Onex selling minority stakes in WestJet to Delta and Korean Air

A WestJet flight departs from Victoria International Airport in Sidney, Canada. Photographer: James MacDonald/Bloomberg

Onex Corp. is selling minority stakes 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.

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Onex, a Toronto-based private equity firm chaired by Gerry Schwartz, made a long-coveted leap into aviation in 2019, buying WestJet in a leveraged buyout for $3.5 billion, financing the deal with about $1.2 billion in equity in December 2019, three months before the COVID-19 pandemic upended the global aviation industry.

With the sale, announced Friday, CIBC analysts valued WestJet at nearly US$2.2 billion – or, more than $3 billion (Canadian), which for Onex represents an improvement of more than two times its initial investment.

WestJet is already a code-share partner with Delta, Korean and Air France, 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.

Passenger volumes in many regions still haven’t recovered.

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.

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.

Increasing travel options and an economic boost: aviation analyst

Rick Erickson, a Calgary-based Aviation Analyst, says the theme of airlines with much larger networks buying into other airlines has been profitable and could be a huge benefit to the average business class style passenger.

“Business passengers like direct flights or, at a maximum, a one stop hop – so in the case of the deal that WestJet got on the table now, Korean Air has 100 destinations it flies to, while Delta has roughly 300 destinations,” he said.

Erickson adds that WestJet already flies to several Delta hubs in the United States.

He says adding even more options will allow Canadian passengers access to a number of connecting destinations in Latin America, Central America, Europe or the Caribbean.

The economic impact could be even larger, as YYC Calgary International Airport already generates close to $10B in economic activity in southern Alberta and increased air travel could boost that further.

“It’s good news for the Alberta air cargo industry. We’re likely to see more flights go to daily, we have perishables here – especially fresh meat – that gets exported to Asia, including pork, which is a big part of that,” Erickson said.

“This could be a benefit also to the oil and gas sector. There’s lots of oil and gas activity going on throughout Asia. Parts break and we’ve got quite an inventory of companies that build these sorts of things here.”

More competition still needed: passenger rights advocate

While this new WestJet deal is expected to enhance the expansion of travel options, some passenger rights advocates still worry about a lack of competition domestically in Canada.

“It is an absurdity that flying from Toronto to Paris may be cheaper than flying from Toronto to Vancouver,” said Gabor Lukacs, founder of advocacy group Canadian Air Passenger Rights. “This is not because of the high taxes or airport fees; this is because of how much airlines are charging on those lucrative routes.”

“I would like to see foreign airlines come to compete with Canadian airlines, because currently on the domestic market, we have a high level of protectionism, where foreign airlines are not allowed to fly passengers between points in Canada.”

Lukacs notes that the prices in Canada are not likely to come down as a result, but he does hope that passenger rights are taken more seriously.

“WestJet has had a dismal track record and consumer satisfaction survey data just published a couple days ago is ranked very much toward the bottom of North American Airlines, together with Air Canada,” he said.

“Mind you that could and should change, and respecting passenger rights should be part and parcel of that change.”

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