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Shares in Calgary-based WestJet hit a record high Tuesday after it posted a 16-per-cent jump in second-quarter profit (Fred Lum/The Globe and Mail)
Shares in Calgary-based WestJet hit a record high Tuesday after it posted a 16-per-cent jump in second-quarter profit (Fred Lum/The Globe and Mail)

WestJet plots expansion as profits surge Add to ...

WestJet Airlines Ltd. is preparing to expand regionally in Canada and extend its reach overseas, bulking up amid the threat of new competition.

WestJet said Tuesday that it has placed orders for another five Bombardier Q400 turboprops for duty on the airline’s regional Encore service. The carrier already has 13 Q400s in its fleet, and is now aiming to have 30 of the planes eventually deployed on short-haul trips. WestJet, which started flying in 1996, launched Encore in June, 2013.

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The Calgary-based company relies on Boeing 737 narrow-body jets as the workhorse, but has been branching out. WestJet has lined up four Boeing 767 wide-body jets for service between Alberta and Hawaii beginning in late 2015 and there are plans for new overseas routes starting in mid-2016. Last month, WestJet introduced its first transatlantic service, providing flights between St. John’s and Dublin on Boeing 737-700 aircraft.

“We’ve got some good momentum going here and we’re going to keep our foot on the accelerator,” WestJet chief executive officer Gregg Saretsky said during the firm’s quarterly conference call.

WestJet shares hit a record high Tuesday after the airline posted a 16-per-cent jump in second-quarter profit. The country’s second-largest carrier is in expansion mode even as new entrants are making moves in Canada’s aviation market. Vancouver-based Canada Jetlines Ltd. and Calgary-based Jet Naked are two upstarts that are billing themselves as ultra low-cost carriers ready to do battle in 2015 against WestJet and Air Canada on domestic and Canada-U.S. routes.

“To the extent that there are other lower-cost operators that see opportunities, they are going to be met with a pretty strong response from WestJet, and our people are ready for any challenge,” Mr. Saretsky said.

Southwest Airlines Co. of Dallas said last week that it is considering a foray into Canadian airports to offer Canada-U.S. flights. Canadian passengers took an estimated five million flights last year through U.S. border airports, counting departures and arrivals on various American carriers such as Southwest.

“We’ll be ready to meet whatever competitor wants to come and take us on, and Southwest is a very good competitor. But our job is to make sure that WestJet is in a position to be a fierce competitor as well,” Mr. Saretsky said.

He made the comments after WestJet announced healthy financial results and fuller planes for its second quarter, overcoming bigger bills for jet fuel. WestJet surpassed analysts’ expectations as the carrier cruised to a profit of $51.8-million or 40 cents a share, up from $44.7-million or 34 cents in the same period last year. The company’s load factor, or the proportion of seats filled by paying customers, improved to 79.6 per cent in the latest quarter, up from 79.4 per cent a year earlier.

One option to bolster revenue being contemplated by WestJet is slapping on a fee for the first check-in bag. On domestic flights since mid-May, Toronto-based Porter Airlines Inc. began charging $25 one-way for the first checked bag.

National Bank Financial analyst Cameron Doerksen said WestJet intends to have a 262-seat cabin for its Boeing 767s, comparing favourably with Air Canada Rouge’s configuration of 264 or 280 seats for the aircraft. Rouge began its budget leisure operations in July, 2013, with wide-body Boeing 767s and narrow-body Airbus A319s.

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