WestJet Buys Rival Sunwing Airlines as Travel Restrictions Ease

WestJet Group announced it would purchase Sunwing Airlines for an undisclosed amount, creating an opportunistic deal for owner Onex (TSX:ONEX) stock.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 3, 2022 3:15 pm EST

| More on: ONEX

WestJet Group announced this week that it would be buying up rival Sunwing Airlines and Sunwing Vacations, as travel restrictions continue to ease. The takeover is the first major move after WestJet owner Onex (TSX:ONEX) purchased the airline for $3.5 billion back in 2019.

What happened?

Onex stock announced the purchase by WestJet Group of Sunwing Airlines for an undisclosed amount on Mar. 2. The deal, once meeting with government approval, should be finalized this year. The pair of airlines will continue to be marketed separately but headquartered together in Toronto.

While the deal likely won’t see an increase in new flights, it’s mainly seen as an opportunistic choice by Onex stock. It broadens the destinations for WestJet, adding far more exposure to leisure destinations. This is where there seems to be the largest recovery in airline travel.

So what?

The deal is huge news for those watching air travel rebound, as WestJet continues to be in the second spot as Canada’s second-largest airline. Sunwing doesn’t change that, but it certainly creates a huge competition boost, especially in the tourism market.

The WestJet deal also comes just in time as travel restrictions ease in Canada and indeed around the world. As of Feb. 28, Canadians will no longer need a PCR test to re-enter Canada, but instead have the option to use a rapid antigen test. These are far cheaper and take far less time as well.

Now what?

The WestJet news comes just under a week after Onex stock reported earnings. The company reported a 5% growth in investing capital for the fourth quarter, though profit fell 64% from share price drops mainly. However, for the year the company reported strong profit that nearly doubled to $1.4 billion the year before.

It’s clear the company won’t let some recent share losses get in the way of opportunistic goals. And that includes the rebound in air travel. Shares of Onex stock are up 9% in the last year, falling 16% since December highs.