The federal government says its approval of WestJet Airlines’ takeover of Sunwing Airlines and a related vacations arm will help stabilize the sector while financially supporting the Toronto-based travel company.
Calgary-based WestJet’s purchase of Sunwing, announced a year ago, was given the green light on Friday by the government, which imposed conditions that include jobs growth and capacity reservation. The merged companies must also maintain Sunwing’s Toronto and Montreal offices for five years.
In a statement, Ottawa said approving the takeover in Canada’s concentrated and fragile air-travel market “was not taken lightly, especially considering the delays and bottlenecks experienced by travellers last summer, as well as the customer service and communications challenges by Sunwing during the recent holiday season.”
Factors considered in approving the deal included service, economic implications, financial health of the sector and competition.
“Given the current air sector landscape, it was important to ensure that the final agreement offered the best possible outcome for Canadians,” the statement said. “The acquisition will help maintain the stability of the sector as Sunwing will continue to provide more affordable vacation packages to Canadians, while being financially supported by WestJet.”
WestJet’s purchase price for privately owned Sunwing has not been announced. Sunwing was founded in 2002 by Colin Hunter, whose son Stephen is the current chief executive officer. German travel company TUI Group owns 49 per cent and, along with Stephen Hunter, will become shareholders in WestJet.
The companies’ tour businesses will be combined and headquartered in Toronto, while WestJet will run Sunwing Airlines from its Calgary base.
Both companies issued statements welcoming the approval.
“We look forward to closing the transaction in the weeks ahead and officially joining the WestJet Group, Sunwing said in an e-mail.
“We are pleased that the regulatory review of the transaction is now complete,” said Angela Avery, WestJet Group executive vice-president.
Sunwing disappointed hundreds of travellers over the recent winter break when its operations were badly affected by storms, a pilot shortage, and an inability to move crews and planes around its network. Many travellers were stranded for the holidays, or missed their flights altogether. Sunwing apologized, but drew the anger of politicians and customers.
The government extended credit to Sunwing worth as much as $448-million to survive the COVID-19 pandemic.
The conditions the government imposed on the WestJet deal include that the company: phase out Sunwing’s seasonal aircraft leasing program; improve baggage handling; improve Sunwing’s communications with passengers with better technology; extend Sunwing vacation packages to five more Canadian cities; boost employment at the Toronto office by 20 per cent over three years; and supply airfare data for price monitoring.