Westjet chief executive says Onex deal positions airline for long-term success
Westjet President and Chief Executive Officer Ed Sims says his company is poised for long-term growth after investment firm Onex announced a deal to buy the company outright.
“Onex have bought into the strategy, they’ve bought into the vision of the business,” Sims told a gathering of reporters at the company’s Calgary headquarters Tuesday.
That strategy includes evolving into a globally competitive international carrier, with new wide-body aircraft and a true business class catering to high-paying business class passengers, replacing Westjet’s original low-cost approach to air travel.
“They have not spent $5 billion on this entity to try to shrink their way to prosperity,” he said. “They have a growth agenda, they believe we have a growth agenda. They’re looking to expand operations. They understand, as I understand, that this highly volatile industry sometimes requires re-evaluation of our workforce around efficiency and productivity. That is not on their agenda for this transaction.”
Sims said in the short term, one of the biggest challenges will be to convince staff the deal is in their best interest, both for the company, and in terms of job security.
“I’ve been in the aviation industry over 30 years now,” said Sims. “One of the biggest challenges is volatility, and people worried about the sustainability of the business model. What Onex’s investment gives us now is that sustainability.
“We are ordering aircraft today with a 20 to 25-year life. And we need to have a business strategy that allows us to develop an economic return on those assets for the life of those assets.”
Sims said the deal with Onex will relieve executives from the burden of reporting results publicly quarterly, and responding to shareholder demands for immediate returns on their investment.
“One of the challenges of being in the public domain is reporting quarterly,” said Sims. “I compare it to a farmer constantly pulling up his or her radishes, wondering how they’re growing, and then wondering why they’re not growing on a sustainable basis. We now have the ability to focus on our long-term strategy.”
That strategy, he said, remained grounded in its Calgary roots and keeping the headquarters on the Prairies.
“We like to think we’re not just made in Calgary, we’re made of Calgary,” said Sims, pointing to the 3,500 airline staff based in the city. “We believe we actually uphold Calgary and Alberta’s values as we fly; our hospitality, our outstanding service.”
The deal is subject to shareholder, court, and regulatory approval.