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Opinions Alex Ruus
Westjet AirlinesWJA.TOBUYJun 16, 2014
Alex RuusStock price when the opinion was issued
As of Dec 13, 2019. Market Open.
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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.
Lyle Stein
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.
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.
Has held the stock right from its IPO. This is in a cyclical and very difficult industry. There are a select few of business models globally, that over time consistently make money. Airlines have a few key imports such as fuel, labour and capital costs. People are a very big part of the business, and a really good business model globally, consistently makes money for shareholders with very good relationships with employees. This company ties in their employees with options and profit sharing. His target is $33.