Opinions
Daniel Lloyd
Westjet Airlines
WJA-T
DON'T BUY
May 02, 2017
$22.100
Stock price when the opinion was issued
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DON'T BUY
Considering the Boeing 737 crash. They came out with good numbers and guidance in the last quarter after a few bad quarters. Their suspension of the 737s is not a huge thing, but rather a nuance. He doesn't like airline stocks and prefers Air Canada that he just sold. This is not a bad entry point. Be careful: have a buy and sell price.
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PARTIAL SELL
There is some market risk in the overall market. It is an all cash deal. You will get $31 for it. There is a 4% difference between market and the deal. If you can do better than 4% somewhere else with a similar degree of risk, then you should sell. He would take some money off the table.
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COMMENT
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.
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Airlines are not exactly bastions of free cash flow. They are going to be challenged for the next while, having such a large base in Western Canada. Unless oil comes roaring back, they are going to be challenged for growth and, as a result, will have to move further and further into direct competition with Air Canada (AC-T), which usually never works out well for airlines. There are better names to own.