Air Canada Will Monitor Evolving Delta-WestJet Partnership

Air Canada says it will keep an eye on the evolving relationship between Delta Air Lines and WestJet, after the U.S. carrier acquired a minority stake in the Canadian LCC.

However, the Canadian mainline is largely unconcerned by the transaction involving its domestic rival, describing it as unsurprising.

“It shouldn’t be surprising to anybody,” Air Canada CEO Michael Rousseau said on a May 9 investor call. Nodding to Delta’s existing codeshare partnership with the LCC, he added, “We all know Delta has a strategy of putting minority interest in airlines around the world, so it doesn’t really surprise us. We’ll monitor it, and we’ll see what, if anything, changes over the next little while, but we don’t expect anything.”

Delta announced the transaction on May 9, agreeing to acquire a 15% stake from Onex Partners for $330 million, and intending to sell 2.3% upon closing to joint venture partner Air France-KLM for $50 million. Korean Air has also agreed to acquire a minority stake from Onex, intending to invest $220 million in exchange for 10%.

All three carriers—Delta, Korean and Air France—have existing relationships with WestJet.

Delta says its investment will lead to a more seamless travel experience for customers. It also “aligns our interests and ensures that we remain focused on providing a world-class global network and customer experience for travelers in the United States and Canada,” CEO Ed Bastian said. For Korean Air, the investment comes as “part of our continued commitment to enhancing transpacific connectivity,” said Walter Cho, chairman and CEO of Korean Air and Hanjin Group. “This strategic partnership will enhance our global network and create long-term value for customers through greater choice and convenience,” Cho added.

Calgary, Alberta-based WestJet will continue to be owned and controlled by the Onex Group, a Toronto-based investment management firm which acquired WestJet in 2019 for approximately C$5 billion ($3.6 billion) including debt. Onex CEO Bobby Le Blanc highlighted the new transaction during the company’s first quarter earnings call on May 9. The airline investments will help strengthen established industry partnerships and are a positive reflection of WestJet’s ability to grow, he said.

“Earlier this morning, we announced a 25% sale of our equity investment in WestJet to prominent global airlines Delta, Korean Air, and Air France KLM,” Le Blanc said. “With the proceeds, Onex and our affiliated funds and partners will have fully realized our original cost while still owning 75% of our shares.”