WestJet Airlines Ltd.’s new regional subsidiary will consider bids from two aircraft manufacturers, with Bombardier Inc.’s Q400 turboprop emerging as the early favourite among analysts.
Montreal-based Bombardier’s Q400 program will compete against the French-Italian ATR 72-600 series for a contract to supply up to 40 turboprops to the carrier, WestJet chief executive officerGregg Saretsky said Wednesday.
Top WestJet executives, aided by consultants, expect to select the winning bidder by mid-2012. Factoring in an anticipated wait of 12 to 18 months for aircraft delivery, Calgary-based WestJet plans to launch short-haul flights within Canada and some transborder service to the United States by the end of 2013.
The new service will stick with the WestJet brand, but won’t have buy-on-board meals or “LiveTV” screens on seatbacks, two options available to travellers aboard WestJet’s fleet of Boeing 737s.
Communities across Canada are lobbying for WestJet to add them to the company’s route map, Mr. Saretsky said.
WestJet will now move to the next phase by holding talks with Bombardier and ATR.
“Both are excellent aircraft that would fit seamlessly into our current fleet,” Mr. Saretsky said during a conference call with analysts. “The regional fleet will consist of just one type of aircraft to maintain operational efficiencies and flexibility, similar to the successful single-fleet approach we use in our current operations.”
Bombardier spokesman Marc Duchesne noted that the Q400 is assembled at the manufacturer’s Toronto plant. Bombardier hopes for a visit from WestJet officials to allow them to “better understand the amazing features, such as jet-like speed, of this aircraft,” he said.
Analysts say the Q400 has the inside track for now, although WestJet emphasized that it’s still early in the bidding process.
In an internal memo last month to its pilots, WestJet said it’s seeking to expand operations under a two-tier structure, keeping costs under control at the regional subsidiary by paying reduced wages. The memo said WestJet might configure the Q400 to have 74 seats while there would room for 68 passengers on the ATR 72-600. The maximum cruising speed of the Q400 is 667 kilometres an hour, compared with the ATR plane’s 510 km/h, WestJet added.
Mr. Saretsky confirmed the two plane manufacturers on WestJet’s shortlist after the carrier announced that its quarterly dividend will rise to 6 cents a share from 5 cents for shareholders of record on March 14, payable on March 30. As well, WestJet intends to buy back up to 5 per cent of its stock over the next year.
Mr. Saretsky said he’s pleased that employees, known internally as WestJetters, overwhelmingly endorsed management’s plans to create the wholly owned regional division. Of the non-union workers who cast ballots, 91 per cent approved the proposal for launching the short-haul service.
WestJet posted a $148.7-million profit last year, up 65 per cent from $90.2-million in 2010. In the fourth quarter, the airline had a $35.6-million profit, down 4 per cent from $37.2-million in the same period of 2010. Quarterly share profit stayed at 26 cents.
WestJet forecasts its expenses for jet fuel, excluding hedging, will range from 93 cents to 95 cents a litre in the first quarter, up 9 to 12 per cent from the same period in 2011. On the revenue side, bookings remain healthy, despite some economic uncertainty.