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Old 05-13-2019, 08:37 PM   #21
stampsx2
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Could Onex potentially be buying low then maybe a year later sell to a different buyer?
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Old 05-13-2019, 09:10 PM   #22
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Wonder if they figure the shares were significantly below market and think they can add value over time and then exit with an IPO?
Yes, that is the business they are in. They buy companies, often with debt, and attempt to improve them and sell them for more money later. Sometimes to a strategic buyer, but in this case it would almost certainly be an IPO.

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Could Onex potentially be buying low then maybe a year later sell to a different buyer?
It would almost certainly be more than a year. The average is probably more like 5-7 years.
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Old 05-14-2019, 10:30 AM   #23
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I mean, it looks like United's enterprise value is about $30B (USD, that is), but it's the biggest airline in the world, so I guess that kind of makes sense in the context of Westjet. I'm surprised that airlines in general aren't bigger businesses. $30B is a lot of money, but a company like Tesla's enterprise value is >$50B.
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Old 05-14-2019, 10:45 AM   #24
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That says more about how Tesla's share price is out of whack than United's.

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Old 05-14-2019, 10:57 AM   #25
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You may be able to give me some direction on my current learning. I have been learning about using net present value and discounted cash flow models to value stocks. I just started trying to find downloadable excel spreadsheets of these models that I can use rather than trying to build my own spreadsheet. I have found a couple of templates but I question how good they are. Is there a resource you could point me to for more info and a good spreadsheet for the tasks?
Check out Aswath Damodran, he has several excellent, open source valuation models readily available online.

As for what the valuation would have been based on, roughly speaking Onex would likely have determined what to pay by taking a 3-5 year average of bottom line cash flow (think EBITDA), adjusted for extraordinary items (management salaries above market, for example), and then multiplied by a comparable acquisition factor in the airline industry.

So something roughly like:

Adjusted 3 Year Average EBITDA x acquisition multiple = $5Bn.

NPV models in my experience tend to be used as a justification for the purchase price, as opposed to the determination.
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Old 05-14-2019, 11:23 AM   #26
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Originally Posted by IliketoPuck View Post
Check out Aswath Damodran, he has several excellent, open source valuation models readily available online.

As for what the valuation would have been based on, roughly speaking Onex would likely have determined what to pay by taking a 3-5 year average of bottom line cash flow (think EBITDA), adjusted for extraordinary items (management salaries above market, for example), and then multiplied by a comparable acquisition factor in the airline industry.

So something roughly like:

Adjusted 3 Year Average EBITDA x acquisition multiple = $5Bn.

NPV models in my experience tend to be used as a justification for the purchase price, as opposed to the determination.
Ha, I went to one of his courses at NYU. Very smart man and an excellent professor.
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Old 05-14-2019, 12:58 PM   #27
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Ha, I went to one of his courses at NYU. Very smart man and an excellent professor.
I've admired his work for quite some time. Seems like a genuinely good voice in the finance world as well.
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Old 05-14-2019, 01:16 PM   #28
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What's all this boring valuation talk doing in an aviation thread?

If Onex goes all in on challenging Air Canada I wonder what the future WestJet mainline fleet could look like?

-Airbus A220 series order?
-Boeing 777 order?
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Old 05-14-2019, 01:24 PM   #29
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What's all this boring valuation talk doing in an aviation thread?

If Onex goes all in on challenging Air Canada I wonder what the future WestJet mainline fleet could look like?

-Airbus A220 series order?
-Boeing 777 order?
All 320's and 350's
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Old 05-14-2019, 01:28 PM   #30
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All 320's and 350's

Complete purge of the 737 from their fleet to cleanse themselves against public opinion after the whole MAX fiasco.
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Old 05-14-2019, 01:52 PM   #31
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Complete purge of the 737 from their fleet to cleanse themselves against public opinion after the whole MAX fiasco.
It may be irrational, but I still won't want to fly on the MAX after they come back. I'm sure I'm not alone.
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Old 05-14-2019, 06:47 PM   #32
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What's all this boring valuation talk doing in an aviation thread?

If Onex goes all in on challenging Air Canada I wonder what the future WestJet mainline fleet could look like?

-Airbus A220 series order?
-Boeing 777 order?
I would love to see some A220-100 planes added to the Westjet/Encore fleet so that the Q400s can be taken off longer routes like YYC-YBR and YYC-YZF.
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Old 05-14-2019, 10:47 PM   #33
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Toronto is where more of their flights are based out of now
I think it's important to clarify that this is incorrect.

123 departures tomorrow from YYZ.
140+ from Calgary, and more destinations.

New Dreamliner hangar just built here. New critical transatlantic Dreamliner flights for Calgary, and nothing for Toronto. WestJet has hardly any presence in the east besides YYZ, whereas out here they have sizable YVR and YEG operations.

They're still WestJet, for now.
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Old 05-16-2019, 08:30 AM   #34
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Related...

https://twitter.com/statuses/1128999650948734977
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