WestJet has extended the maturity of most term loan borrowings to 2031 through a new secured term loan facility which is backed by its loyalty program and brand.
In other words, the airline’s strong financial performance and oversubscribed loyalty program has enabled advantageous loan terms, increasing the carrier’s liquidity and providing greater flexibility in securing financing for the next seven years.
Chief Financial Officer Mike Scott said, "We are the only airline of scale in North America that did not require any sector-specific government aid, incur any third-party debt, or issue any equity during the pandemic. Instead, we focused on keeping our balance sheet clean to capitalize on our ambitious growth plan, fuelled by the largest narrowbody orderbook of any airline in Canada.”
In Canada’s uncertain and cutthroat aviation market, having a strong financial footing means WestJet can pursue its strategic objectives with impunity.
CEO Alexis von Hoensbroech has stressed on multiple occasions, with the acquisition of Sunwing, “we are the clear market leader.”
As Open Jaw reported, when asked about Sunwing’s integration with WestJet, von Hoensbroech said the combined company is now covering roughly 50% of the vacation market in Canada.
WestJet said it was able to extend the maturity of the substantial majority of its term loan borrowings to 2031 because of its improved airline ratings and its “strong financial performance, which exceed its pre-COVID earnings.”
WestJet's liquidity is in excess of $2 billion and its pro forma adjusted net leverage ratio at year-end 2023 was approximately three times adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
"We are very pleased with this innovative structure, secured by our loyalty program and brand," said Scott. "This opportunistic refinancing transaction enhances our financial flexibility and was oversubscribed, which is reflective of the strength of the WestJet Rewards Loyalty program and the WestJet brand."
The closing of the new facility is subject to customary conditions and is expected to occur 14FEB, 2024.
Barclays Bank PLC acted as sole administrative agent and structuring agent for the new facility.
