Billionaire Gerry Schwartz's $2.6 billion bid for WestJet Airlines is a bet...
- Billionaire Gerry Schwartz’s $2.6 billion bid for WestJet Airlines is a bet his private equity firm’s deep pockets and patience will help the Canadian carrier weather challenges and build a more formidable competitor against market leader Air Canada, industry analysts and executives said on Tuesday.
Onex saw an opportunity in Canada’s aviation market duopoly to build up the Calgary-based low-cost carrier against Air Canada, even in a country where high commercial aviation fees and surcharges are regularly derided by airlines, a source familiar with Onex’s thinking told Reuters. WestJet’s earnings slipped in 2018 as it worked to contain costs amid a unionizing workforce, while spending on a bold plan to transform itself from a domestic low-cost carrier into a full service airline with international flights, first class cabins and a separate budget carrier called Swoop.
“Our objective is to remove obstacles to growth, and we do that by providing access to capital and a long-term perspective that isn’t constrained by the quarterly reporting cycle,” Onex added in a separate emailed statement.Cowen & Co airline analyst Helane Becker said WestJet has a good plan to grow the business, but it seemed to be taking longer than expected.” These guys are trying to build up another company to compete with Air Canada,” she said.
Sims will stay on to carry out WestJet’s growth plans, as it adds Boeing Dreamliner service and grows Swoop from six to 10 aircraft this year.
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