Air Canada and WestJet planes at Calgary International Airport on Aug. 31, 2022.Jeff McIntosh/The Canadian Press
The federal government is set to announce on Friday it has approved WestJet Airlines’ takeover of Sunwing Airlines and a related vacations division, according to two people familiar with the matter.
The deal, announced by the companies in March, 2022, marks a bigger step for Calgary-based WestJet into the vacations package business with the purchase of Toronto-based Sunwing.
The purchase price of privately owned Sunwing, founded and owned by the Hunter family, has not been disclosed.
Approval of the takeover is expected to come with conditions recommended by the Competition Bureau, which had raised some concerns. However, the deal has passed the public interest test and has received the support of cabinet, said the sources, who are not authorized to speak publicly on the matter.
The companies previously said the tour businesses will be combined and headquartered in Toronto, while WestJet will run Sunwing Airlines from its Calgary base. The two brands will be marketed separately.
In the fall, the Competition Bureau said in a report the takeover will lead to higher prices and fewer choices for travellers. The watchdog warned of a “substantial lessening or prevention of competition” in the sales of vacation packages, including airfare and resort stays, on 31 routes between Canada and Mexico or the Caribbean. WestJet would gain a monopoly on 16 of those routes, and the takeover would lead to reduced travel in the markets in which the companies’ networks overlap, it said.
The report noted the economic importance of the airline and travel industry, the reliance on the industry for travel particularly to sun destinations, and that demand would likely grow sharply after the pandemic.
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However, final say on the takeover rested with cabinet.
WestJet takes on a Sunwing brand damaged by poor service over the recent Christmas break, when the airline cancelled many flights. Passengers were stranded – sometimes for days – far from home. The company blamed the government for blocking the hiring of foreign pilots, and bad weather that hampered operations and prevented the repositioning of crews and planes. Stephen Hunter, the chief executive, apologized.
WestJet, owned by Onex Corp., and privately held Sunwing announced the takeover a year ago, after the pandemic had battered the global aviation industry and sent passenger volumes plunging. Sunwing and WestJet are two of Canada’s four largest integrated airlines and vacation package sellers.
“We look forward to the result of the government’s review of the proposed transaction,” said WestJet spokeswoman Madison Kruger.
Sunwing did not immediately respond to a request for comment.
Sunwing also owns travel agency SellOffVacations.com and Blue Diamond Hotels and Resorts, as well as having partnerships with several hotel chains. The company also owns and operates 45 resorts in Mexico and the Caribbean, several tour providers, a luxury charter jet service, and other vacation and hotel brands.
Colin Hunter, father of the CEO, founded Sunwing in 2002. German tourism and airline company TUI Group owns 49 per cent. Stephen Hunter and TUI would become WestJet shareholders under the takeover and retain ownership of several Caribbean resorts.
Sunwing employs about 2,400 people and operates a fleet that ranges in size from 10 to 40, depending on the season.