WestJet Group completes acquisition of Sunwing

The WestJet Group announced Monday (May 1) that it has completed its acquisition of Sunwing Vacations and Sunwing Airlines. 

The transaction, first announced in March 2022, combines the two Canadian aviation and leisure companies. 

It will bring "greater choice, competitive airfares and increased direct access to sun destinations to Canadian travellers," WestJet said a news release. "In addition, it positions Sunwing to continue its growth across Canada and permits the newly merged company to protect jobs."

What happens now?

Initially, the airlines will continue independent operations, maintaining a "sharp focus on providing an exceptional guest experience and ensuring safe operations," according to the release. 

As the two entities transition from competitors to collaborators, the combination of these businesses will be planned in a way that positions Sunwing as an "instrumental pillar" of the WestJet Group, and prioritizes the experience of more customers.  

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"As we have set out on our new strategic trajectory for the WestJet Group, investing further in leisure and sun flying across Canada is a critical driver for growth," stated Alexis von Hoensbroech, CEO of the WestJet Group. "It brings me great pleasure to welcome Sunwing to the group, adding 18 Boeing 737s, 2,000 employees and Canada's largest vacation tour operator and significantly expanding our footprint in Eastern Canada. Together, we will strategically enhance our sun and leisure offerings to bring even more affordable and accessible travel opportunities to Canadians." 

Stephen Hunter, formerly the CEO of Sunwing Vacations, has been appointed CEO of the WestJet Group's Vacations Business, which is now responsible for all tour operating and vacation package businesses of both the Sunwing Vacations and WestJet Vacations brands.

"The combination of our complementary businesses marks an important milestone that will enable us to fast-track our growth plans and provide Canadians with more affordable vacations to more destinations than ever before," stated Hunter. "I am thrilled to join forces with WestJet and, in doing so, create even more opportunities for our people and deliver greater value for Canadian travellers."

As previously announced, the WestJet Group's newly-combined tour operator businesses, comprised of WestJet Vacations and Sunwing Vacations, will be based in Toronto, ON and will continue to operate a Montreal office. 

In the coming years, the Vacations Business expects to facilitate new flying and new employment opportunities by retaining Sunwing's aircraft in Canada year-round, among other sources of anticipated growth, WestJet said. 

"We are excited to welcome Sunwing's employees to the WestJet Group of Companies; throughout the planning of this transaction, we have been continually impressed by their expertise and experience in the vacations industry," stated von Hoensbroech." We look forward to working alongside them to deliver memorable services to an expanding number of Canadians."

"Strict conditions" 

The Government of Canada approved the acquisition in March, noting how the deal would be subject to "strict terms and conditions." 

The enforceable terms are intended to "protect the interests of travellers," said Transport Canada, which was expected given that the Competition Bureau, last October, raised concerns about the transaction.

The terms and conditions include:

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

The decision to green light the deal "was not taken lightly, especially in light of everything that happened over the holidays for those who flew with Sunwing,” stated Transport Minister Omar Alghabra in March. 

“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," he said. 

Sunwing, founded in 2002, has headquarters in Toronto and a regional office in the Montreal area. The tour operator employs roughly 2,200 people.

Transport Canada noted that in the absence of the acquisition, Canada’s air transport sector "could have faced greater instability, including job losses, a significant reduction of affordable vacation offerings, negative impacts on passengers, and the Government not being repaid sizable loans." 

WestJet, owned by Onex Corp., and Sunwing account for roughly 37 per cent of non–stop capacity between Canada and sun destinations and 72 per cent of non–stop capacity between Western Canada and sun destinations, the Competition Bureau found in its report last fall. 

The marrying of WestJet and Sunwing was originally positioned as a move that would keep business competitive as low-cost carriers increase their presence in the Canadian marketplace.

The deal is set to increase WestJet’s reach to sun destinations and European cities while expanding the brand’s presence in Eastern Canada.

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