anything they are in a better financial position than some other airlines that just lease everything because WestJet actually owns airplanes. In fact if I remember correctly they have around 80 aircraft that are completely paid off and owned which is a great financial position to be in.

I’m also not sure how with only one quarter of loss recently and a turn around starting (clearly or Onex wouldn’t have paid 5 billion) they are on the precipice of going deep into debt. If you could explain your reasoning that would be great.
Sure, as you said they have 80 planes. Those planes cost money just sitting there. That leaves some financed as you say, then someone else currently owns them until that financing is paid off. Including the 787's which are on a leaseback deal. You can bet that the ones they own are the older and cheaper ones that have little resale value but are still an asset. Good news is their lease rates went down though due to a slower market. They're asset to debt ratio went from 1.08 in 2017 to 0.78 in 2018. They currently show 3.2billion in long term debt and lease obligations.

They are really good at making things look happy and shiney, but they can't do it forever. Hence the sale now while they still can.
---------- ADS -----------
  

altiplano
Rank 11
Rank 11
Posts: 3568
Joined: Sat Jan 22, 2005 2:24 pm

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by altiplano » Tue May 14, 2019 7:21 am

Biff wrote:
Tue May 14, 2019 5:47 am
Onex bought the company to make a 2x profit over the medium term. The only way to do that is to grow. I see a pretty big 787 order coming down within the next year.
I agree on the medium term cash out plan for Onex, but I don't think a pile of widebodies and new routes into already served markets is the way it will happen.

It's going to be unlocking of value, streamlining operations, and employee concessions IMO to meet the timeframe
---------- ADS -----------
  

Rezy
Rank 3
Rank 3
Posts: 109
Joined: Wed Jul 18, 2012 11:03 am

Re: WestJet to be sold in friendly deal to Onex Corp. for $5 billion

Post by Rezy » Tue May 14, 2019 8:00 am

Some people are getting confused with the idea that a PE firm still needs to create value. They don’t. As they are the only shareholder, creating shareholder value is moot. The only variable is how to turn 5 billion from their purchase of WJ into 10 billion. There are lots of ways to do that and one of the biggest concerns they will have is risk. And how to offload that risk.
If they sell off Encore they no longer assume the risk of a Q tail going down on their balance sheet.
We just don’t know what their plans are, they could be long term (good for employees) or short term (bad for employees). Time will tell.
---------- ADS -----------
  

Post Reply

Return to “General Comments”