The airline market has been suffering for the last two years due to the global pandemic. Recovering from the Covid-19, restrictions start to be loosened, and the federal government of Canada has lifted its advisory against international travel. Airline companies aim to catch up with the business and recover well out of the pandemic.
Nowadays value-oriented travel is the fastest-growing segment of the airline market. Canadian low-cost carrier WestJet Group has announced a deal to buy Sunwing Airlines and Sunwing Vacations, making a foray into the holiday tour market as the competition among Canadian carriers heats up. WestJet released a statement confirming the acquisition.
As part of the agreement, WestJet will create a new tour operating unit, led by Sunwing CEO Stephen Hunter, which will include Sunwing Vacations and WestJet Vacations as separate brands.
Both companies operate flights to warmer destinations. WestJet aims to increase its flight footprint to sun destinations and resorts. With this acquisition, WestJet hopes to take a bigger share in the competitive business by increasing its capacity and offering low-fares.
WestJet’s new CEO Alexis von Hoensbroech said:
“We feel strong enough, even more so together, to recover well out of this pandemic and to be more competitive, specifically in a low-cost market,”.
CEOs of both companies stated that no layoffs would result from the takeover. Moreover, WestJet CEO Alexis von Hoensbroech believes this merger will generate more jobs opportunities for Canadians:
“There will be fewer aircraft from Europe, which means more aircraft from Canada being staffed with Canadian crews. So this will eventually mean more jobs,” Hoensbroech said.
WestJet has 8,490 employees (down from about 14,000 in 2019) and 180 aircraft, whereas Sunwing employs near 2,500 staff and owns 18 planes. According to Airways Magazine, the two airlines have compatible fleet and this will help reduce the overall cost of the merger such as integration of flight crew, ground staff, and operations.
Shortly after the announcement of the acquisition, the federal Competition Bureau said it would review the proposed transaction.
"Under the Competition Act, the Competition Bureau has a mandate to review mergers to determine whether they are likely to result in a substantial lessening or prevention of competition," the statement read.
Completion of the acquisition is expected to be done in late 2022, pending regulatory approval. And according to experts, we might see more mergers in the airline industry, due to expected competition.
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