Update on WestJet's Acquisition of Sunwing Airlines

WestJet has issued a statement following the Government of Canada's issuance of an order regarding its acquisition of Sunwing Airlines.

Helwing

Villamizar

March 11, 2023

DALLAS – The WestJet Group (WS) has issued a statement following the Government of Canada's issuance of an order finding that the proposed acquisition of Sunwing Vacations and Sunwing Airlines (WG) is in the public interest, taking into account certain measures.

"We are pleased that the regulatory review of the transaction is now complete," said Angela Avery, WestJet Group Executive Vice-President and Chief People, Corporate & Sustainability Officer. "We thank the Minister of Transport and the Commissioner of Competition, and the staff of Transport Canada, the Competition Bureau, and the Canadian Transportation Agency, for their efforts to review the transaction."

The issuance of the order is an important step in the process of closing the transaction. WS has been awaiting regulatory clearance from the federal Cabinet following a recommendation by the Minister of Transport.

Reports about the acquisition made the rounds earlier today, stating that the transaction included WG, Sunwing Vacations, Vacation Express, and the company's Canadian retail assets. WS is expected to have Stephen Hunter and TUI Group as shareholders following the deal. WG is privately owned by these entities.

However, it is speculated that regulatory approval will come with certain conditions in light of the concerns raised by Canada's Competition Bureau last fall.

Photo: Michal Mendyk/Airways
Photo: Pablo Gonzalez/Airways

Acquisition Under Canadian Scrutiny

WestJet's proposed acquisition of Sunwing, which was announced in March 2022, initially faced scrutiny from the Canadian government's Competition Bureau, which raised significant concerns about the potential merger, citing possible anti-competitive effects that could harm consumers in terms of sales of combined air and resort vacation packages on 31 identified routes between Canada, the Caribbean, and Mexico.

The Bureau believed that WestJet may acquire a "monopoly" on 16 of these routes, leading to reduced travel options for Canadians and increased prices, less choice, and service cuts. Eliminating the competition between the integrated airlines and tour operators could also result in a significant reduction in Canadian travel, where existing networks overlap, according to reports by Open Jaw.

Additionally, Transport Canada also considered that the acquisition may have a deep and negative effect on Canadian jobs, with Unifor filing a public interest submission to Transport Canada on Friday, July 22, 2022.

However, both airlines expressed confidence that the government would indeed approve the deal, emphasizing that the combination of their businesses would result in more affordable vacation packages and airfares, and help to protect and create jobs during a difficult period for the travel industry.

Their confidence appears to be well-founded. If merged, the combined fleet of WS and WG airlines is expected to be around 127 aircraft, 110 from WS, and 17 from WG, not including those of their subsidiaries.

This is a developing story.

Featured image: Mark Avila-Liam Funnel/Airways