Should Versant Worry if WestJet Unionizes?

Despite recent reports that the Canadian Auto Workers [CAW] union is attempting to woo WestJet Airlines Ltd. (WJAVF.PK) employees, research firm Versant Partners remains enthusiastic about the successful budget airliner.

In a research note, Versant analyst Cameron Doerksen said:

We are not overly concerned by this news and would view any significant sell-off in the stock as an attractive buying opportunity.

Versant is maintaining its 12-month target share price of C$19, based on 14x over its EPS estimate of C$1.37 over the next four quarters.

CAW chief organizing director John Aman said to the Financial Post on Tuesday,

The CAW had received an increase in calls from interested WestJet employees in the past three months and the union is now deciding if the movement has enough steam.

Mr. Doerksen is not impressed, however, and said:

Unions including the CAW have hardly been successful in protecting jobs and significantly increasing wages at Air Canada.

Several attempts at unionization in the past have failed. Canadian Union of Public Employees [CUPE] tried twice, in 1998 and 2006, to unionize flight attendants with no success. The Teamsters also struck out when they approached flight attendants in 2003.

Mr. Doerksen said:

In any case, WestJet has never had any layoffs and employees have access to profit sharing and an “attractive” share purchase plan that would be in jeopardy if they unionized.

And even if the CAW succeeded, it would not be the end of the world, as Mr. Doerksen went on to say:

Southwest Airlines (LUV) is the most successful budget airline in the world, even while 82% of its workers are unionized.

Shares in WestJet were down C$0.02 to C$13.98 per stock on Wednesday afternoon.