Stakes in WestJet sold to other airlines, including Delta

WestJet passenger jets parked at departure gates at the Calgary International Airport on Wednesday, May 31, 2023. THE CANADIAN PRESS/Jeff McIntosh

Onex Corp. has sold a minority stake in WestJet to Delta Air Lines and Korean Air in a US$550-million deal that aims to position the Calgary-based airline for growth abroad amid intensifying domestic competition and plummeting demand for flights to the U.S.

Under the deals announced Friday, Delta will acquire a 15 per cent stake in WestJet for US$330 million, while Korean Air will buy a 10 per cent stake for US$220 million.

After the agreement closes, Delta plans to sell a 2.3 per cent stake in WestJet to its joint venture partner Air France-KLM for US$50 million.

Onex, a Toronto-based private equity firm chaired by Gerry Schwartz, made a long-coveted leap into aviation in 2019 by signing a friendly deal to buy WestJet in an all-cash transaction of $3.5 billion, or about $5 billion including debt.

WestJet already counts itself a code-share partner with Delta, Korean and Air France -- three of the world’s largest carriers. But it is not plugged into any airline alliance, including the 18-member SkyTeam alliance which includes its new shareholders.

In a code-share agreement, both airlines can sell -- under their own code -- flights operated by their partner, enabling travellers to combine flight segments on a single ticket and check their bags just once.

Partnership in an airline alliance taps into a much broader network of global carriers.

“This does point towards WestJet eventually going down the road of full SkyTeam membership,” said Robert Kokonis, president of consulting firm AirTrav Inc.

“If WestJet were to become a SkyTeam member bringing WestJet rewards into the global ecosystem of other SkyTeam loyalty programs, that would be a massive change in the Canadian business and leisure travel landscape.”

Air Canada is a member of the Star Alliance network.

“This is a very, very smart and shrewd tactical play by WestJet and Onex,” Kokonis said.

Announced Friday, the sale values WestJet at $3.1 billion and allows Onex to recoup the balance of its equity investment in the carrier while retaining a 75 per cent stake, according to CIBC Capital Markets analyst Nik Priebe.

That recouping owes partly to the fact Onex has reaped about US$510 million in dividends from the company since the acquisition, according to figures from Onex’s fourth-quarter financial filings.

Onex bought WestJet in December 2019, three months before the COVID-19 pandemic upended the global aviation industry. Passenger volumes in many regions still haven’t recovered.

Unlike competitors such as Air Canada, WestJet opted not to take a federal aid package during the pandemic. It proceeded to buy Sunwing’s main airline and vacation divisions in May 2023 in a major consolidation of the Canadian aviation market. And last year, it scooped up all nine Boeing 737 jets that had been operated by defunct discount carrier Lynx Air.

However, U.S. President Donald Trump’s tariffs and annexation threats have prompted many Canadians to spurn travel south of the border. WestJet has cut U.S. flight capacity in response, suspending nine cross-border routes this summer. It has rerouted some planes for flights within Canada, but competition is heating up due to greater supply as rival airlines take similar steps.

Delta and Korean Air will occupy two seats on WestJet’s 13-member board. Before it goes through, the deal needs U.S. regulatory approval.

Under federal law, no single foreign entity can control more than 25 per cent of a Canadian airline, whose ownership must also be at least 51 per cent Canadian.

Tawfiq Popatia, co-head of Onex Partners, said in a statement the company was “delighted to welcome” its three new investors.

“Delta, Korean and Air France-KLM are among the world’s most prominent and best-managed airlines,” he said.

WestJet has partnered with Delta since 2011, and with Korean Air since 2012.

“Investing in a world-class partner like WestJet aligns our interests and ensures that we remain focused on providing a world-class global network and customer experience for travellers in the United States and Canada,” Delta CEO Ed Bastian said.

Air Canada’s chief executive said Friday that “we don’t expect anything” to change as a result of the deal.

“We all know Delta has a strategy of putting minority interest in airlines around the world,” Michael Rousseau said.

This report by The Canadian Press was first published May 9, 2025.

Companies in this story: (TSX:ONEX)