The WestJet Group’s takeover of vacation-focused rival Sunwing Airlines has been approved by Canada’s transport minister, setting the stage for a major shake-up in the airline industry.
Omar Alghabra gave the Liberal government’s official endorsement of the deal on Friday.
First announced in March 2022, the deal will see Calgary-based WestJet acquire Toronto’s Sunwing along with its tour operator business.
Financial terms of the acquisition between the two private airlines were not disclosed, although Sunwing shareholders would get a stake in WestJet’s business.
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The Competition Bureau concerned about the agreement between WestJet and Sunwing
Under the agreement, WestJet will create a new tour operator unit led by Sunwing CEO Stephen Hunter, which includes Sunwing Vacations and WestJet Vacations as separate brands.
The acquisition would increase WestJet’s air footprint to sun destinations and resorts.
The federal Competition Bureau has raised concerns about the merger, saying the deal will likely lead to higher prices and less service for Canadians.
Less competition, especially in the vacation space where airlines have overlapping routes, will affect the fares offered to Canadians for getaways, the watchdog said in a letter to Alghabra last fall. .
The bureau said the two airlines represent two of the four largest integrated vacation package providers in Canada and are the two largest players connecting Western Canada to sun destinations.
WestJet said the acquisition would increase its overall flight capacity because it can fly Sunwing jets on routes outside of the airline’s traditional holiday schedules. The company also said it would maintain operations at Sunwing’s offices in Toronto and Laval, Quebec.
The Unifor union had pushed the federal government to include job protections for Sunwing employees as part of the deal’s approval. WestJet argued that expanded flight opportunities with Sunwing jets will create more jobs.
Earlier this year, WestJet announced plans to refocus its operations to primarily serve routes from Western Canada.
The announcement comes as the Canadian airline industry struggles to regain its footing after three years of disruption in the pandemic.
Both airlines are also emerging from a difficult holiday season, which has seen numerous flight delays and cancellations, chaos at airports and hundreds of Sunwing passengers stranded in Mexico.
— with files from The Canadian Press
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