Onex Recoups Investment with Sale of WestJet Stake, IPO Could be Next

Six years after acquiring WestJet in 2019, Onex Corp. has diversified the airline’s ownership group by selling stakes to some of the world’s largest carriers. The transaction also allows the private equity firm to recoup the balance of its 2019 equity investment in the Calgary-based airline, while still retaining 75% ownership.

On Friday, Onex announced it was selling a 15% stake in WestJet to Delta Air Lines for US$330 million and 10% ownership to Korean Air for another $220 million. DL plans to sell a 2.3% stake in the Canadian carrier to its joint venture partner Air France-KLM for US$50 million.

“The transaction was completed at more than a 25 per cent premium to our current WestJet NAV (net asset value),” Onex chief executive Bobby Le Blanc said on a conference call. “This is a significant achievement that speaks to our team’s ability to deliver positive realizations for high quality assets in all market conditions.”

 “Delta, Korean and Air France-KLM are among the world’s most prominent and best-managed airlines,” Tawfiq Popatia, co-head of Onex Partners, said in a statement. “Onex is delighted to welcome them as shareholders in WestJet.”

WestJet and Delta have been partners since February 2011, while Korean Air and WestJet established a partnership back in June 2012.

 “Investing in a world-class partner like WestJet aligns our interests and ensures that we remain focused on providing a world-class global network and customer experience for travellers in the United States and Canada,” Delta CEO Ed Bastian said.

All of the new WestJet owners are members of the SkyTeam Airline Alliance. Air Canada belongs to the rival Star Alliance network.

During the conference call, the potential for WestJet to go public was discussed as a possible next step.

“We are at the cap for strategic foreign investors,” Popatia said on the conference call. 

 “Given its size, I think it’s natural to think about this as ultimately, one day, being reintroduced to the public markets.”

Onex Chief Executive Le Blanc said selling the minority stake in WestJet will help strengthen establish industry partnerships and reflects positively on the airline’s strategy, performance and ability to continue to grow.