| Two of Canada’s largest travel companies are proposing a major merger.
WestJet and Sunwing announced today that they have reached a definitive agreement under which the WestJet Group of companies will acquire Sunwing Vacations and Sunwing Airlines.
“The transaction will bring together two distinctly Canadian travel and tourism success stories to deliver new travel options and greater value for travellers in the rapidly expanding leisure and work-from-anywhere travel markets,” officials said. “The combination will enable both companies to protect and create jobs and rebuild strength in the Canadian travel industry at a critical time.”
Robert Kokonis, president of Toronto-based AirTrav, said the deal makes sense for both sides.
WestJet is Canada’s second largest airline, but WestJet Vacations is number four in Canada. Sunwing Vacations, however, is the top tour operator in the country, he said.
The acquisition would increase WestJet’s flight footprint to sun destinations and European cities after what has been a tough two years for the airline and travel industries, Canadian Press reports.
Kokonis said Transat, which was in talks to be purchased by Air Canada early last year, will be the most squeezed, as Air Canada can take the top end of the market, and WestJet-Sunwing can make inroads in Quebec.
“Following the close of the transaction, a new tour operating business unit will be created under the WestJet Group, to include both Sunwing Vacations and WestJet Vacations Inc., and will be led by Sunwing CEO Stephen Hunter. Sunwing’s current shareholders will become equity holders in the WestJet Group,” officials said.
“Canadian travellers will have access to more competitive airfares and affordable vacation packages through the combined strength of the companies. The tour operator business will be headquartered in Toronto, with a Quebec head office in Laval and the business will continue to market the Sunwing brand alongside WestJet Vacations. The WestJet Group will maintain its head office in Calgary.
“The WestJet Group of companies will expand to include Sunwing Airlines. This will add increased capacity, dedicating otherwise seasonal aircraft to operate year-round in Canada, instead of Sunwing supplementing seasonal demand with imported aircraft, which translates into more jobs for Canadians. This acquisition will improve the WestJet Group’s ability to offer more affordable fares by immediately expanding its low-cost footprint in Canada,” officials stated.
The combination, which remains subject to receipt of regulatory approvals, is anticipated to close late 2022.
Andrew Dawson, President Tour Operations, Sunwing, said in a statement that the deal will mean more jobs, more choices and lower prices for Canadian consumers.
| “I hope and expect this working relationship will only strengthen in this next chapter, as we bring together two Canadian powerhouse brands to drive scale and continued growth in the travel sector,” he said. “Specifically, having a single purchase point for vacation packages from more gateways to more destinations will simplify processes and help our agent partners grow their businesses.
“Additional benefits of the agreement include:
- More jobs. WestJet and Sunwing employees will have access to greater opportunities, whether they are pilots, cabin crew or tour employees.
- More choice. We plan to strengthen the partnerships we have built with local, regional and international airports across and will be able to offer customers vacations to more destinations than ever before, in addition to increasing capacity year-round. Cities where WestJet operates will gain access to a wider array of vacation packages and regional growth is expected in several of our existing markets, particularly in Quebec where we have a longstanding presence.
- Lower prices. The alignment between the two airline operations is essential to keep the business competitive as several low-cost carriers increase their presence in the Canadian market.”
“I want to assure you that any existing plans customers have made with Sunwing will be honoured. Given that the agreement is subject to regulatory approvals, we will be operating business as usual for the time being,” Dawson said. |
“This is an exciting moment for WestJet, Sunwing and Canada’s travel industry,” said Alexis von Hoensbroech, CEO of WestJet. “We are bringing together two highly complementary businesses with powerhouse brands to strengthen our successful leisure business and deliver greater value to our guests.”
“This combination brings together Canada’s two original low-cost carriers and positions us to accelerate growth in value-oriented travel, already the fastest growing segment of the airline market. It creates new opportunities for our people, our operational partners and supports the recovery from a global pandemic that has been particularly challenging for the Canadian travel and tourism industry including local airports and businesses we work closely with,” added von Hoensbroech.
Stephen Hunter, CEO of Sunwing, said, “We have a very promising future as part of The WestJet Group, which is one of the only airlines in the world that has not issued debt or equity during the pandemic, or accepted sector-specific government aid. The combination of their strong balance sheet and growth trajectory with Sunwing’s unparalleled expertise in creating differentiated vacation packages will ensure the success of the new vacation division.
“My team and I are excited for the future, and we look forward to offering even more vacation destinations to Canadians at affordable prices,” Hunter said.
WestJet Group and Sunwing intend to build on their collective history of constructive labour relations and will respect all arrangements with union and employee associations, including those in place and those currently under negotiation.
As a result of the resiliency created by the transaction, Sunwing expects to no longer require the pandemic-related Large Employer Emergency Financing Facility (LEEFF) Sunwing obtained from the Canadian government in early 2021, which will be fully repaid upon closing of the transaction.
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