WestJet looks for value in Sunwing acquisition

The move is not just to bolster the airline's leisure business, but to maintain its position in the low-cost travel market.

WestJet has announced its plans to acquire leisure carrier Sunwing Airlines and its value-oriented booking business Sunwing Vacations.

Under the terms of the deal, the WestJet Group would create a new tour operating business unit comprised of Sunwing Vacations and WestJet Vacations, both of which will continue to be marketed independently. Sunwing CEO Stephen Hunter would lead the new business group.

Aside from the vacation booking business, the Sunwing Airlines carrier will be brought under the WestJet Group, bringing added capacity of low-cost routes to its network.

WestJet was founded as a low-cost, regional airline, but has risen out of the value category as its business has expanded to become a global carrier in recent years. In addition to strengthening WestJet’s business in leisure travel, Sunwing also strengthens the company’s position in value-oriented travel, which WestJet CEO Alexis von Hoensbroech said in a statement is the fastest-growing segment of the airline market.

WestJet also owns Swoop, an airline that began flying in 2018 to help the company ensure it didn’t miss out on opportunities in low-cost travel amid its global ambitions.

The acquisition first came to light Wednesday morning when the union representing Sunwing’s flight attendants released a statement regarding its plans to defend against any job losses that may result from the merger.

WestJet confirmed the news in the afternoon with its own statement. The company claimed the acquisition was likely to create jobs in Canada, as it would both allow Sunwing’s otherwise seasonal aircraft to operate year-round, as well as eliminate the need to supplement demand with imported aircraft.

The companies expect the deal to close by the end of the year, subject to customary regulatory approval, though in the airline space that might not be a given.

A deal by Air Canada to acquire Sunwing’s fellow leisure airline Transat was terminated last year when European regulators signaled that they would not approve the acquisition as it was proposed. Sunwing also faced its own takeover attempt last year, though Hunter was prevented from naming the would-be buyer by an NDA.