WestJet’s Proposed Acquisition of Sunwing
LOCATION: National
ISSUE/SOURCE: Government of Canada approval of WestJet’s acquisition of Sunwing Vacations and Sunwing airlines
DATE: March 15, 2023
SUGGESTED RESPONSES
- On March 10, 2023, the Government of Canada approved WestJet’s acquisition of Sunwing.
- In determining that the proposed purchase is in the public interest, the government considered a broad range of factors. This included levels of service, social and economic implications, the financial health of the air transportation sector, and competition.
- After considering the pros and cons, the government determined that approving the acquisition will allow Sunwing to continue to provide affordable vacation packages to Canadians, not only maintain existing jobs but create more, and protect Canadians who have already purchased tickets. The agreement is accompanied by commitments to improve customer service, including baggage handling and committing to increase connectivity.
If Pressed
Terms and Conditions
- 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.
- An Independent Monitor will be in place for 5 years to ensure that WestJet complies with the Terms and Conditions.
LEEFF Loan
- Approving the Proposed Acquisition with strict terms and conditions, including the repayment of Sunwing’s two Large Employer Emergency Financing Facility (LEEFF) loans, ensures that these loans will be repaid immediately upon Closing. This is a guarantee that the Government will see over $200 million of dollars in repaid funds within the next few months, which it could reinvest into the economy to benefit Canadian taxpayers.
- Additionally, as a larger and more financially secure airline, WestJet’s commitment to taking on Sunwing’s voucher facility, and fully repay this loan upon its maturity, means Canadians can expect to see another hundred million repaid by 2028.
Background Information
- On March 2, 2022, Canada’s second largest air carrier, WestJet, announced its intention to acquire Sunwing Vacations and Sunwing Airlines. Transport Canada was officially notified April 8, 2022, triggering the review process.
- As per the Canada Transportation Act, on May 19, 2022, the Minister of Transport communicated to the Parties that the Proposed Acquisition did raise significant public interest considerations, and that a public interest assessment would be launched by the Department.
- The Commissioner of Competition provided a report to the Minister on October 25, 2022. The Department then considered the input of the Commissioner as it provided its public interest assessment to the Minister on December 5, 2022.
- There followed a series of meetings and conversations among Transport Canada officials, the Parties and their legal counsels to discuss, question, review and request additional information respecting the concerns that were shared.
- The Minister made his final recommendation to the Governor in Council in March 2023. His recommendation took into consideration various factors, including the measures presented by the Parties and the Commissioner’s assessment of them, in determining whether the Proposed Acquisition is in the public interest as it relates to national transportation.
- The Governor in Council approved the Acquisition on March 10, 2023, subject to terms and conditions.