WestJet acquisition of Sunwing approved by Transport Canada

The Government of Canada has approved the acquisition of Sunwing Airlines and Sunwing Vacations by WestJet Airlines, with “strict terms and conditions in the interest of Canadians”.

Supporting Canada’s Aviation Industry

In a release issued on their official website on Friday, Transport Canada announced the Minister of Transport, Omar Alghabra, had approved the acquisition.

It said it was following various assessments, consultations, and reviews by groups such as unions, consumer protection groups, and the Commissioner of Competition.

It stated that its priority is to “ensure a safe and competitive air sector” in Canada and how this creates jobs and supports the country’s economy.

Transport Canada said the decision had “not been taken likely”. It cited the issues faced by the aviation industry in the previous summer. This included delays and cancellations, and, specifically, Sunwing’s performance during the peak holiday season.

Transport Canada’s Remarks on the WestJet-Sunwing Acquisition…

The Honourable Omar Alghabra said: “After considering the pros and cons, we have made the decision that will allow Sunwing to continue to provide affordable vacation packages to Canadians, create more good jobs, and protect current jobs as well as Canadians who have already purchased tickets.”

Sunwing received a government loan of 375 million CAD in February 2021 and a further loan, under a different scheme for COVID protection, of 100 million CAD in June 2021.

Fearing instability and job losses, the Government stated that Sunwing will continue to offer holidays with financial support from WestJet.

The Government did not want to risk not being “repaid sizable loans” if the purchase had been denied.

Rising to Demands

Sunwing, at the time of writing, had not issued a press release. However, WestJet praised the announcement.

WestJet’s Group Executive Vice-President, Angela Avery, said: “We are pleased that the regulatory review of the transaction is now complete.“

The acquisition must comply with the terms and conditions of approval set. The demands are “enforceable”, the release states.

The terms include ensuring jobs, facilities, and services remain stable. It requires the current capacity to be maintained, if not increased. It also focuses on improved customer experiences and technology.

1. Extending Sunwing vacation package offerings to five new Canadian cities
2. Maintaining capacity on routes most affected by the merger;
3. Increasing regional connectivity;
4. Improving baggage handling for better passenger experience;
5. Maintaining a vacations business head office in the Toronto area and a regional office in the Montreal area for a minimum of five years;
6. Increasing net employment by 20 percent over three years in the Toronto office;
7. Ensuring better passenger experience by investing in IT technology solutions to improve Sunwing’s communications;
8. Supplying airfare data on vacation packages for monitoring post-acquisition price trends; and
9. Gradually ending Sunwing’s seasonal leasing practice to protect Canadian jobs.

The government aims to protect jobs and flight capacity in key areas of Sunwing’s infrastructure with these demands.

About Sunwings: Significance on WestJet…

Sunwing has its headquarters in Toronto, whereas WestJet is based in Calgary.

Sunwing currently “leases-in” other airlines to perform flights on its behalf during peak season. This includes UK airline TUI Airways. UK personnel often operate these during the term of the lease.

AviationSource reported WestJet’s recently announced increase in its Summer 2023 flying program.

The approval will complete the long-awaited process in both companies.

However, it is likely that, due to the strict targets, limits, and terms set, we will see no major changes in operations in the short to medium term.