An airline industry veteran has been tapped to run WestJet Airlines Ltd.'s after its chief executive officer resigned, a surprise move that follows weak quarterly earnings and the bungled launch of a new reservation system.
Sean Durfy stepped down as president and CEO of the Calgary-based airline Mondayt night, saying he wanted to spend more time with his young family. He'll be replaced by industry veteran Gregg Saretsky, who was an executive at the now-defunct Canadian Airlines for 13 years and has worked in the industry for 25 years.
"There's no secret that there have been challenges at the company over the last 12 months, and I'm certain that there have been issues when it comes to performance," said Ben Cherniavsky, an industry analyst who follows the airline for investment dealer Raymond James Ltd.
It's the second time in 10 years WestJet has replaced a top executive unexpectedly. It's an awkward situation for a company that prides itself on corporate culture, Mr. Cherniavsky said.
"This is a delicate situation for the board and for WestJet," he said. "Culture and leadership is important at any company, but it is absolutely pinnacle to the success at WestJet. It's telling that this is the second time in a relatively short history the plug has been pulled on a CEO, even if he resigned on his own."
The airline praised Mr. Durfy for spearheading several projects, including the launch of its vacation package business and the implementation of two new reservation systems. However, the most recent reservation system was an embarrassment for the airline when it launched in October, causing website crashes and long waits for customer service.
The company said the reservations glitch eroded its fourth-quarter results, with profit coming in 52 per cent below the same quarter a year ago. While pressured by reduced business spending, high unemployment and low consumer confidence, Mr. Durfy told analysts that he was "ecstatic and extremely pleased" with the quarter's $20.2-million profit.
The company's shares have lagged its main competitor Air Canada, with a gain of 11.95 per cent since the beginning of the year. Air Canada has gained 28.03 per cent, while the S&P 500 Airline Index, which tracks the broader industry, has gained 13.73 per cent.
Mr. Durfy said he would stay with the company until April. Both men will attend a press conference Tuesday, and plan to attend a National Bank Financial transportation conference in Toronto March 24.
"Those things I set out to accomplish at WestJet have now been achieved and I believe this is an appropriate time to allow others to carry the torch," Mr. Durfy said in the release.
At the end of December, WestJet had a domestic market share of 38 per cent, compared with 36 per cent at the end of 2008, Mr. Durfy said in February, basing his figures on revenue passenger miles, a key measure of airline traffic. While he declined to estimate his rival's share, industry experts say Air Canada's piece of the domestic market stood at 55 per cent at the end of 2009, down from 57 per cent a year earlier.
Before joining WestJet, Mr. Durfy was president and chief operating officer at Calgary-based utility Enmax Energy Corp. He holds a Bachelor of Commerce from Dalhousie University in Halifax.
Founded in 1996, the low-cost WestJet didn't fly east of Manitoba until 2000. It now serves 69 cities in North America and the Caribbean.
Mr. Saretsky is well positioned to enhance his predecessor's accomplishments, WestJet chairman Clive Beddoe said. At Alaska Airlines, Mr. Saretsky developed a network of partners among the U.S. airlines and an award-winning rewards program. He was also "instrumental in the establishment of many cost-saving initiatives, making Alaska one of the most efficient airlines in North America," WestJet said.
"He brings a wealth of knowledge and experience to the president and CEO role and we are confident his background will provide the leadership and experience required to achieve our strategic plans," Mr. Beddoe stated.
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