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Opinions Norman Levine
Westjet AirlinesWJA.TOCOMMENTMay 26, 2015
Stock 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.
Doesn’t own airlines and probably never will. These are trades with probably 6 month outlooks. This company benefits as fuel prices go down and travel goes up. On the negative side, they have been adding capacity, which is something you never want to hear in the airline business. When capacity is tight, airlines print money. When they start adding capacity, not so much.