Two of WestJet’s major airline partners, Delta Airlines and Korean Air intend to take a 25% stake in the Canadian airline. In an announcement earlier this week, Delta and Korean plan to acquire 25% ownership of WestJet from Onex Corp. for US$550 million.
Breakdown of Delta Airlines and Korean Air’s WestJet Ownership
The agreement has Delta and Korean acquiring independent equity stakes totaling 25% in WestJet. Delta will be investing US$330 million for a 15% stake, and Korean will invest US$220 million for a 10% stake. Delta will also have the option to sell 2.3% of their stake to Air France KLM, who are also a major partner of WestJet’s.
What does this mean for WestJet, Delta and Korean?
I think the biggest thing we’ll have from the investments is even more connectivity between the three airlines and potentially SkyTeam membership for WestJet.
All three airlines already codeshare with each other, all three feed traffic onto each other’s flights and over the past few years WestJet has increased flights to Delta hubs in Atlanta, Detroit, Minneapolis-St. Paul and Seattle plus starting flying to Korean Air’s hub in Seoul and have now flown to Paris for several years with ongoing connections on Air France.
So the connectivity is already there but we’ll likely see it grow even more. If and when Canada-U.S. relations get back to pre-2025 we may see WestJet and/or Delta fly to Atlanta, Detroit, MSP, Salt Lake City etc. from a wider variety of Canadian cities and maybe we’ll see WestJet shift a 787 from European leisure destination flying to provide additional feed into Seoul. Who knows, all just guessing on my part right now.
With both Delta and Korean having members on WestJet’s board, it could possibly mean (at least I am hoping it does) that they can somehow shift the current mindset of the airline’s top brass (and Onex) and have them reconsider their cancellation of the additional 787s and order some again or lease some to expand on WestJet’s long haul network.
Could this mean SkyTeam membership?
It definitely could mean that we would see WestJet join the SkyTeam alliance sometime in the near future, especially with their revamped program in place. Making “points redemption” charts (whether fixed or dynamic) for partner airlines is a lot easier than “dollar redemptions” but of course I’m just speculating, but would love to see it happen. I’ve been mentioning WestJet should join SkyTeam since 2011 or perhaps even earlier than that, so maybe my long drawn out hopes and predictions will actually become reality!
Wrapping it up
Delta Airlines and Korean Air have agreed to buy a 25% stake in WestJet from Onex Corporation. The sale is subject to regulatory approval and hopefully shouldn’t meet any hurdles since Canadian airlines are allowed to have up to 49% foreign ownership. With all three airlines already partnering the tie up between them in terms of ownership makes sense and for Delta I think this was the next best option for them seeing as the joint-venture partnership they were working on with WestJet never came to fruition.
