James TelfserWestjet AirlinesWJA.TOCOMMENTNov 26, 2013

A really interest deal with Onex. He has been a long term fan for years. His first professional 10 bagger. He is not convinced Onex over paid -- they probably saw this as a great time -- comparable to US peers. He thinks the regulators will approve the deal.

They are going international but competition is increasing from other countries at the same time. They have started to consolidate and are forming a base. He thinks we will consolidate for a bit yet. In November and December are good times for this airline.

Likely would not own it right now. He doesn’t think the Canadian economy is quite as strong as what the government is saying. He expects oil prices to rise which means higher input costs. However there are better places to put your money. Nothing wrong with the company.

In the past, he has favoured WestJet because its management is disciplined, they operated a single type of plane, they had happy non-unionized employees, and they focused on the Canadian market. But then they decided they wanted to be Air Canada. They operate several types and sizes of planes on more routes--if he had to invest in an airline now, it probably would NOT be Westjet. They were the Southwest of Canada but they have destroyed what they had, WestJet’s share price has been drifting sideways while Air Canada’s has been rising. He asserted that WestJet’s problems are all self-inflicted.

He is more of an AC-T fan. WJA-T has been a success story also. There are mistakes you make when you get too big. They launched an ultra low carrier. Canada cannot support more than two airlines. He likes the airline industry. WJA-T's numbers have been fine.

He is short WestJet and has been long Air Canada against it. That is still the trade he would favour. WestJet built out too much capacity. There is no compelling reason to own it. Tax loss season is coming and companies that have underperformed, like WestJet, will stay under pressure.

It has come down a lot. Airlines find it so difficult to make money. Their capacity and load rates are good but fuel costs eat into profits. At some point the bottom will come in. He is not sure what the turnaround story is going to be. You could look at it if you are a value investor.

Good entry point, dividend safe? Last quarter OK. Problem is pilot unionization. Fuel price has gone up. Stock’s gone down because hasn’t had a knockout quarter. Never owns airlines because no consistently growing cash flow. Dividend is safe.