WestJet Airlines Ltd.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from take-over bid and early warning requirements so that the applicable thresholds be triggered on a combined basis rather than on a per class basis -- Relief to address foreign investment concerns -- Dual class structure implemented solely for compliance with foreign ownership requirements in the airline industry -- Both classes of securities are freely tradable, have identical economic attributes and are automatically and mandatorily inter-convertible based on the holder's Canadian or non-Canadian status.

Applicable Legislative Provisions

National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.

Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids.

Securities Act (Ontario), Part XX.

Citation: WestJet Airlines Ltd., Re, 2012 ABASC 412

September 21, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

WESTJET AIRLINES LTD.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that:

(a) an offeror that makes an offer to acquire outstanding variable voting shares of the Filer (Variable Voting Shares) or outstanding common voting shares of the Filer (Common Voting Shares, and collectively with the Variable Voting Shares, the Shares), which would constitute a take-over bid under the Legislation as a result of the securities subject to the offer to acquire, together with the offeror's securities of that class, constituting in the aggregate 20% or more of the outstanding Variable Voting Shares or Common Voting Shares, as the case may be, at the date of the offer to acquire, be exempted from the take-over bid requirements contained in Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids (MI 62-104) and Part XX of the Securities Act (Ontario) (collectively, the TOB Rules) (the TOB Relief);

(b) an acquiror who acquires beneficial ownership of, or control or direction over, Variable Voting Shares or Common Voting Shares, or securities convertible into such shares, that, together with the acquiror's securities of that class, would constitute 10% or more of the outstanding Variable Voting Shares or Common Voting Shares, as the case may be (or 5% in the case of acquisitions during a take-over bid), be exempted from the early warning requirements contained in the Legislation (the Early Warning Relief); and

(c) an eligible institutional investor subject to the early-warning requirements of the Legislation be entitled to rely on alternative eligibility criteria from those set forth in section 4.5 of National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (NI 62-103) in order to benefit from the exemption contained in section 4.1 of NI 62-103 (the Alternative Monthly Reporting Criteria and, collectively with the TOB Relief and the Early Warning Relief, the Decision Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this Application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filer in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions, NI 62-103, MI 62-104 or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein. For the purpose of this decision, the following terms have the meaning ascribed to them hereinafter:

"CTA" means Canada Transportation Act; and

"TSX" means the Toronto Stock Exchange.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation governed by the Business Corporations Act (Alberta).

2. The Filer's head office is located in Calgary, Alberta.

3. The Filer is a reporting issuer in all of the provinces of Canada and is not in default of any requirement of the securities legislation in any of these jurisdictions.

4. The Filer is subject to the CTA, which requires that, as a licensed airline, it must be controlled in fact by Canadians (as defined in the CTA) and that non-Canadians not hold or control more than 25% of the voting interests in a licensed airline.

5. The Government of Canada's Bill C-10, the Budget Implementation Act 2009, contains provisions whereby the restrictions relating to voting securities in the CTA would be amended to provide the Governor in Council with flexibility to increase the foreign voting interest ownership limit from the existing 25% level to a maximum of 49%. These provisions would come into force on a date to be fixed by order of the Governor in Council.

6. The authorized share capital of WestJet is comprised of: an unlimited number of Variable Voting Shares; an unlimited number of Common Voting Shares; an unlimited number of non-voting shares; an unlimited number of first preferred shares; an unlimited number of second preferred shares and an unlimited number of third preferred shares. As of July 31, 2012, 7,893,039 Variable Voting Shares and 126,332,362 Common Voting Shares were outstanding. There are no non-voting shares and no preferred shares outstanding. In addition, as of July 31, 2012, WestJet had 5,186,487 options issued and outstanding, each entitling its holder to purchase one Variable Voting Share or one Common Voting Share.

7. The Common Voting Shares may only be held, beneficially owned and controlled, directly or indirectly, by Canadians (as defined in the CTA). An outstanding Common Voting Share is converted into one Variable Voting Share, automatically and without any further act of the Filer or the holder, if such Common Voting Share becomes held, beneficially owned or controlled, directly or indirectly, otherwise than by way of security only, by a person who is not a Canadian.

8. The Variable Voting Shares may only be held, beneficially owned or controlled, directly or indirectly, by persons who are not Canadians. An outstanding Variable Voting Share is converted into one Common Voting Share, automatically and without any further act of the Filer or the holder, if such Variable Voting Share becomes held, beneficially owned and controlled, directly or indirectly, otherwise than by way of security only, by a Canadian.

9. Each Common Voting Share confers the right to one vote. Each Variable Voting Share also confers the right to one vote unless: (i) the number of Variable Voting Shares outstanding, as a percentage of the total number of voting shares outstanding of the Filer, exceeds 25% (or any higher percentage that the Governor in Council may specify by regulation), or (ii) the total number of votes cast by or on behalf of holders of Variable Voting Shares at any meeting exceeds 25% (or any higher percentage that the Governor in Council may specify by regulation) of the total number of votes that may be cast at such meeting. If either of the above noted thresholds is surpassed at any time, the vote attached to each Variable Voting Share decreases proportionately such that: (i) the Variable Voting Shares as a class do not carry more than 25% (or any higher percentage that the Governor in Council may specify by regulation) of the aggregate votes attached to all outstanding voting shares of the Filer and (ii) the total number of votes cast by or on behalf of holders of Variable Voting Shares at any meeting does not exceed 25% (or any higher percentage that the Governor in Council may specify by regulation) of the votes that may be cast at such meeting.

10. Aside from the differences in voting rights stated above, the Variable Voting Shares and Common Voting Shares are similar in all other respects, including the right to receive dividends if any, and the right to receive the property and assets of the Filer in the event of dissolution, liquidation, or winding up of the Filer.

11. The articles of the Filer contain coattail provisions pursuant to which Variable Voting Shares may be converted into Common Voting Shares in the event an offer is made to purchase Common Voting Shares and the offer is one which is required to be made to all or substantially all the holders of Common Voting Shares. Similar coattail provisions are contained in the terms of the Common Voting Shares and provide for the conversion of Common Voting Shares into Variable Voting Shares in the event an offer is made to purchase Variable Voting Shares and the offer is one which is required to be made to all or substantially all the holders of Variable Voting Shares. Since these coattail provisions, in their existing form, do not specify the threshold at which the offer is required to be made to all the holders of a class of Shares, they do not need to be amended as a result of the decision to grant the Decision Sought.

12. The Variable Voting Shares and the Common Voting Shares are listed on the TSX under separate ticker symbols ("WJA.A" for the Variable Voting Shares and "WJA" for the Common Voting Shares). Notwithstanding the foregoing, the Variable Voting Shares and the Common Voting Shares have historically traded at the same price or within a narrow price range, demonstrating that the market essentially assigns the same value to each class.

13. The Filer's dual class structure was implemented solely to ensure compliance with the requirements of the CTA.

14. An investor does not determine or choose which class of Shares it acquires and holds. There are no unique features of either class of Shares which an existing or potential investor can choose to acquire, exercise or dispose of. The class of Shares ultimately available to it is a function of the investor's Canadian or non-Canadian status only. Moreover, if after having acquired Shares, a holder's Canadian or non-Canadian status changes, the Shares will convert accordingly and automatically, without formality or regard to any other consideration.

15. The Variable Voting Shares are not considered "restricted voting securities" for the purposes of the Legislation.

16. The TOB Rules and early warning requirements apply to the acquisition of securities of a class. Because of the current significantly smaller public float of Variable Voting Shares (compared to the public float of Common Voting Shares), it is more difficult for non-Canadian investors to acquire shares in the ordinary course without the apprehension of inadvertently triggering the TOB Rules and early warning requirements, thus restricting the interest of non-Canadian investors in the Shares for reasons unrelated to their investment objectives. In fact, some non-Canadian investors have expressed their concern relating to the limited float of Variable Voting Shares and the risk of such float further decreasing over time. As a result, although the Filer has a flexible capital structure that is designed to permit non-Canadian investors to become shareholders of the Filer, the relatively small number of outstanding Variable Voting Shares appears to have limited the investment interest of non-Canadian investors. Therefore, aggregating Variable Voting Shares and Common Voting Shares for the purpose of the TOB Rules and early warning requirements would facilitate investment in Variable Voting Shares.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Decision Sought is granted provided that:

(a) the Filer shall publicly disclose the terms of the Decision Sought in a news release filed on SEDAR promptly following the issuance of this decision document;

(b) the Filer shall disclose the terms and conditions of the Decision Sought in all of its annual information forms and management proxy circulars filed on SEDAR following the issuance of this decision document;

(c) with respect only to the TOB Relief, the Variable Voting Shares or Common Voting Shares, as the case may be, subject to the offer to acquire of an offeror, together with the offeror's securities of that class of the Filer, would not constitute, at the date of the offer to acquire, in the aggregate 20% or more of the outstanding Variable Voting Shares and Common Voting Shares on a combined basis;

(d) with respect only to the Early Warning Relief, the Variable Voting Shares or Common Voting Shares, or securities convertible into such shares, as the case may be, over which the acquiror acquires beneficial ownership of, or control or direction over, together with the acquiror's securities of the Filer, would not constitute 10% or more of the outstanding Variable Voting Shares and Common Voting Shares on a combined basis (or 5% in the case of acquisitions during a take-over bid); and

(e) with respect only to the Alternative Monthly Reporting Criteria, the eligible institutional investor may meet any of the eligibility criteria contained in section 4.5 of NI 62-103 by calculating its securityholding percentage using (i) a denominator comprised of all of the outstanding Variable Voting Shares and Common Voting Shares on a combined basis, and (ii) a numerator including all of the Variable Voting Shares or Common Voting Shares, as the case may be, beneficially owned or over which control or direction is exercised by the eligible institutional investor.

For the Commission: