When WestJet Airlines Ltd.'s 8,500 non-union employees begin voting Monday on whether to support management’s plans to start a regional carrier, most of them will be making their decision as both workers and shareholders.
Nearly 85 per cent of WestJet’s employees are shareholders, so management’s efforts to create a regional subsidiary that pays reduced wages to pilots will be attractive from a corporate viewpoint.
The proposal to launch a wholly owned subsidiary for short-haul flights within Canada “is the building block for a global WestJet,” the airline’s executives said in an internal presentation to WestJet pilots.
Calgary-based WestJet is canvassing its entire work force on the proposed subsidiary. But the company has granted veto power to its 1,050 non-union pilots, who will be casting their ballots on whether to approve a memorandum of agreement governing pay and benefits for pilots at the regional carrier. Voting wraps up on Feb. 3 for all staff.
WestJet executives are hoping that the pilots will agree that to become a global player, the airline must first take care of business at home. Passenger traffic from smaller Canadian cities will feed major domestic hubs, which in turn would make it viable for WestJet to consider flights overseas five years after the regional service is launched, according to management’s presentation.
By building a regional airline with 40 turboprops, the increased domestic traffic will allow WestJet to grow in North America with its fleet of Boeing 737 jets, management argues. The company currently has 97 Boeing 737s.
WestJet plans to start its regional service in 2013 with turboprops, either Canadian-built Bombardier Q400s or French-Italian ATR 72-600s. If all goes well, the carrier envisages ordering wide-body aircraft for flights to Europe and Asia as early as 2018.
“Current WestJet pilots would not be adversely affected by the regional operation,” said the presentation prepared by WestJet chief executive officer Gregg Saretsky and his management team.
WestJet emphasizes that it isn’t interested in acquiring Toronto-based Porter Airlines Inc., which operates 26 Q400s. But to allay the fears of WestJet pilots who might be worried about their future, management has offered job security to pilots flying “mainline” Boeing 737s.
Even if WestJet were to buy Porter, WestJet is pledging to first protect the jobs of its own pilots before allowing any Porter pilots to be promoted to flying 737s.
WestJet flight operations vice-president Len Winzinowich and WestJet Pilots Association president John Takacs reached the memorandum of agreement last week. In the deal, WestJet guarantees that any wide-body jets acquired in 2018 or beyond will be added to the mainline’s operating certificate, and not the regional subsidiary’s.
Management is reminding employees who are also shareholders of the common goal to “enhance our competitive position” to increase market share and obtain a higher stock price.
Pilots are the only non-management group at WestJet awarded stock options, but all staff are eligible for the airline’s stock purchase program, which remains intact as one of the most generous in Canada, matching contributions dollar-for-dollar, up to 20 per cent of existing staff’s gross salary. Pilots at the subsidiary, however, would only be allowed to contribute up to 10 per cent of their wages toward the stock purchase plan.
Other WestJet employees are represented by a non-union group called the Pro-active Communications Team.