Airline Industry Private Placement Financial Model

Description
WestJet Financial Model is a financial model of a North American Airline private placement by Onex Corp. The deal is one of the largest Airline industry deals closed successfully. The deal is a cash deal financed by mostly debt and sponsor’s equity, and structured as a stock sale. WestJet existing debt is assumed and management stay on-board. The model is ideal for investment banking, equity research, air transport and private equity finance professionals, valuation and transaction experts. The model includes the following features:
- An annual 3-statement financial model of the Airline under the existing management and the private equity team including: a detailed airline industry revenue schedule, airline industry cost schedule, depreciation schedule, working capital schedule, tax schedule, debt and interest schedule, shareholder’s equity schedule, covenants and credit statistics, income statement, cash flow statement and balance sheet for a five year quarterly forecast period.
- Internal rate of return (“IRR”) schedule, cash on cash return and value added at the operating company (“OPCO”) and HOLDCO level given the initial investment by the sponsors and management team in Q1/19 and the assumptions made with respect to the OPCO dividends and its use, calculation of paid-in-kind and cash interest on HOLDCO debt, dividend recapitalization and integration of additional dividends and their use in the model and IRR calculation, with quarterly exit throughout 2023 to 2025.
- Leveraged buyout model along with the sources and uses of funds at OPCO given the stock sale financed mostly with sponsor debt and sponsor’s equity while assuming the existing long term debt on the balance sheet as of Q1/19, transaction fees, purchase price allocation, and calculation of goodwill created on the pro forma balance sheet in the transaction given the deal assumptions and financial disclosures.
- Refinancing of term debt by 2019FYE along with a dividend recapitalization schedule.
- Recapitalized pro forma balance sheet of the company that is taken private.
- Historical financial statements of WestJet and the resulting credit statistics from 2017 to 2019 on a quarterly basis.
- Assessment of Company’s leverage, capital structure, value and privatization as a suitable target for a take private transaction.
- Calculation of unlevered free cash flow (“Free Cash Flow to the Firm”, ”FCFF”, or “UFCF”) via three different approaches.
- Calculation of WestJet diluted shares outstanding schedule.
- Quantification of risk measures for purposes of valuation including beta calculation, cost of equity and cost of capital calculation throughout the forecast period given the changing leverage of the company as debt is paid down.
- Valuation of the revamped company under the guidance of the management and private equity team, based on intrinsic value approach.
- Relative valuation of the Company prior to the transaction given FY1 and LTM EV/EBITDA and P/E multiples of peers.
- Implied share price and enterprise value under the guidance of the management team and the private equity firms as a result of their efforts to improve operating efficiency and capital structure.
- Sensitivity analysis of the intrinsic valuation of the revamped company with respect to term year weighted average cost of capital and term year growth rate.
- Sensitivity analysis of Management and HOLDCO IRR’s with respect to purchase and exit multiples of EBITDAR.
- Sensitivity analysis of Management IRR, Onex IRR, % of borrowing and % of equity investment with respect to the amount of HOLDCO borrowing.
- Optimization of the deal financing with respect to HOLDCO borrowing to maximize Onex IRR.
- Scenario analysis for Base, Best and Worst Case inflation, fuel costs and passenger revenue mile (“PRM and the resultant three statement financial model, implied valuation, and exit IRRs of OPCO and HOLDCO.
- An automated summary dashboard for Base, Best and Worst Case of revamped company financial report, market data, transaction and IRR schedules for all investors.
- The tabs of the models are: Cover, Summary, Assumptions, Sources & Uses, Scenarios, Historicals, Model, Graphs, Intrinsic Valuation, Relative Valuation, Other and Notes.
- A report of the transaction and the financial model describing different steps and segments of the model, the transaction terms and company valuation, IRRs and sensitivities, anatomy of a leveraged buyout (“LBO”) and criterias which make a successful private placement target along with the print ready format of the model is included with the package.