August 23, 2019

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'No downside for Winnipeg,' in WestJet sale, transportation U of M economist says

OTTAWA — WestJet’s purchase by a private-equity tycoon from Winnipeg could mean more choice for local passengers, a transport observer predicts.

"I don’t really see a downside for Winnipeg, or for the country in general,” said Barry Prentice, a University of Manitoba professor specializing in transportation economics.

Toronto-based Onex Corp. is run by its Winnipeg-born founder Gerry Schwartz who, 20 years ago, tried to purchase Air Canada.

“Gerry Schwartz had wanted an airline for a long time; I guess now he gets one,” Prentice said. "But that's not the primary reason — I think it’s a good business deal for them."

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OTTAWA — WestJet’s purchase by a private-equity tycoon from Winnipeg could mean more choice for local passengers, a transport observer predicts.

"I don’t really see a downside for Winnipeg, or for the country in general," said Barry Prentice, a University of Manitoba professor specializing in transportation economics.

Barry Prentice, a University of Manitoba professor specializing in transportation economics on the purchase of WestJet by Toronto-based Onex Corp.: "I think it’s a good business deal for them."

RUTH BONNEVILLE / WINNIPEG FREE PRESS FILES

Barry Prentice, a University of Manitoba professor specializing in transportation economics on the purchase of WestJet by Toronto-based Onex Corp.: "I think it’s a good business deal for them."

Toronto-based Onex Corp. is run by its Winnipeg-born founder Gerry Schwartz who, 20 years ago, tried to purchase Air Canada.

"Gerry Schwartz had wanted an airline for a long time; I guess now he gets one," Prentice said. "But that's not the primary reason — I think it’s a good business deal for them."

WestJet has been adding flights to Europe and Hawaii and purchasing larger planes, as it morphs from a spunky upstart to "another big airline," Prentice said.

Onex’s purchase makes it easier for the the airline to expand, thanks to the parent firm’s access to capital and international partners. Last year, Ottawa set out a 49 per cent limit to foreign ownership of Canadian airlines.

WestJet recently shifted to a hub-and-spoke model, which means getting Prairie passengers to hubs such as Calgary and sending them abroad from there.

For Winnipeggers, that could mean more options for overseas flights that will likely keep prices consistent, Prentice said.

"I think it will bring a lot of strength to the company," said Prentice. "More competition is always better for consumers."

Shortly after its first flight in 1996, WestJet let employees buy shares in the company, a sign of loyalty the airline used to advertise. But employees unionized last year, as the airline outsourced work and launched budget offshoots. Pilots threatened to strike a year ago.

The Air Line Pilots Association said there’s been "a drastic turnaround" since then.

Gerry Schwartz, Chairman of the Board, President and Chief Executive Officer of Onex

TYLER ANDERSON/NATIONAL POST

Gerry Schwartz, Chairman of the Board, President and Chief Executive Officer of Onex

"Onex won’t micromanage; the WestJet brand will continue," said Dave Colquhoun, adding that "a fair number of Winnipeggers" fly WestJet planes.

The airline’s flight-attendant union CUPE 7040 said news of Onex’s takeover came shortly before midnight, and that the firm told unions it predicts no job losses.

"It was a surprise, to all of the frontline staff," said union head Chris Rauenbusch. "We’re formulating a very good working relationship."

While Winnipeg is among WestJet’s focus cities, it’s not a hub where a large chunk of its employees are based.

Passenger-rights advocate Gábor Lukács said the company’s quality has slipped in recent years, getting "very combative" over issues like delayed baggage claims.

"Their attitude seems to be much in the direction of race-to-the-bottom, and that’s quite troubling," Lukács said. "I wonder if this had played in investors’ findings."

Onex has held multiple aviation firms over the years, from manufacturing jets and aircraft parts to airline food providers. But its 1999 attempt to take over and merge Air Canada and now-defunct Canadian Airlines was quashed by a Quebec court.

Schwartz was not available Monday for a interview.

dylan.robertson@freepress.mb.ca

History

Updated on Monday, May 13, 2019 at 7:04 PM CDT: Adds photo

10:20 PM: Fixes typo

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