TORONTO — Twenty years ago Onex Corporation was part of a $1.8 billion bid to merge Air Canada and Canadian Airlines. At that time, one airline was dominant in the east, the other in the west. Could Onex be eyeing a similar set up now with WestJet and Transat?
In the guessing game of who’s buying who, anything is possible, and while it seemed highly unlikely that WestJet on its own could make a play for Transat, yesterday’s announcement that Onex intends to acquire WestJet in a $3.5 billion deal (plus debt) puts things in a new light.
According to reports, analyst Benoit Poirier of Desjardins Securities said Onex might also look to acquire Transat. “We believe it would be easier for WestJet to acquire Transat once the company is integrated within Onex, as unlocking Transat’s full potential could take a few years (three to five years) – which might be less suited for a public entity,” Poirier said in an investor note.
To which WestJet CEO Ed Sims said: “We don’t speculate on any issues along those lines.”
Since then speculation about who if any Transat’s potential buyer could be has run rampant. Quebecor CEO Pierre Karl Peladeau has expressed interest, along with Montreal developer Groupe Mach and financial services company FNC Capital.
Air Canada has been drawn into the fray too. Asked by an analyst about acquisition opportunities in Canada and abroad in a conference call to discuss first quarter results on May 6, Air Canada President and CEO Calin Rovinescu said: “We will continue with our business plan,” adding, “that’s what brought us this far.”
Onex, backed by American Airlines parent AMR Corp., failed in its 1999 bid to merge Air Canada and Canadian Airlines. Now it has WestJet, subject to a shareholder vote this summer. The deal, if it goes through, would close in the second half of 2019 or early 2020.
Sims has said there are no layoffs planned as a result of the Onex acquisition. WestJet’s profit sharing program is also expected to continue.
With files from The Canadian Press