Lets start some more rumours

[joe to go]

Second last paragraph. Susan seems to have "insider" information




News from Reuters

Stock sale may put WestJet on buy-up trail

10/09/09

By Susan Taylor

OTTAWA (Reuters) - WestJet Airlines may be readying the ground for its first acquisition with a surprise C$172.5 million ($160 million) share offering, analysts said on Thursday.

Analysts differed on the logic behind Wednesday's announcement, but some said the airline, which had C$740 million in cash at the close of the second quarter, hardly seemed to need the extra cash.

"Given that the company's official explanation for raising money at this time does not make a lot of sense to us, we wonder if there is potentially another more strategic rationale," Versant Partners analyst Cameron Doerksen said in a note.

"Until the company provides a more detailed use of proceeds, we suspect that the market will remain puzzled by the timing of this deal."

The timing of the stock issue, which could dilute existing shareholdings by 12 percent, is more puzzling because WestJet's share price is depressed, Doerksen said. The stock has lost about 14 percent of its value so far this year.

Trading at C$11.70 before the offering was announced, WestJet stock shed 4.5 percent on Thursday to C$11.17 on the Toronto Stock Exchange.

Underwriters will sell up to 15.4 million WestJet shares for C$11.20 each. Announcing the deal on Wednesday, WestJet said simply that proceeds will go to aircraft financing, capital expenditures and general corporate purposes.

"In our view, this is a broad phrase to mean that it does not want to disclose what its actual intentions are for the proceeds," Research Capital analyst Jacques Kavafian said.

WestJet may be targeting privately held Porter Airlines, which operates a fleet of propeller planes from the small Toronto Island Airport, Kavafian said. Porter's main success has been in Eastern Canada, where WestJet is weaker, he noted.

And Paradigm Capital analyst Doug Cooper said Canadian tour operators could be a nice fit with WestJet Vacations.

"Something like this could offer large growth potential for WestJet, as it could allow it to capture a significant share of a relatively new market, without causing cannibalization of its existing business," he said in a note.

A spokesman for Canada's No. 2 airline said regulations restrict WestJet from commenting until the offering closes.

The no-frills carrier, one of the few profitable airlines in North America, said last month it would slow its planned fleet expansion due to the weak economy.

The money may be a form of protection against an industry battered by low demand, the H1N1 flu and recession, said Genuity Capital Markets airline analyst David Tyerman.

Kavafian also said WestJet, based in Calgary, Alberta, might be replenishing its war chest for a tough competitive environment in the next six months. It is preparing to roll out a new reservation system and frequent flyer program.

[u]And the airline might need cash because it has ordered a wide-body aircraft to launch international flights.[/u]"This share issue is puzzling. It may or may not be an indication of further things to come," wrote Kavafian. "Either way, we recommend prudence and await further development."

($1=$1.08 Canadian)

(Reporting by Susan Taylor; editing by Janet Guttsman)

© Reuters Limited. All Rights Reserved.
Reproduction or redistribution of Reuters content, including framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

[KAG]

Nothing we do is ever done without lots of thought put into it.
Maybe expansion, maybe getting ready for the N1H1 global outbreak crushing travel this fall/winter, who knows. Either way I'm interested to find out whats up...

[SMP]

Joe to go,

I'd say that this is to fund booze for your 5some at the golf tourney...when Durf saw who you guys had rounded up he must had shuddered.

Have fun,

SMP

PS I say it is the C series from Bombardier

[rightseatwonder]

ive been hearing smaller type for a while... but i thought it'd be better to just buy up Porter.


hmmmm.

of course what can you get for a measly 170,000,000 these days! lol

[KAG]

Those 767-200 with 777 wings/flight deck, new engines and a nice YYZ base to put them.
Since were starting rumors

[CAL]

It really surprises me to see that some airlines are actually doing very well on the balance sheet...with that amount of cash sitting around it would not surprise me to see WJ looking to get rid of some competition or get into another market....my money is on Sunwing or Canjet or both (737)...

[Four1oh]

Now, it's only my speculation, but I was thinking planes too, until that press release Transat put out. They're doing the same thing, but for 55 million. Now I wondered, is there any connection between Transat and WJ? Then I said to myself, self, they're both in the Vacation business, could that be it? Hmm, I also said to myself, maybe both companies are preparing for this winter's season? Perhaps they're seeing a bloodbath brewing in the holiday destination sector, and are both battening down the hatches, so to speak. Then Sunwing came to mind. Hmm. Maybe, just maybe this is war chest money to deal with Sunwing?

I'm sure I'm no where near the target, but damn, the possibilities for this money is endless!

[Flywest]

I'll play along,

5 Bucks on Westjet buying Sunwing.

The vacation & tour company infrastructure they want, along with brand new, fresh off the line airplanes that fit into their existing fleet.

[CCR]

New uniforms...that's my guess

[Pajock]

It's sooooo obvious.....a bid for the Pheonix Coyotes.

[CanadaEH]

Buying Sunwing... you'd have to gut the interiors to make them common with WS's -800's.

Buying Canjet is a win-win. You knock off a competitor (Canjet), purchase some assets (not sure what's owned/leased), gain some market share (East), you cease the contract Canjet has with Transat leaving them with nobody to do flying for Transat, and launch a bunch of direct flights from cities to the Carribean that were flown by Transat/Canjet.

Dirty and far fetched but hey, since we're starting rumors..

[Rockie]

Ken Rowe is the whack-a-mole of the Canadian airline industry. Buying him out won't get rid of him.

[Spit-IX]

How about Westjet needs more cash to cover losses? After all Westjet will do everything it can to prevent having to announce a loss or layoffs and tarnish is image.

[tonysoprano]

"WestJet intends to use the net proceeds of the offering to finance WestJet's capital expenditures, including future aircraft financing activities, and for general corporate purposes," the airline said of the "bought deal."

What'd he say?

[CanadaEH]

What that means is that Westjet could buy some of the aircraft it has on lease, removing the debt/interest on that aircraft. We did this in Q2, which ate into our cash-on-hand by about $90M. It could also use the money to fund projects like Sabre (reservation system) and its associated costs to develop and implement new modules (i.e. functionality). Or, the money can be put away for what might be a nasty winter if the Swine Flu curtails travel demand or if the tour operator market becomes oversaturated.. leading to a heavily discounted season to the Carribea/Mexico.

It's my opinion that one tour operator won't make it through the winter.. I'm just not sure which one.

[aerodude]

http://www.cbc.ca/money/story/2009/09/0 ... g0909.html

WestJet Airlines Ltd. said Wednesday it has signed a deal with a syndicate of underwriters to raise at least $150 million in an issue of shares to help fund capital expenditures, including the purchase of new aircraft.

The underwriters, led by CIBC, have also been granted an over-allotment option for an additional two million shares that if fully exercised would bring the financing to $172.5 million.

[tonysoprano]

Mexico might be a quiet place this winter.

[Stoptheworld]

What that means is that Westjet could buy some of the aircraft it has on lease, removing the debt/interest on that aircraft. We did this in Q2, which ate into our cash-on-hand by about $90M. It could also use the money to fund projects like Sabre (reservation system) and its associated costs to develop and implement new modules (i.e. functionality). Or, the money can be put away for what might be a nasty winter if the Swine Flu curtails travel demand or if the tour operator market becomes oversaturated.. leading to a heavily discounted season to the Carribea/Mexico.

It's my opinion that one tour operator won't make it through the winter.. I'm just not sure which one.
What that means is that Westjet could buy some of the aircraft it has on lease, removing the debt/interest on that aircraft. We did this in Q2, which ate into our cash-on-hand by about $90M. It could also use the money to fund projects like Sabre (reservation system) and its associated costs to develop and implement new modules (i.e. functionality). Or, the money can be put away for what might be a nasty winter if the Swine Flu curtails travel demand or if the tour operator market becomes oversaturated.. leading to a heavily discounted season to the Carribea/Mexico.

It's my opinion that one tour operator won't make it through the winter.. I'm just not sure which one.

CE, you're ruining the fun by stating the most likely and reasonable use of the money.

Would you include Enerjet in your predictions regarding tour operators?

[yycflyguy]

I'll play along,

5 Bucks on Westjet buying Sunwing.

The vacation & tour company infrastructure they want, along with brand new, fresh off the line airplanes that fit into their existing fleet.

It really surprises me to see that some airlines are actually doing very well on the balance sheet...with that amount of cash sitting around it would not surprise me to see WJ looking to get rid of some competition or get into another market....my money is on Sunwing or Canjet or both (737)...

Hey that's great! Do you guys expect a Date-Of-Hire merger or just tag those pilot SOB's to the bottom of the WJ pilot list?

[Four1oh]

Would you include Enerjet in your predictions regarding tour operators?

Didn't enerjet announce they're going to wait this season out before becoming a 'tour operator'?

[Rotten Apple #1]

I heard it was primarily a three fold reason:

1) A new livery (aircraft colors) to be unveiled in October with the next delivery

2) A retrofit of aft galley to include two ovens

3) Pulling out the first four rows of seats and replacing them with three rows of 2 by 2 seating

All in preparation for an as yet unannounced alliance membership. That of course doesn't explain all the cash proceeds; general corporate purposes for the rest.

But that's just a rumour.

[CanadaEH]

And another rumor points to Hawkair doing some flying for WS to Victoria, Terrace, and Williams Lake.

[SMP]

I heard it was primarily a three fold reason:

1) A new livery (aircraft colors) to be unveiled in October with the next delivery

2) A retrofit of aft galley to include two ovens

3) Pulling out the first four rows of seats and replacing them with three rows of 2 by 2 seating

All in preparation for an as yet unannounced alliance membership. That of course doesn't explain all the cash proceeds; general corporate purposes for the rest.

But that's just a rumour.

JD,

Here's hoping that it isn't #1, no airline has made more money by changing there colours (except maybe AirTran). This is a road to increased cost with no upside on revenue. Unless the scheme is another airlines colours which is a whole new ballgame.

#2 & #3, if there is money to be made then bring it on. I'll gladly take a hot meal on those YZ-VR-YZ days.

SMP

[tonysoprano]

#2 & #3, if there is money to be made then bring it on. I'll gladly take a hot meal on those YZ-VR-YZ days.

I doubt you'll see it on that route. I'm thinking more on those HNL routes.

[CanadaEH]

It would be used on any route that we currently sell sandwiches on.

They taste a hell of a lot better when you toast/warm them up.