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WestJet's new look and 787 preview

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9 hours ago, CanadaEH said:

It's easier to add rows to planes, charge for amenities that used to be free, and tack on a bunch of ancillary fees. 

Isn’t that exactly what WestJet is doing both with its mainline product and with Swoop?

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Thanks Blues.

As a consumer I might be left wondering why there's only two, or three pax in business? Iow's, I could be asking myself if there's something wrong with the product that it's so under subscribed?

I will assume the ad intends to instill a sense of spaciousness, calm  and comfort.

It just strikes me as an odd approach to marketing the service.

I like the exterior paint and I think the interior is quite appealing. 

 

Edited by DEFCON

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16 hours ago, internet said:

Hate the whole thing.  Old tail was simple. This is some graphic software over-designed mess of a bunch of different directions.  

Not sure who in Marketing is so paranoid that no one will know it’s a Canadian airline.  Give me a break. How many more small ridiculous nods to “we are Canadian. We are Canadian” can they try to incorporate in that mess.

Agree....not near as appealing as the original. Just plain ugly!

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15 hours ago, CanadaEH said:

I'm sure they didn't do any market research, focus groups, surveys, etc.......

Sarcasm? Not sure!! 🙄

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Small point, but The whole "The Spirit of Canada" thing bothers me a bit.  I'm okay with the concept as a tribute to people/places but the way I see it, they're using it to lay claim to Canadian identity as if they are the only airline to embody what Canada is.  Not a fan and as a former employee who watched a huge majority of the VP level and higher get recruited from aborad (mostly the USA), I find it actually quite funny.  "Proudly Canadian" was much better.

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Good point, although it seems this is an attempt to lay "equal claim" as another airlines that identifies itself with Canada that they are NOT they only "spirit of Canada".

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The whole 'spirit of' thing is old, tired, overused and not very compelling any longer.

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ANALYSIS: WestJet defends transformation from analyst onslaught

  • 10 May, 2018
  • SOURCE: Flight Dashboard
  • BY: Jon Hemmerdinger
  • Calgary

Financial analysts bombarded WestJet's top brass on 8 May with questions heavy in skepticism.

Might WestJet this quarter post its first loss in 13 years? Should WestJet even call itself a low-fare carrier? One analyst questioned management's credibility.

The comments seemed to mark a high point of tension between analysts who rate WestJet's stock and executives steering the company through wholesale transformation.

Led by new chief executive Ed Sims, those executives are moulding WestJet into an international player with multiple hubs and premium products, while also targeting the ultra-discount segment with a new subsidiary called Swoop.

Sims and his colleagues defended that plan during the first quarter earnings call on 8 May. They expressed confidence, urged patience and insisted the overhaul will start paying off as soon as later this year.

"We are in a pivotal year of our evolution. We are making the necessary investment now to build the infrastructure required to transform our business," Sims told analysts.

The Calgary company earned an operating profit of C$55.6 million ($43.5 million) in the first quarter, marking 52 quarters of consecutive profits.

But profits slipped 29% in one year, reflecting difficult weather conditions, loss of revenue following the end of a codeshare deal with American Airlines and increased competition, Sims said.

But the second quarter could be worse.

WestJet expects its second quarter adjusted unit costs (excluding fuel and profit sharing expenses) will jump 7.5-8.5% year-on-year due to factors including higher-than-expected transformation costs.

WestJet also predicts second quarter unit revenue per available seat mile (RASM) will be flat to down 2%, partly reflecting a decline in bookings amid the threat of a possible pilot strike.

Analysts expressed little patience on the call.

"When you look at the various guidance you gave... Do you think your streak of consecutive profitable quarters comes to an end this quarter?" asked CIBC World Markets analyst Kevin Chiang.

"We are evaluating the situation very carefully," Sims responded. "The unknown is the uncertainty caused by potential industrial action."

Raymond James' analyst Ben Cherniavsky said, "There is a fair amount of skepticism and frustration around the targets you have set. I'm still struggling to understand how you can get to your 2018 investor day targets."

"There is a credibility gap here that's building," Cherniavsky added.

WestJet aims to return at least 13% of invested capital by 2020 – similar to 2015 levels. By comparison, it returned 9.5% of capital in the 12 months ending in March, the company reports.

RBC Capital Markets' analyst Walter Spracklin asked why WestJet continues to cling to its low-fare heritage.

"I'm trying to understand why you wouldn’t be more aggressive in your fare increase," Spracklin said. "Why are we still looking at [WestJet] as a low-fare airline. You have Swoop for that."

Sims shot down that suggestion.

"It is still incumbent on the WestJet mainline to remain cost competitive," he responded. "We still believe he who has the lowest cost will ultimately win in the domestic market."

Sims and his colleagues remained resolute throughout the call. The company must spend money to make money, and costs now will generate returns starting in the second half of 2018 and accelerating next year, they said.

"We are incurring a disproportionate amount of expense in the first half of 2018 in advance of anticipated incremental revenue benefits," Sims said.

Sims, who succeeded former CEO Gregg Saretsky in March, said he "absolutely" understands analysts' concerns. But WestJet faces the same pressures that airlines have always faced, he added.

"I've never operated in any other environment than [one where] you have the three headwinds of labour, fuel and competition," he said. "This is business as usual for WestJet."

Sims formerly worked at several airlines, including Air New Zealand, where he helped that company acquire Boeing 787s.

Shortly after the earnings call, Sims hosted a packed marketing event at the Calgary International airport that culminated in a short video – projected against a massive hangar door – in which the company unveiled a digital rendering of a 787-9 decked out in a new livery.

The video starkly highlighted the very transformation that Sims succinctly describes in the most-recent copy of inflight WestJet Magazine.

"When WestJet launched back in 1996, it was very much a point-to-point carrier," he writes. "Today, WestJet is evolving into what is known as a hub-and-spoke airline."

Formerly an all-737 operator, WestJet several years ago began acquiring a fleet of network-feeding Bombardier Q400s, which subsidiary Encore operates. Then it acquired 767s, which it used to launch routes to London.

WestJet majorly overhauled its network in recent months by routing more flights through its Calgary, Toronto and Vancouver hubs. It is also taking delivery of at least 55 737 Max.

Sims describes 787s as completing the puzzle – connecting WestJet to distant international markets while feeding an increasingly complete domestic network.

The company has said 787s will serve European cities, but Sims adds that WestJet eyes fast-growing Asian markets, too.

WestJet expects to receive its first of 10 General Electric GEnx-powered 787s in January 2019. Those aircraft will carry about 320 seats, including 24 premium economy seats and 16 lie-flat seats – marking WestJet's foray into the ultra-premium segment.

The company will likewise open new airport lounges and introduce two-by-two premium economy seats on 737s, executives say.

WestJet also plans to implement a new joint venture with Delta Air Lines next year and is considering a potential European partnership with Air France-KLM Group, Sims said.

Amid all that, on 20 June WestJet's new ultra-low-cost subsidiary Swoop will take flight. The company sees that unit as a means to capture more bargain-seeking travelers while heading off new ULCC entrants.

Such new entrants include already-operating Flair Airlines and potential upstart Jetlines. Air Canada has responded by expanding the fleet and network of its low-cost unit Rouge.

SECOND QUARTER SURPRISE

No one said changes would come cheap, but WestJet's second quarter cost and revenue projections caught investors by surprise; WestJet's stock price dropped 8% following the news.

The 7.5-8.5% unit cost jump reflects Swoop's launch, additional flying by Encore (which operates higher-unit-cost Q400s) and a jump in maintenance and fuel costs, chief financial officer Harry Taylor tells investors.

WestJet paid 14% more per litre of fuel in the first quarter.

But the second quarter cost bump also accounts for higher-than-expected expenses related to WestJet's incoming 787s, Taylor said.

Those costs include expenses from acquisition of ground servicing equipment and related aircraft support, but largely reflect WestJet's broader transition into a more-upscale airline, Sims said.

For instance, the company has been purchasing new inflight products and testing how it will serve wine and food, he said.

"It's actually more about… prototyping the service and trialing those service flows with guests and our own flight attendants," said Sims.

As costs surge this quarter, unit revenue will remain flat to slightly down despite three recent fare increases, executives said.

That projection reflects increased competition and other factors, including the threat of a pilot strike, which has caused a dip in bookings, they said.

Pilot union Air Line Pilots Association, International (ALPA) warned in late April that pilots could walk off the job on 19 May.

WestJet has since seen "soft deterioration in bookings… We are seeing a degree of anxiety from guests," said Sims. "While we are still in those negotiations… it creates a level of uncertainty."

WestJet's pilot struggles escalated in-step with the company's transformation. Pilots had not been unionised until May 2017, when they voted for ALPA representation. But negotiations for a first contract stalled due at least partly to disagreement about how WestJet will staff the cockpits of aircraft operated by discount unit Swoop. Sims has said Swoop must pay wages commensurate with other ULCCs to be competitive.

The company initially planned to transfer WestJet and Encore pilots temporarily to Swoop, but the union opposed that idea, even filing – and winning – a complaint with the Canada Industrial Relations Board.

Sims has since said Swoop will launch with outside-hired pilots, which has not gone over well with ALPA. Dozens of pilots picketed outside WestJet's headquarters on 8 May.

Sims said discussions with the union continue with an improved tone, and insists he will do everything possible to keep aircraft flying.

"I have an almost visceral reaction to the prospect of 70,000 WestJet guests potentially being stranded," he said. "We have been working for a considerable amount of time on potential contingency plans to minimise that impact."

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Wondering what a stock confidence meltdown looks like? This is it.

The WJ senior management team are doing as good a job of answering legitimate investor questions as Sarah Huckabee Sanders does answering simple questions for the Trump administration.

Somehow, WJ senior management has decided that declaring war on its employees will be a winning long term strategy. The pilots are first. Sooner rather than later everybody else will follow.

Looks like the “I’m an owner” koolaid effect has run its course. Perhaps the WJ employees will realize that AC is a better investment, both financially and career wise.

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5 minutes ago, rudder said:

 

Looks like the “I’m an owner” koolaid effect has run its course. Perhaps the WJ employees will realize that AC is a better investment, both financially and career wise.

Not sure about other groups, but many pilots hired by AC the last while

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This could also be a turning point. If WJ can return to a satisfied work force then their stability as an airline will certainly improve.

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Time to get off the ESOP bandwagon.

Industry standard pay. Industry standard work rules. A registered pension plan.

These changes will not happen while spending $$ on share matching of up to 20% of pilot payroll. Even the WJ pilots will have to decide priorities.

Employee ownership was a great idea back in the day when there was lots of upside. Not any more. The era of the WJ millionaire is over. Just be an employee. Collect a wage and earn a retirement benefit. Senior management can run the share price in to the ground and it will not matter to you or your financial well being.

Aligning employee and shareholder interest was a great catch phrase back in the day but when push comes to shove the employees more often than not end up under the bus. What is the evidence? SWOOP.

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"The WJ senior management team are doing as good a job of answering legitimate investor questions as Sarah Huckabee Sanders does answering simple questions for the Trump administration."

If you want to pick on Sara Sanders in her absence, at least have the gonads to present your political slurs on the other board where you can be properly addressed.

  

Edited by DEFCON

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Not to mention that it's the same old repetitive union propaganda about how others should run their business!  

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8 minutes ago, Lakelad said:

.

WestJet and Air Canada: How little separates the airlines anymore

'Like it or not, WestJet is becoming much more like a large international carrier'


Sat May 12, 2018 - CBC News
by Kyle Bakx

When WestJet launched in early 1996, co-founder Clive Beddoe's strategy wasn't to go head to head with Air Canada, but instead to get people in Western Canada out of their cars and into the skies.

They started with three planes, 200 staff and cheap fares — like $29 from Calgary to Edmonton, taxes not included.

"Our classic market is going to be those who are driving. People who travel right now in their car. Our principal competitor is Ford or Toyota," Beddoe said at the time.

Competitors and analysts scoffed.

But WestJet has since grown far beyond those humble beginnings. The airline now has roughly 170 planes, 13,000 employees, and a flight schedule that criss-crosses North America and reaches into Europe and the Caribbean.

Indeed, WestJet is now in a transformational stage as it becomes an international airline offering premium services.

As the Calgary-based airline revamps its operations, the carrier is becoming more and more like its rival in Montreal, Air Canada, which has itself adapted over the years to be more like WestJet.

WestJet is currently grappling with a looming work stoppage as it negotiates its first union contract in the company's history. Air Canada was quick to say it'll try to help any stranded passengers, just like WestJet's offer when Air Canada hit serious labour pains in 2011.

The business direction of the airlines is becoming as aligned, as are their ticket prices. Those in the industry say differences between the two carriers are essentially non-existent.

westjet-and-air-canada-2017-numbers.jpg

'Employees are still owners, but the close-knit team atmosphere is fading.'

.

 

 

 

https://theairlinewebsite.com/topic/434171-westjet-pilots-strike-vote/?page=4&tab=comments#comment-1716186

 

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On 5/10/2018 at 5:08 PM, rudder said:

Time to get off the ESOP bandwagon.

Industry standard pay. Industry standard work rules. A registered pension plan.

These changes will not happen while spending $$ on share matching of up to 20% of pilot payroll. Even the WJ pilots will have to decide priorities.

Employee ownership was a great idea back in the day when there was lots of upside. Not any more. The era of the WJ millionaire is over. Just be an employee. Collect a wage and earn a retirement benefit. Senior management can run the share price in to the ground and it will not matter to you or your financial well being.

Aligning employee and shareholder interest was a great catch phrase back in the day but when push comes to shove the employees more often than not end up under the bus. What is the evidence? SWOOP.

Rudder.

While you might want to get off the ESOP bandwagon, many of us prefer to be in charge of our own future. Building wealth the same way those rich folk do and having that wealth in my own hands should the company not end well.

Buying stock and diversifying your wealth is still effective with just a bit of effort.

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1 minute ago, Critter said:

Rudder.

While you might want to get off the ESOP bandwagon, many of us prefer to be in charge of our own future. Building wealth the same way those rich folk do and having that wealth in my own hands should the company not end well.

Buying stock and diversifying your wealth is still effective with just a bit of effort.

Just a word of caution. I bought as many AC shares as I could in my  ESOP.  It did do one thing for me in that, after CCAA, it meant that I wouldn't be paying any capital gains tax for a long time. My point is that if the company doesn't end well neither does your ESOP.

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Hence the reason I diversify....

Properties and equities so far have done well for me and all my eggs are definitely not in one basket.

But pensions that will be taxed at the highest tax rate versus equity income...no thanks.

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On 5/10/2018 at 6:30 PM, DEFCON said:

"The WJ senior management team are doing as good a job of answering legitimate investor questions as Sarah Huckabee Sanders does answering simple questions for the Trump administration."

If you want to pick on young women that aren't here to defend themselves at least have the gonads to present your political slurs on the other board where you can be properly addressed.

  

If you think that statement is "picking on young women" the problem is yours.  🤔

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3 hours ago, Critter said:

Rudder.

While you might want to get off the ESOP bandwagon, many of us prefer to be in charge of our own future. Building wealth the same way those rich folk do and having that wealth in my own hands should the company not end well.

Buying stock and diversifying your wealth is still effective with just a bit of effort.

I don’t disagree that collecting the ESOP matching is sensible given that it is an extremely generous matching plan. And as you state, get it out of WJ stock as soon as possible for a diverse portfolio.

The point that I was making is that if there are going to be raw increases in pay rates, improvements in WAWCON, possible benefit or benefit cost sharing improvements, and even potentially a registered retirement plan that result from the collective bargaining then all of those improvements (read costs) will not happen while WJ is paying a de facto 20% bonus to pilot ESOP participants.

$$ are $$. Doesn’t matter where they come from. And unless the company is printing shares for the match, that program is costing $$.

Where do you want those $$ spent? That is the question.

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13 hours ago, rudder said:

Where do you want those $$ spent? That is the question.

Bank stock would be a good place to start. Definitely not a boat though.

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"If you think that statement is "picking on young women" the problem is yours."

In your opinion ...  🤔

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