Tango Niner Posted May 1, 2003 Share Posted May 1, 2003 With all the bad AC press going around, thought it only fair to distribute a "bad" WJ story. (Actually, is it negative press? You decide.) Similar articles in Calgary Herald and National Post, by the way. T9 ------------------- CALGARY -- WestJet Airlines Ltd. squeezed out a tiny profit in the first quarter -- an 89-per-cent plunge from a year ago -- citing hard times in the travel industry and expenses related to its own expansion. The Calgary-based air carrier said that its profit fell to $778,000 or 1 cent a share for the three months ended March 31, compared with $7.1-million or 10 cents a year earlier. Revenue was $172.2-million, up from $137.1-million. Clive Beddoe, WestJet's president and chief executive officer, told analysts that the business environment hasn't been conducive to producing healthy profits. Still, the country's second-largest airline continued to add destinations -- it will land in 26 cities by mid-June -- and aircraft to its fleet -- it now has 38. "The continuous threat of further terrorist attacks last year and [worries leading up to] the war with Iraq, the softening economy and the competitive environment have created very major challenges for us to contend with as we continue to grow our airline," Mr. Beddoe said. At WestJet's annual meeting yesterday, shareholders voted 91 per cent in favour of a proposal to increase the maximum number of stock options issued under the employee stock option plan to the equivalent of 12 per cent of outstanding shares from 10 per cent. Under the compensation policy, the number of options issued to an employee rises as the stock price falls to maintain a fixed dollar value for the options granted to each employee. Eighty-five per cent of the stock options in 2003 will go to pilots, as the company continues to recruit them as part of its expansion. At the end of the first quarter, WestJet had 5.7 million stock options outstanding, equivalent to about 7.5 per cent of its common shares. At the meeting, Mr. Beddoe said WestJet's share of the domestic airline market has risen to 24 per cent from 14 per cent a year ago. He projected that the company's market share would reach 27 per cent by year-end. In the first quarter, fuel costs, which rose to $38.1-million from about $22-million a year earlier, also contributed to the decline in profit, the company said. Soaring crude oil prices, which influence the cost of jet fuel, forced WestJet to tack on a fuel surcharge during the period. The fee, which varies according to the length of a trip, will be cut "in time," Mr. Beddoe said. WestJet's load factor, or percentage of seats sold, fell to 64.4 per cent from 68.2 per cent in the year-earlier quarter. Its yield, or revenue per passenger mile, fell to 17.9 cents from 21.4 cents. The company cited fourth- and first-quarter acquisitions of nine Boeing 737-700 aircraft, which added 58.8 per cent in available seat miles during the first quarter, for contributing to declining load factor. The scare over severe acute respiratory syndrome (SARS) also was a factor. WestJet shares fell 10 cents to close at $16.50 on the Toronto Stock Exchange yesterday. When asked if WestJet is on track to meet consensus earnings forecasts of 83 cents a share this year -- the average of eight analysts surveyed by Thomson Financial/First Call -- Mr. Beddoe, being cautious, called the projection "achievable." WestJet said it will add nine planes in 2004 (for a net gain of eight, as an older model is retired) and will add destinations in the United States within 18 months Link to comment Share on other sites More sharing options...
Guest JW Posted May 1, 2003 Share Posted May 1, 2003 The reality of the situation in any business is that bankruptcies destabilize the entire system, as the CCAA company attempts to maintain market share and cash-flow to keep the creditors at bay. Mr. Beddoe, I'm totally sure, is aware of that but why waste a chance to slam AC once again? ...imo! JW ============================== Winnipeg Free Press WestJet lashes out at AirCan Thursday, May 1st, 2003 By James Stevenson CALGARY -- WestJet Airlines president Clive Beddoe is accusing Air Canada of pursuing a "scorched earth policy" with endless seat-sales after his discount airline unveiled first-quarter profits that fell 90 per cent from last year. WestJet said yesterday the quarter, in which the airline made just $778,000 profit, was one of the toughest in its history. Along with its own rapid expansion, the Calgary-based airline faced many external pressures, including high fuel prices, ongoing industry turmoil and fewer travellers because of the war in Iraq. After the company's annual meeting yesterday, Beddoe also lashed out at Air Canada --which is trying to restructure in the face of bankruptcy -- by accusing the big carrier of driving down earnings with unsustainable fares. "We're also facing competition from a carrier that's desperate and would dearly love to see us disappear," said Beddoe. "They're just desperate, they're desperate to get cash," he told reporters. "They've got a bit of a scorched earth policy that if they're going to go down, they'll do as much damage as they can on their way and I think that was to be expected. We sort of knew that would happen." Air Canada filed for bankruptcy protection April 1. The company met with its union leaders yesterday to give an update on its financial straits and plead for co-operation on its plans for thousands of layoffs. Meanwhile in Calgary, WestJet's mood was still positive as the airline posted its 25th consecutive quarter of profitability. The airline's earnings for the three months ended March 31 amounted to one cent a share, down from 10 cents per share in the first quarter of 2002, when WestJet's net income was $7.1 million. Revenue increased 25.6 per cent to $172.2 million for the quarter as the airline increased its capacity by 58.8 per cent and its passenger traffic by 50 per cent. WestJet serves 24 Canadian cities from Victoria to Halifax and has announced plans to add service to St. John's and Gander, Nfld., in mid-June. Beddoe said his airline's Canadian market share was about 24 per cent, up from about 14 per cent a year earlier. Although WestJet is Canada's second-largest airline, it is still roughly one-10th the size of Air Canada. -- Canadian Press -------------------------------------------------------------------------------- Link to comment Share on other sites More sharing options...
Guest JW Posted May 1, 2003 Share Posted May 1, 2003 The reality of the situation in any business is that bankruptcies destabilize the entire system, as the CCAA company attempts to maintain market share and cash-flow to keep the creditors at bay. As a business man, I'm sure Mr. Beddoe is aware of the realities of the market. But why waste a chance to slam AC once again? ...imo! JW ============================== Winnipeg Free Press WestJet lashes out at AirCan Thursday, May 1st, 2003 By James Stevenson CALGARY -- WestJet Airlines president Clive Beddoe is accusing Air Canada of pursuing a "scorched earth policy" with endless seat-sales after his discount airline unveiled first-quarter profits that fell 90 per cent from last year. WestJet said yesterday the quarter, in which the airline made just $778,000 profit, was one of the toughest in its history. Along with its own rapid expansion, the Calgary-based airline faced many external pressures, including high fuel prices, ongoing industry turmoil and fewer travellers because of the war in Iraq. After the company's annual meeting yesterday, Beddoe also lashed out at Air Canada --which is trying to restructure in the face of bankruptcy -- by accusing the big carrier of driving down earnings with unsustainable fares. "We're also facing competition from a carrier that's desperate and would dearly love to see us disappear," said Beddoe. "They're just desperate, they're desperate to get cash," he told reporters. "They've got a bit of a scorched earth policy that if they're going to go down, they'll do as much damage as they can on their way and I think that was to be expected. We sort of knew that would happen." Air Canada filed for bankruptcy protection April 1. The company met with its union leaders yesterday to give an update on its financial straits and plead for co-operation on its plans for thousands of layoffs. Meanwhile in Calgary, WestJet's mood was still positive as the airline posted its 25th consecutive quarter of profitability. The airline's earnings for the three months ended March 31 amounted to one cent a share, down from 10 cents per share in the first quarter of 2002, when WestJet's net income was $7.1 million. Revenue increased 25.6 per cent to $172.2 million for the quarter as the airline increased its capacity by 58.8 per cent and its passenger traffic by 50 per cent. WestJet serves 24 Canadian cities from Victoria to Halifax and has announced plans to add service to St. John's and Gander, Nfld., in mid-June. Beddoe said his airline's Canadian market share was about 24 per cent, up from about 14 per cent a year earlier. Although WestJet is Canada's second-largest airline, it is still roughly one-10th the size of Air Canada. -- Canadian Press -------------------------------------------------------------------------------- Link to comment Share on other sites More sharing options...
Guest JW Posted May 1, 2003 Share Posted May 1, 2003 The reality of the situation in the aviation marketplace bankruptcies destabilize the entire system. The CCAA company attempts to maintain market share and cash-flow to keep the creditors at bay. They drop prices and the competitors suffer. This is nothing new, and Westjet is not the first to feel those effects from failing companies...Holidair, Nationair, Worldways, C3000, Pan Am, Eastern, North Central, Piedmont, Air Club, Canjet I, Royal, Greyhound, Wardair, and CAIL of course, plus many more. As a business man, I'm sure Mr. Beddoe is aware of the realities of the market. But why waste a chance to slam AC once again? ...imo! JW ============================== Winnipeg Free Press WestJet lashes out at AirCan Thursday, May 1st, 2003 By James Stevenson CALGARY -- WestJet Airlines president Clive Beddoe is accusing Air Canada of pursuing a "scorched earth policy" with endless seat-sales after his discount airline unveiled first-quarter profits that fell 90 per cent from last year. WestJet said yesterday the quarter, in which the airline made just $778,000 profit, was one of the toughest in its history. Along with its own rapid expansion, the Calgary-based airline faced many external pressures, including high fuel prices, ongoing industry turmoil and fewer travellers because of the war in Iraq. After the company's annual meeting yesterday, Beddoe also lashed out at Air Canada --which is trying to restructure in the face of bankruptcy -- by accusing the big carrier of driving down earnings with unsustainable fares. "We're also facing competition from a carrier that's desperate and would dearly love to see us disappear," said Beddoe. "They're just desperate, they're desperate to get cash," he told reporters. "They've got a bit of a scorched earth policy that if they're going to go down, they'll do as much damage as they can on their way and I think that was to be expected. We sort of knew that would happen." Air Canada filed for bankruptcy protection April 1. The company met with its union leaders yesterday to give an update on its financial straits and plead for co-operation on its plans for thousands of layoffs. Meanwhile in Calgary, WestJet's mood was still positive as the airline posted its 25th consecutive quarter of profitability. The airline's earnings for the three months ended March 31 amounted to one cent a share, down from 10 cents per share in the first quarter of 2002, when WestJet's net income was $7.1 million. Revenue increased 25.6 per cent to $172.2 million for the quarter as the airline increased its capacity by 58.8 per cent and its passenger traffic by 50 per cent. WestJet serves 24 Canadian cities from Victoria to Halifax and has announced plans to add service to St. John's and Gander, Nfld., in mid-June. Beddoe said his airline's Canadian market share was about 24 per cent, up from about 14 per cent a year earlier. Although WestJet is Canada's second-largest airline, it is still roughly one-10th the size of Air Canada. -- Canadian Press -------------------------------------------------------------------------------- Link to comment Share on other sites More sharing options...
Guest JW Posted May 1, 2003 Share Posted May 1, 2003 The reality of the situation in the aviation marketplace bankruptcies destabilize the entire system. The CCAA company attempts to maintain market share and cash-flow to keep the creditors at bay. They drop prices and the competitors suffer. This is nothing new, and Westjet is not the first to feel those effects from failing companies...Holidair, Nationair, Worldways, C3000, Pan Am, Eastern, North Central, Piedmont, Air Club, Canjet I, Royal, Greyhound, Wardair, and CAIL of course, plus many more. As a business man, I'm sure Mr. Beddoe is aware of the realities of the market. But why waste a chance to slam AC once again? ...imo! JW ============================== Winnipeg Free Press WestJet lashes out at AirCan Thursday, May 1st, 2003 By James Stevenson CALGARY -- WestJet Airlines president Clive Beddoe is accusing Air Canada of pursuing a "scorched earth policy" with endless seat-sales after his discount airline unveiled first-quarter profits that fell 90 per cent from last year. WestJet said yesterday the quarter, in which the airline made just $778,000 profit, was one of the toughest in its history. Along with its own rapid expansion, the Calgary-based airline faced many external pressures, including high fuel prices, ongoing industry turmoil and fewer travellers because of the war in Iraq. After the company's annual meeting yesterday, Beddoe also lashed out at Air Canada --which is trying to restructure in the face of bankruptcy -- by accusing the big carrier of driving down earnings with unsustainable fares. "We're also facing competition from a carrier that's desperate and would dearly love to see us disappear," said Beddoe. "They're just desperate, they're desperate to get cash," he told reporters. "They've got a bit of a scorched earth policy that if they're going to go down, they'll do as much damage as they can on their way and I think that was to be expected. We sort of knew that would happen." Air Canada filed for bankruptcy protection April 1. The company met with its union leaders yesterday to give an update on its financial straits and plead for co-operation on its plans for thousands of layoffs. Meanwhile in Calgary, WestJet's mood was still positive as the airline posted its 25th consecutive quarter of profitability. The airline's earnings for the three months ended March 31 amounted to one cent a share, down from 10 cents per share in the first quarter of 2002, when WestJet's net income was $7.1 million. Revenue increased 25.6 per cent to $172.2 million for the quarter as the airline increased its capacity by 58.8 per cent and its passenger traffic by 50 per cent. WestJet serves 24 Canadian cities from Victoria to Halifax and has announced plans to add service to St. John's and Gander, Nfld., in mid-June. Beddoe said his airline's Canadian market share was about 24 per cent, up from about 14 per cent a year earlier. Although WestJet is Canada's second-largest airline, it is still roughly one-10th the size of Air Canada. -- Canadian Press ---------------------- Link to comment Share on other sites More sharing options...
Guest Skirt Posted May 1, 2003 Share Posted May 1, 2003 JW, Your logic seems O.K. to a point. These are the 1st quarter results (ending March 31st) for WJ and AC didn't file CCAA until April 1st! It'll be interesting to see the 2nd quarter results when SARS, the Full war, and CCAA effects kick in. Link to comment Share on other sites More sharing options...
Guest JW Posted May 1, 2003 Share Posted May 1, 2003 I wasn't referring to the results, but to the article pasted below from the Winnipeg Free Press where Mr. Beddoe comments on the "scorched earth" policy. The current policy of AC is just to stay in business, imo. Link to comment Share on other sites More sharing options...
Flapsforty Posted May 1, 2003 Share Posted May 1, 2003 If they were trying to stay in business they wouldn't be selling seats at 40% off during the best quarters to make money in. They are trying to hurt the competition as much as possible so IF they do come out of this, they would have weaker competitors and better their own chances. IMO. I would do the same, if I had nothing to lose. I'm sure if you took a poll everyone would agree. Link to comment Share on other sites More sharing options...
Guest M. McRae Posted May 1, 2003 Share Posted May 1, 2003 So is it only OK for Westjet to run a seat sale??? http://c0dsp.westjet.com/internet/sky/deals/index.jsp WestJet Fare Deals Once again, WestJet leads the way when it comes to offering great fares and great service. Check below to see WestJet's Fare Deals! These are not the only fares and flights we offer, rather they are deals on selected destinations. For a complete listing of WestJet's destination schedules, please see our Flight Schedules Seats at these fares are limited, so book early! Departing from: CalgaryEdmontonHamiltonKelownaSaskatoonSault Ste MarieSudburyThunder BayTorontoVancouverWindsorWinnipeg (Fare Deals are only available on selected lucky WestJet cities.) One Way or Round Trip? Round Trip One Way Number of guests 1 Guest2 Guests3 Guests4 Guests5 Guests6 Guests7 Guests8 Guests9 Guests 0 Infants1 Infant2 Infants3 Infants4 Infants up to 23 months Fare Deals Rules All fares quoted are one way. Bookings are non-refundable. Seats are limited and subject to availability. Special Fares are combinable with our other great fares. Minimum $25.00 service charge per person plus the applicable fare upgrade to change booking. To cancel booking there is a $25.00 service charge per person with the remainder of fare held in a credit file to be used for future travel. Valid for new bookings only. One day advance booking required. * Taxes and fees extra. Link to comment Share on other sites More sharing options...
Flapsforty Posted May 2, 2003 Share Posted May 2, 2003 Sure it's okay for anyone. However, when you aren't making a profit is a seat sale a good idea? What reason would you be runing one for? ZIP started doing it just after a Judge in Quebec decided the competition tribunal couldn't use cease and disist orders on AC. Next I believe Zip was selling YYJ-YYC for 34.95. If can't tell me you're making money on a 34.95 seat. I'll entertain a notions for a company that's losing 3-5 million a day for having seat sales. Link to comment Share on other sites More sharing options...
Guest Kilo Mike Posted May 2, 2003 Share Posted May 2, 2003 Ok Flaps.. A question then. WJ's past promos of free travel for; birthday , last name , customer number, are just ok when you are profitable then? Given the rapidly shrinking profits WJ has been generating, I guess the days of the flying gimic are all done? Come on now. This business is a revenue hungry beast and it needs a cash stream. Everyone has gimics to keep the flow going when times are tough. Don't take it personal when your competition does it.. It's just competition. KM Link to comment Share on other sites More sharing options...
Flapsforty Posted May 2, 2003 Share Posted May 2, 2003 Yes we've been party to the gimicks. We're having a few happening in Toronto right now. Planes, trains, buss lines, hotels, the Blue Jays, etc. They're all pitching in to get commerce moving into back Toronto, and justifiably so. But AC, ZIP, Tango are going after particular markets as if to weaken their competitors so that if they can emerege from CCAA they would have a better chance to make money. Why else sell so low when market demand will be highest during Q 2 and 3? What's your take on it? And no I'm not taking it personally, just discussing it with whoever cares to. Cheers. Link to comment Share on other sites More sharing options...
Guest Labtec Posted May 2, 2003 Share Posted May 2, 2003 Flaps: You have missed the point. Business in a capitalist system is all about the mutual infliction of economic loss. Economically, we try to hurt you by taking your market share and you try to do the same to us. It isn't about natural love and affection. It is a ruthless exercise and for the last few years Clive has been winning. The thing is that in any game you can't win all the time. Air Canada was winning for nearly 60 years I wonder if WJ can match that performance? We'll see in 2056. Labtec Link to comment Share on other sites More sharing options...
Flapsforty Posted May 2, 2003 Share Posted May 2, 2003 I'll have long since been under 6 feet of very well kept lawn at that point and probably won't care. Unless I can take my options with me... Let me know how it all turns out. Cheers. Link to comment Share on other sites More sharing options...
CAT3DUAL Posted May 2, 2003 Share Posted May 2, 2003 In reality, thats it. Fifty years from now most of us we'll have been long buried and who will frankly care a rip about AC or WJ or anyone else for that matter. Link to comment Share on other sites More sharing options...
Guest Virtual Posted May 2, 2003 Share Posted May 2, 2003 Did not WJ go after competitors' markets to begin their airline? Link to comment Share on other sites More sharing options...
Guest Oracle Posted May 2, 2003 Share Posted May 2, 2003 Kinda nice when you have the government backing you........but since then it's been a downhill slide. Coincidence?? No Link to comment Share on other sites More sharing options...
Guest Virtual Posted May 2, 2003 Share Posted May 2, 2003 ....or was it a 'knife' in that back? Link to comment Share on other sites More sharing options...
Guest Labtec Posted May 2, 2003 Share Posted May 2, 2003 Nobody said life was fair. You do what you can and take the opportunities you can create for yourself. AC was lucky the government was on its side. There never will be a captalist utopia where the government does not interfere, just like there was no communist utopia. Right now WJ is winning but they aren't winning by as much. If and when AC comes out of the CCAA process WJ will be in some serious trouble and those profit sharing checks will start to get slimmer and slimmer. It is a natural business cycle. A crippled AC is what Clive wants. CCAA may allow AC to come up strong and that is not what CLive desires. For its efforts AC would have preferred a weak and feeble CAIL to a bankrupt one. AC didn't want to see a CAIL that actually restructured properly and could really compete, it is better to have your competitors continually on the ropes punch drunk. Even if AC fails WJ has lowered the bar on a working family's ability to earn a living in the Airline industry. You cannot live in YYZ on 40k/year own a home and raise a children. A house costs 400K in the city. Rent for a one bedroom is 1000k/mnth. What will happen if AC fails? There will be some other lower cost airline that arrives and gives a rapidly expanding WJ a run for its money. Already Jetsgo pays less than WJ. Where does it end? The people at WJ who can't afford a home will be competing with people from XYZ airlines that can't afford an apartment. What a business. It isn't fair but that's the way it is going. If the people at WJ don't think that there will be a cheaper lower cost airline that will undermine their wages and working conditions they aren't being true to themselves. Labtec Link to comment Share on other sites More sharing options...
deicer Posted May 2, 2003 Share Posted May 2, 2003 You're beginning to sound alot like me!!!!! Yours in Humor! Iceman Link to comment Share on other sites More sharing options...
Maranatha Posted May 2, 2003 Share Posted May 2, 2003 You're quite right...I think! I'm willing to be corrected on this and fire away if I'm wrong, but isn't YYC-YXX the only original route pioneered by WJ. The very basis for WJ's founding was CB's dissatisfaction with the service and fares being offered on Western routes by AC & CAI. Thus, most of WJ's routes have been cherry-picked off AC & CAI, not to mention JAZZ & CMA. But that's the airline business...and that's fair enough. Unfortunately Clive has this nauseating way of portraying himself as the Great, Smug, Self-righteous, Airline Innovator...and give the man credit, in many ways he is...an innovator. But, at the risk of sounding repetitive, this industry has a long history of "What goes around comes around." Max Ward found that out to his great chagrin, after years of Beddoe-like pontificating against AC & CP. Maybe Clive and WJ will be the exception. Time will tell. Link to comment Share on other sites More sharing options...
IFG Posted May 2, 2003 Share Posted May 2, 2003 Hi, JW - Re: "Mr. Beddoe comments on the "scorched earth" policy." & "The current policy of AC is just to stay in business, imo.": In juxtaposing the two, you seem to imply that the latter in some way trumps or discredits the former (I'm assuming that we both read into CB's comments an allegation of unfair behavior.) Regardless that "staying in business" would be more of a general corporate objective than a specific policy in itself, as it concerns that allegation, you can hardly say the two are mutually exclusive. Nobody here is in a position to absolutely ( ) prove or disprove anything untoward regarding whatever AC does; it will be argued with jesuitic thoroughness before the appropriate authorities. All the same, there is much past and present to provide those in other companies with grounds at least to wonder. Nobody in this industry soap opera can be complacent about anything. Cheers, IFG Link to comment Share on other sites More sharing options...
Steam Driven Posted May 2, 2003 Share Posted May 2, 2003 In addition to YYC - YXX , how about Calgary - Comox, Edmonton - Abbotsford, Calgary - Prince George. Thunder Bay - Ottawa, THE WEST - Hamilton. Hamilton - THE EAST. "Cherry Picking", I think not, introducing service at attractive prices on overpriced routes perhaps. Also a fair bit of pioneering city pairs. Watch for more of the same in the years to come. Link to comment Share on other sites More sharing options...
Guest Virtual Posted May 2, 2003 Share Posted May 2, 2003 Yes.... and more of the 'same' can come from different places. There will always be innovators and it will be interesting to see who/what/where it will come from next. Those innovators will be looking at AC, WJ, etc. to get their clientele from.... just as it was done before them. Interesting business if you're lucky enough to be still in it! Link to comment Share on other sites More sharing options...
W5 Posted May 2, 2003 Share Posted May 2, 2003 On startup, WS initiated some non-stop routes that in earlier times might have been operated by PWA but at the time were not done by anybody: Edmonton-Kelowna, Edmonton-Victoria, Victoria-Kelowna and Edmonton-Regina (was operated for a while by CRA, and AirBC later on); later added also Victoria-Prince George and Saskatoon/Regina-Ottawa. Link to comment Share on other sites More sharing options...
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