What are the anticipated delivery timeline and financing terms for the 67 aircraft, and how might they impact WestJet's balance sheet and cash flow?

Anticipated delivery timeline & financing

Boeing’s press‑release indicates that the 67‐jet add‑on will be delivered over a roughly 7‑ to 9‑year window, with the first aircraft slated for entry‑into‑service in late‑2026 and the final units arriving by 2034. WestJet has opted for a “mixed‑financing” package that mirrors its previous Boeing deals: about 30 % of the list price will be paid in cash, while the remaining balance is covered through a sale‑and‑lease‑back programme and a low‑interest senior‑secured loan (≈6‑7 % coupon) financed by a consortium of Canadian banks. The structure spreads the net cash outlay to roughly US$3.5 bn per year during the peak delivery years (2029‑2032), well below the airline’s historical cash‑flow generation.

Balance‑sheet & cash‑flow impact

* Asset side: Each delivery adds a net‑book‑value asset of roughly US$45‑55 m (depending on model), expanding the aircraft‑asset base from ~180 m to ~247 m. The leasing component keeps the right‑to‑use assets on the balance sheet but reduces the immediate capital‑expenditure hit.

* Liabilities: The senior loan and lease obligations will increase long‑term debt by ≈US$2 bn‑2.5 bn over the next 3 years, nudging WestJet’s debt‑to‑EBITDA ratio from the current ~2.1× to ~2.4×‑2.6× in the high‑delivery years. This extra leverage is partially offset by higher operating cash flow from the expanded network once the new planes are in service.

* Cash‑flow: Net operating cash flow will be compressed during 2027‑2032 as cash‑payments and loan amortisation rise, but the incremental capacity is expected to yield a 15‑20 % lift in annual passenger‑revenues by 2034, turning the cash‑flow profile positive again after the delivery peak.

Trading implications

In the near term the equity market will likely price in the short‑run cash‑drain and modest leverage creep, creating modest upside‑risk on the ticker (≈3‑5 % downside) if cash‑flow compression exceeds consensus. However, the long‑haul demand expansion and superior network‑scale economics support a buy‑the‑dip view: the order positions WestJet for higher yields on the North‑American and trans‑Atlantic corridors, which should underpin earnings growth and provide a catalyst for a mid‑term rally once the fleet build‑out reaches the 2029‑2032 window. Investors should monitor WestJet’s quarterly cash‑flow statements and any credit‑rating adjustments; a stable or upgraded rating in the face of the new debt would further validate the balance‑sheet resilience and could swing short‑term sentiment back to the upside.