As Gregg Saretsky takes over today as chief executive officer of WestJet Airlines Ltd., investors are looking for signs that the Calgary-based carrier will be able to deliver on ambitious growth plans.
By coincidence, Mr. Saretsky becomes WestJet CEO one year to the day after Calin Rovinescu took over as Air Canada's CEO. Since April 1, 2009, WestJet shares have risen 14 per cent while Air Canada's have soared 185 per cent as the country's largest airline avoided filing for bankruptcy protection.
Among the challenges facing Mr. Saretsky, who had summer jobs as an Air Canada flight attendant while in university, will be changing the minds of some analysts who think a beaten-up Air Canada still has more potential than WestJet to deliver big returns.
National Bank Financial Inc. analyst David Newman, for instance, has a 52-week target price of $3.50 for Air Canada and $17 for WestJet, while Raymond James Ltd. analyst Ben Cherniavsky has a target of $3.50 for Air Canada and $13.50 for WestJet. Air Canada class B shares closed unchanged yesterday at $2.22. WestJet shares finished at $13.65, down 1 cent.
WestJet wants to steal business traffic away from Air Canada nationally and woo consumers from Porter Airlines Inc. in the Eastern Triangle of Toronto, Montreal and Ottawa.
A new WestJet pricing system, to be introduced by the end of this year, will give business travellers certain options that they value, such as changing flights without penalty or even getting a cash refund.
Another major push will be to sign partnerships with foreign carriers, including "code-sharing" pacts that allow for co-operation on connecting flights, baggage handling and electronic ticketing.
Mr. Saretsky said in an interview last week that he is aiming to sign one co-operation deal by the end of 2010, and perhaps add another three or four next year.
Because Air Canada belongs to the Star Alliance of global carriers, WestJet is scrutinizing the other two groupings, called Oneworld and SkyTeam.
Potential Oneworld partners include Cathay Pacific Airways Ltd. of Hong Kong and British Airways PLC while possible SkyTeam partners include Korean Air and Delta Air Lines Inc. of Atlanta.
There could even be interlining, which is a looser type of partnership than code-sharing. Independents include Emirates Airline and Virgin America.
"Anything is possible," Mr. Saretsky said.
"We will prioritize those with the most reach and the ability to deliver traffic to our hubs for us to distribute."
WestJet already has partnership deals in place with China Airlines and Air France-KLM, but some industry experts say WestJet will be hard-pressed to forge ahead with its planned co-operation agreement with Dallas-based Southwest Airlines Co. in 2011, if ever. Mr. Cherniavsky said WestJet has gone through a rough patch, noting lineups at airports and lengthy waits with the call centre last fall, amid problems with phasing in a new computer reservations system.
"The reservation system was not well implemented and the people and customers came under some strain. And it took an awful long time for the loyalty program to materialize," he said.
Versant Partners Inc. analyst Cameron Doerksen said despite recent stumbling, WestJet still has an enviable corporate culture and customer service that give it a long-term edge over legacy carriers such as Air Canada. "WestJet is laying the groundwork. There's the frequent-flier program, they're expanding their sun destinations and transborder routes into the U.S., and also making inroads to get business travellers," he said.
"Changes aren't going to happen overnight, but there are a lot of strategic initiatives that are going to be ramping up over the next few years."
Position: Previously WestJet's executive vice-president of operations; becomes president and chief executive officer today, (He succeeds Sean Durfy, who stepped down to spend more time with his family.)
Personal: Born in December, 1959, in Châteauguay, Que., and raised for nearly 11 years in the Montreal suburb; moved to Richmond, B.C., in 1970. Has two older brothers who are commercial pilots. Married for 24 years to Debb, with whom he has three children: twins Mark and Jennifer, 23, and Bobby, 15.
Education: BSc in microbiology and biochemistry, University of British Columbia, 1982; Master of business administration, UBC, 1984.
Airline career: 1985-1998: Rose through management ranks at Calgary-based Canadian Airlines International Ltd. (formerly CP Air).
1998-2008: Management positions at Seattle-based Alaska Airlines Inc., including executive vice-president overseeing areas such as marketing, planning and flight operations.
June, 2009: Joined WestJet as vice-president of vacation division.