Cramer's Take: Delta & Korean Air's $550M WestJet Gamble—A Sky-High Opportunity?

Investors, buckle up! Today’s deal—Delta Air Lines and Korean Air’s joint $550 million stake in Canada’s WestJet—has all the makings of a high-stakes, high-reward move. Let’s break down why this could be a game-changer for airlines and investors alike.

First, the cold, hard numbers: Delta is plunking down $330 million for a 15% stake, while Korean Air chips in $220 million for 10%. But here’s the kicker—Delta’s got an option to pass along 2.3% of its shares to Air France-KLM for an extra $50 million. This isn’t just about buying stock; it’s about building a global airway superhighway.

Let’s start with the financial fireworks. WestJet’s current net asset value? The premium paid by Delta and Korean Air is over 25% higher. That’s a massive vote of confidence in WestJet’s future—especially since Onex Partners, which bought WestJet in 2019 for $3.45 billion, is still in control. Analysts are scratching their heads: Is this a steal or a stretch?

The operational upside is where this deal gets juicy. Delta and Korean Air already have codeshare agreements with WestJet, but equity stakes mean deeper integration. Think seamless flights from Calgary to Seoul or Paris to Vancouver—without passengers feeling like they’re switching airlines mid-journey. For Delta, this tightens its grip on the Americas while leveraging SkyTeam’s global network. Korean Air gains a stronger foothold in North America, and Air France-KLM’s potential involvement could turn transatlantic routes into cash cows.

But here’s the red flag: Regulatory hurdles? Probably not—since neither Delta nor Korean Air is taking control. But competition concerns? Airlines are already thin on cash post-pandemic. If this reduces competition in key markets, regulators might sniff around.

Then there’s geopolitics. WestJet’s CEO Alexis von Hoensbroech isn’t shy about competing with Air Canada, which leans on the Star Alliance. By hitching to SkyTeam (Delta, Air France-KLM, Korean Air), WestJet’s positioning itself as a rival with global reach. That’s a big deal in Canada’s duopoly-dominated skies.

Now, the investor angle: If you’re in this for the long haul, this deal screams “future upside.” WestJet’s valuation jump shows investors believe in its post-pandemic recovery—and its ability to capitalize on alliances. The $550 million infusion gives WestJet cash for new planes, route expansions, and maybe even a future IPO.

But here’s the catch: WestJet’s still under Onex’s thumb. Private equity’s goal? Exit with a profit. If Onex sells more shares down the line, existing investors could get diluted. And if global travel sputters again (hello, recessions!), this premium might look overcooked.

The bottom line: This is a bold move with big risks, but bigger rewards. For airlines, it’s about surviving in a consolidating industry. For investors, it’s a bet on WestJet’s ability to turn alliances into profitability.

Final verdict? Buy the dip, but keep an eye on the skies. If Delta and Korean Air’s networks lift WestJet’s passenger numbers, this could be the lift investors need. But if geopolitical tensions or weak demand ground these plans, those $550 million stakes might start looking like a lot of money chasing too little growth.

In the end, this deal isn’t just about planes and passengers—it’s about who controls the next great era of air travel. Buckle up, folks—the ride’s just beginning.