Will Westjet survive?

[swimming]

.

[Blue42]

Doesn’t Onex also own the aircraft leasing company that leases a bunch of WJ’s airplanes?

I believe only the first 3 B787s were sold to and then leased ba k from BBAM

[CaptainHaddock]

WestJet (in its current form) will not survive.

WestJet is faced with a massive payout to those who are set to be moved from LOA to layoff in September. A group layoff (50 or more) entitles those being laid off with 16 weeks notice or payment in lieu. The first batch (about 5000) will be laid off September 25th.

Imagine the average pay being about $1000.00. Each employee would be owed (on average) 16 weeks x $1000.00 PLUS any accumulated vacation time and Overtime. Lets imagine there is only the matter of 16 weeks pay at an average of $1000.00 per week for 5000 employees.

$80 MILLION DOLLARS

Then the next batch to follow on October 1st, then the last batch end of November-ish.

All in all, WestJet will be paying out close to $100 million to lay people off.

They have already asked for an exemption. My assumption is, they asked for this exemption as soon as they found out no bail out was coming.

1. Bail out? - No!
2. Exemption from Canadian Labour Law No?
3. Bankruptcy

It is my bold prediction that WestJet will be in credit protection by the end of summer.

Are you from Onex or WJ financial team?

Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.

Ha, if that’s what’s panning out for WJ, then they’ll be holding hands with AC then on their way to the bankruptcy court-what is AC, 35000 employees?

[NoSocks]

Are you from Onex or WJ financial team?

Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.

Ha, if that’s what’s panning out for WJ, then they’ll be holding hands with AC then on their way to the bankruptcy court-what is AC, 35000 employees?

AC is currently sitting on 2.3 billion in cash PLUS they have a large credit facility available to them. Secondly, the majority of those on LOA are there for up to 2 years (where WestJet is 6 months). The opportunity for recovery in 2 years is higher then that of 6 months.

Based on the current moves by Sims and company, it tells me there is a bit of a cash problem (asking for bail outs/exemptions etc). Onex isn't dropping another dime into this company.

[jetav8r]

WestJet not going anywhere. It will survive albeit a smaller airline.

Onex spent billions on it purchase and will work towards making it a leaner meaner carrier. WestJet is no longer a small 2 province carrier. The bean counters will look at all aspects of the operation and see where cuts will be made and improvements to the operation.

AC has been bankrupt how many times and comes back stronger. The feds won't let AC be the only game in town again. They will prop up WestJet one way or another to maintain competition.

I am fortunate that I have never been laid off and am currently working but it is heart breaking for everyone who is on layoff or soon will be. For the yungins' its a bit easier, they can ride out the storm, but for the old farts it will be difficult to start over.

This might be the best time to reset the mindset and do something else that will actually make more money. I've had a backup plan for years just in case. Its lonely flying around and not hear anyone for minutes thinking do I have a comm failure. Chin up, things will get better.

[Bede]

Onex spent billions on it purchase and will work towards making it a leaner meaner carrier.

Onex only spend around $300M on the purchase (sorry, don't have the exact number). The rest came from other unknown investors.

AC has been bankrupt how many times and comes back stronger. The feds won't let AC be the only game in town again. They will prop up WestJet one way or another to maintain competition.

AC has been through CCAA once. The Fed's don't need to support WJ for competition. They need a flag carrier and can promote any number of other smaller carriers to be the competition. The Liberals are all about shoring up their vote. There is no political reason to support WJ. No one in AB will vote for them anyways regardless of who they bail out so why bother blowing the money?

[Big Pistons Forever]

When it comes to airlines, normal business practices don’t seem to apply. The status of owning an airline seems to be a big deal for many heavy weight investors and JS seems no different. He is still pissed he was frozen out of a deal with Air Canada when it was in CCAA.

I would suggest that he would be more willing to hang in there with WestJet, than if it were say in the waste management business.

[Old fella]

Onex spent billions on it purchase and will work towards making it a leaner meaner carrier.

Onex only spend around $300M on the purchase (sorry, don't have the exact number). The rest came from other unknown investors.

AC has been bankrupt how many times and comes back stronger. The feds won't let AC be the only game in town again. They will prop up WestJet one way or another to maintain competition.

AC has been through CCAA once. The Fed's don't need to support WJ for competition. They need a flag carrier and can promote any number of other smaller carriers to be the competition. The Liberals are all about shoring up their vote. There is no political reason to support WJ. No one in AB will vote for them anyways regardless of who they bail out so why bother blowing the money?

No I don’t believe a WJ bankruptcy will be the headlines in the news. JT doesn’t hate Alberta although most Albertans hate him. A WJ abrupt failure will hurt many others outside of Alberta that is for sure, similar scenario with CAI couple of decades ago. The headlines would be disastrous.

[brooks]

Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.

Ha, if that’s what’s panning out for WJ, then they’ll be holding hands with AC then on their way to the bankruptcy court-what is AC, 35000 employees?

AC is currently sitting on 2.3 billion in cash PLUS they have a large credit facility available to them. Secondly, the majority of those on LOA are there for up to 2 years (where WestJet is 6 months). The opportunity for recovery in 2 years is higher then that of 6 months.

Based on the current moves by Sims and company, it tells me there is a bit of a cash problem (asking for bail outs/exemptions etc). Onex isn't dropping another dime into this company.

I wouldn't be worried about WJ as they don't have 100 widebody's sitting on the tarmac. AC just recently realized that they need to shed more jobs and the other day issued new shares and debt to raise a billion. ONEX and WJ have not issued bonds. Tells me JT told AC to pound sand or take the government loan. AC is burning through what 600 million a month? You're comparing Grapefruit to Kiwi. WJ isn't burning through the same respective rate of cash because they took the necessary steps early to stem the burn. From what I hear bookings are going up and they want to see the MAX back by end of Summer. Should be slow and steady rise back to normal by next summer.

[Hangry]

AC is here for the long game.

WJ is not.

Time will tell.

I’ll bet another 80 years on it.

[tailgunner]

Brooks,
Sims is on record saying that WJ was burning 22 000 000 a day as well. Both companies would initially burn more cash and then settle into a reduced rate as time goes on. AC announced the end of the CEWS program for 20000 employees because even with the program, the corporation is still paying benefits and taxes per employee. So, don’t look at that as a negative for the corporation. AC just lightened their costs further.
Secondly, AC has now flown 1200 cargo flights since early March. They don’t fly, unless the flight is making money. There are now at least 7 converted WB aircraft doing daily cargo flights. Do you know how WJ is utilizing their WB fleet?
Thirdly, WJ is a piece of ONEX’s portfolio. ONEX has other companies that are under the COVID squeeze. How’s the admissions at the movies, or the production companies? Spirit manufacturing has been hurting since the MAX fiasco.The aircraft leasing company is facing hard times for sure, as leases are abandoned or valued downwards? Last I checked, ONEX has a market cap of 6.4 B, AC is 4.3B. The difference is all of AC’s resources go towards AC. How much of ONEX’s resources are allocated to WJ? Will ONEX sacrifice another company to provide capital for WJ? The truth is, no one knows. Sims doesn’t even know.
Cheers

[CFM Symphony]

Brooks,
Sims is on record saying that WJ was burning 22 000 000 a day as well.

Interesting "facts". Here is a fact backed by actual math. WJ revenue 2018 (last full year available before going private) was $4.7bil. Divide that by 365 = $13mil a day...and that's revenue not cost, and at full operating capacity. The rest of your narrative is equally based on counterfactuals.
Cheers

[tailgunner]

CFM Symphony,
Check the Financial Post May 6, 2020.

Westjet will make it through Covid, but may not recover to previous size, warns CEO. Is the article title.
Sims said that during early March, WJ was burning 25000000$ a day. His statement not mine.
Cheers

[aerobod]

CFM Symphony,
Check the Financial Post May 6, 2020.

Westjet will make it through Covid, but may not recover to previous size, warns CEO. Is the article title.
Sims said that during early March, WJ was burning 25000000$ a day. His statement not mine.
Cheers

If you’ve ever done press interviews (as I have done for industry publications), you will know they don’t always take accurate notes or listen to their recordings properly, as cash burn was a lot less than $25m in late March after flights started to be cancelled. There is no reason it would suddenly jump to more than double the normal daily cost with zero revenue. I expect Ed said something like “our cash burn has increased to five million per day” which they interpreted as “our cash burn has increased, two five million per day”.

Best to use logic when analyzing information presented as facts in the press, they are not the best at understanding the quantification of figures they are reporting.

[brooks]

In 80 years you won't be flying in airplanes. You'll be a systems technician working on a spaceship heading to Mars.

ONEX has been highly successful and I doubt that they would tell WestJet to issue layoffs taking into account re-training costs without the required foresight. Right now AC has a trickle of their international destinations open which provides the bread and butter of their operations.

[CFM Symphony]

WJ was burning 25000000$ a day. His statement not mine.

No. That’s the media’s statement, not his. And boy have the media gotten it wrong over the years. I’m not arguing with the media. I’m arguing against basing one’s hypotheses on clear misrepresentations which are easy to fact-check.

[Hangry]

In 80 years you won't be flying in airplanes. You'll be a systems technician working on a spaceship heading to Mars.

Sure maybe. But I guarantee it won’t have WJ painted on it.

[Sharklasers]

WJ was burning 25000000$ a day. His statement not mine.

No. That’s the media’s statement, not his. And boy have the media gotten it wrong over the years. I’m not arguing with the media. I’m arguing against basing one’s hypotheses on clear misrepresentations which are easy to fact-check.

Except he did say it in an interview with the financial post?

“ Sims said in the worst days of early March, when cancellations were outstripping new bookings and before the airline made the decision to temporarily furlough half its staff, WestJet was burning through cash at a rate of about $25 million per day.”

https://business.financialpost.com/busi ... d497a6735d

I’m sure it’s not where close to 25 million a day now and a lot of that number was probably paying out your refundable tickets and the burden of the emergency measures.

[CFM Symphony]

We are beating a dead horse arguing over the broken telephone that is the media. Either way, yes, actual cash burn rates are likely somewhere in the single digit millions per day.

[sarg]

Brooks,
Sims is on record saying that WJ was burning 22 000 000 a day as well. Both companies would initially burn more cash and then settle into a reduced rate as time goes on. AC announced the end of the CEWS program for 20000 employees because even with the program, the corporation is still paying benefits and taxes per employee. So, don’t look at that as a negative for the corporation. AC just lightened their costs further.
Secondly, AC has now flown 1200 cargo flights since early March. They don’t fly, unless the flight is making money. There are now at least 7 converted WB aircraft doing daily cargo flights. Do you know how WJ is utilizing their WB fleet?
Thirdly, WJ is a piece of ONEX’s portfolio. ONEX has other companies that are under the COVID squeeze. How’s the admissions at the movies, or the production companies? Spirit manufacturing has been hurting since the MAX fiasco.The aircraft leasing company is facing hard times for sure, as leases are abandoned or valued downwards? Last I checked, ONEX has a market cap of 6.4 B, AC is 4.3B. The difference is all of AC’s resources go towards AC. How much of ONEX’s resources are allocated to WJ? Will ONEX sacrifice another company to provide capital for WJ? The truth is, no one knows. Sims doesn’t even know.
Cheers

While I'm sure Onex has other companies being squeezed by COVID, I'm sure they're not worried about movie admissions or the MAX production line. Cineplex and Spirit Aerosystems are no longer in the Onex portfolio of companies.

[brooks]

Brooks,
Thirdly, WJ is a piece of ONEX’s portfolio. ONEX has other companies that are under the COVID squeeze. How’s the admissions at the movies, or the production companies? Spirit manufacturing has been hurting since the MAX fiasco.The aircraft leasing company is facing hard times for sure, as leases are abandoned or valued downwards? Last I checked, ONEX has a market cap of 6.4 B, AC is 4.3B. The difference is all of AC’s resources go towards AC. How much of ONEX’s resources are allocated to WJ? Will ONEX sacrifice another company to provide capital for WJ? The truth is, no one knows. Sims doesn’t even know.
Cheers

Incorrect information Tailgunner. Current list of Companies which appears to be well diversified.
Onex Corp is a Canada-based private equity company. Its segments include Electronics Manufacturing Services, including Celestica Inc. that provides electronics manufacturing services; Healthcare Imaging, including Carestream Health, Inc. that provides healthcare information technology solutions; Health and Human Services, including Res-Care, Inc. that provides residential, educational and support services; Building Products, including JELD-WEN Holding, Inc. that manufactures windows and related products; Insurance Services, including USI Insurance Services; Packaging Products and Services, including SGS International, LLC and SIG Combibloc Group Holdings S.a r.l.; Business and Information Services, including Clarivate Analytics and Emerald Expositions, LLC; Food Retail and Restaurants, including Save-A-Lot; Credit Strategies, including Onex Credit Manager, and Other, including Survitec Group Limited. It also provides airlines service through its portfolio company WestJet Airlines Ltd and BBAM Aircraft Leasing.

[Rezy]

Brooks,
Thirdly, WJ is a piece of ONEX’s portfolio. ONEX has other companies that are under the COVID squeeze. How’s the admissions at the movies, or the production companies? Spirit manufacturing has been hurting since the MAX fiasco.The aircraft leasing company is facing hard times for sure, as leases are abandoned or valued downwards? Last I checked, ONEX has a market cap of 6.4 B, AC is 4.3B. The difference is all of AC’s resources go towards AC. How much of ONEX’s resources are allocated to WJ? Will ONEX sacrifice another company to provide capital for WJ? The truth is, no one knows. Sims doesn’t even know.
Cheers

Incorrect information Tailgunner. Current list of Companies which appears to be well diversified.
Onex Corp is a Canada-based private equity company. Its segments include Electronics Manufacturing Services, including Celestica Inc. that provides electronics manufacturing services; Healthcare Imaging, including Carestream Health, Inc. that provides healthcare information technology solutions; Health and Human Services, including Res-Care, Inc. that provides residential, educational and support services; Building Products, including JELD-WEN Holding, Inc. that manufactures windows and related products; Insurance Services, including USI Insurance Services; Packaging Products and Services, including SGS International, LLC and SIG Combibloc Group Holdings S.a r.l.; Business and Information Services, including Clarivate Analytics and Emerald Expositions, LLC; Food Retail and Restaurants, including Save-A-Lot; Credit Strategies, including Onex Credit Manager, and Other, including Survitec Group Limited. It also provides airlines service through its portfolio company WestJet Airlines Ltd and BBAM Aircraft Leasing.

You’re missing the point Brooks.
As all of those companies are held privately through ONEX, people don’t know how big those companies are, what the sales are like, profit margins, assets, etc etc. They are buried beneath layers of funds and equity stakes.

[aerobod]

Brooks,
Thirdly, WJ is a piece of ONEX’s portfolio. ONEX has other companies that are under the COVID squeeze. How’s the admissions at the movies, or the production companies? Spirit manufacturing has been hurting since the MAX fiasco.The aircraft leasing company is facing hard times for sure, as leases are abandoned or valued downwards? Last I checked, ONEX has a market cap of 6.4 B, AC is 4.3B. The difference is all of AC’s resources go towards AC. How much of ONEX’s resources are allocated to WJ? Will ONEX sacrifice another company to provide capital for WJ? The truth is, no one knows. Sims doesn’t even know.
Cheers

Incorrect information Tailgunner. Current list of Companies which appears to be well diversified.
Onex Corp is a Canada-based private equity company. Its segments include Electronics Manufacturing Services, including Celestica Inc. that provides electronics manufacturing services; Healthcare Imaging, including Carestream Health, Inc. that provides healthcare information technology solutions; Health and Human Services, including Res-Care, Inc. that provides residential, educational and support services; Building Products, including JELD-WEN Holding, Inc. that manufactures windows and related products; Insurance Services, including USI Insurance Services; Packaging Products and Services, including SGS International, LLC and SIG Combibloc Group Holdings S.a r.l.; Business and Information Services, including Clarivate Analytics and Emerald Expositions, LLC; Food Retail and Restaurants, including Save-A-Lot; Credit Strategies, including Onex Credit Manager, and Other, including Survitec Group Limited. It also provides airlines service through its portfolio company WestJet Airlines Ltd and BBAM Aircraft Leasing.

You’re missing the point Brooks.
As all of those companies are held privately through ONEX, people don’t know how big those companies are, what the sales are like, profit margins, assets, etc etc. They are buried beneath layers of funds and equity stakes.

Plenty of information in their 171 page annual report, for example p37 has a breakdown of revenue and cost of goods sold by Industry sector: https://www.onex.com/static-files/1088c ... 7d68b95d3a

[Rezy]

Incorrect information Tailgunner. Current list of Companies which appears to be well diversified.
Onex Corp is a Canada-based private equity company. Its segments include Electronics Manufacturing Services, including Celestica Inc. that provides electronics manufacturing services; Healthcare Imaging, including Carestream Health, Inc. that provides healthcare information technology solutions; Health and Human Services, including Res-Care, Inc. that provides residential, educational and support services; Building Products, including JELD-WEN Holding, Inc. that manufactures windows and related products; Insurance Services, including USI Insurance Services; Packaging Products and Services, including SGS International, LLC and SIG Combibloc Group Holdings S.a r.l.; Business and Information Services, including Clarivate Analytics and Emerald Expositions, LLC; Food Retail and Restaurants, including Save-A-Lot; Credit Strategies, including Onex Credit Manager, and Other, including Survitec Group Limited. It also provides airlines service through its portfolio company WestJet Airlines Ltd and BBAM Aircraft Leasing.

You’re missing the point Brooks.
As all of those companies are held privately through ONEX, people don’t know how big those companies are, what the sales are like, profit margins, assets, etc etc. They are buried beneath layers of funds and equity stakes.

Plenty of information in their 171 page annual report, for example p37 has a breakdown of revenue and cost of goods sold by Industry sector: https://www.onex.com/static-files/1088c ... 7d68b95d3a

Here is there q1 report https://www.onex.com/static-files/8778c ... 943b1976b3
What was WestJets revenue? Information not available
What was WestJets loss? Information not available

The only information provided is that WestJet is held by a fund that lost 111 million in q1.

The only point I’m trying to make is that the information is scarce. You’ll never see CCAA coming.

[aerobod]

You’re missing the point Brooks.
As all of those companies are held privately through ONEX, people don’t know how big those companies are, what the sales are like, profit margins, assets, etc etc. They are buried beneath layers of funds and equity stakes.

Plenty of information in their 171 page annual report, for example p37 has a breakdown of revenue and cost of goods sold by Industry sector: https://www.onex.com/static-files/1088c ... 7d68b95d3a

Here is there q1 report https://www.onex.com/static-files/8778c ... 943b1976b3
What was WestJets revenue? Information not available
What was WestJets loss? Information not available

The only information provided is that WestJet is held by a fund that lost 111 million in q1.

The only point I’m trying to make is that the information is scarce. You’ll never see CCAA coming.

It is too early to see the WS reporting, as the private company books need to be consolidated then incorporated into the Onex public books under IFRS rules, so the Onex books will likely be closed for a given quarter before incorporation of the WS audited info. The details are there for other acquisitions and sectors, they will appear for WS at some point this year, I expect, they have already announced the write down of some of their investment: https://www.theglobeandmail.com/busines ... jet-stake/

Also there are various press articles on Onex’s Covid strategy, such as this one: https://www.bnnbloomberg.ca/onex-touts- ... -1.1412645