WestJet Secures New Loan Facility, Bolsters Liquidity for Future Growth

WestJet Group, the Calgary-based parent company of WestJet Airlines, has successfully negotiated a new secured term loan facility, effectively extending the maturity of the majority of its term loan borrowings to 2031. Announced on February 13, 2024, this strategic financial maneuver is backed by the WestJet Rewards loyalty program and the WestJet brand itself, significantly enhancing the airline’s liquidity to over CAD2 billion (USD1.4 billion).

This financial restructuring comes after WestJet Group’s decision earlier in the year to withdraw from issuing a USD500 million bond, initially intended to be backed by its loyalty program. Fitch Ratings highlighted this development on February 1, emphasizing the company’s pivot towards securing a more flexible financial framework.

Mike Scott, WestJet Group’s Chief Financial Officer, underscored the importance of this refinancing transaction. He noted that since the onset of the COVID-19 pandemic, WestJet has been diligently working to maintain a strong balance sheet, aiming to leverage the company’s ambitious growth strategy. This strategy is underpinned by Canada’s largest narrowbody aircraft order book, positioning WestJet for significant expansion.

The airline’s current fleet, as recorded by the ch-aviation fleets module, stands at 175 aircraft. This includes a diverse mix of Boeing 737 models and DHC-8-Q400s operated by WestJet Encore. Additionally, WestJet has placed orders for 57 more aircraft, comprising forty-eight B737-10s and nine B737-8s, alongside dry-lease agreements for ten B737-8s from prominent leasing companies.

Moreover, the integration of Sunwing Airlines into the WestJet Group, slated for completion in the final quarter of this year, will further augment the group’s operational capacity. Sunwing’s fleet, consisting of B737-8s and B737-800s, will join WestJet’s extensive network, following the recent integration of Swoop into WestJet’s mainline operations.

This new loan facility not only strengthens WestJet’s financial standing but also signals the airline’s resilience and commitment to growth despite the challenges posed by the pandemic. With enhanced liquidity and a clean balance sheet, WestJet is well-positioned to navigate the evolving aviation landscape and capitalize on emerging opportunities.