WestJet closes deal to buy Sunwing Vacations and Sunwing Airlines

MONTREAL — WestJet Airlines’ purchase of Sunwing’s main airline and vacation divisions became official Monday in a major consolidation of the Canadian aviation market following a tumultuous year for travel.

First announced in March last year, the deal bolsters WestJet’s vacation package offerings as it adds the tour operator to its fleet, though the two brands will “initially” be marketed separately.

However, the two airlines will move from being competitors to collaborators, with the merger positioning Sunwing as an “instrumental pillar of the WestJet Group,” the latter said in a statement.

The move expands Calgary-based WestJet’s reach in Eastern Canada, particularly in the tour operator realm where it aims to compete against Montreal-based Air Canada and Transat AT.

The federal government approved the takeover of Sunwing Vacations and Sunwing Airlines by WestJet in March, despite a warning from the Competition Bureau that the purchase by Canada’s second-biggest airline would likely result in higher prices and decreased services, especially around package deals.

In signing off on the deal, Ottawa attached conditions that include extending Sunwing packages to five new cities, maintaining capacity on the most affected routes and keeping both a vacations business head office in Toronto and a regional one in Montreal for at least five years.

The agreement adds some 2,000 employees and 18 Boeing 737s to WestJet Airlines’ 109-aircraft fleet, made up entirely of Boeing planes (not including its regional service, WestJet Encore), according to Airfleets.net.

Financial terms of the takeover have not been disclosed.

Stephen Hunter, formerly the CEO of Sunwing Vacations, is now CEO of WestJet’s vacations business, overseeing operations at both Sunwing Vacations and WestJet Vacations.

“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,” Hunter said in a release.

Both companies are private outfits, with parent Sunwing Travel Group majority-owned by the Hunter family and WestJet owned by Toronto-based investment manager Onex Corp. after it took the airline private in a $5-billion deal in 2019.

WestJet and Sunwing comprise about 37 per cent of seat capacity on non-stop flights between Canada and sun destinations. That number rises to 72 per cent between Western Canada and sun destinations, the Competition Bureau said in an October report delivered to the transport minister.

This report by The Canadian Press was first published May 1, 2023.

Companies in this story: (TSX:ONEX)

Christopher Reynolds, The Canadian Press