Go to the Globe and Mail homepage

Jump to main navigationJump to main content

AdChoices
A Westjet Boeing 737-700 takes off at the International Airport in Calgary. (Todd Korol/Reuters)
A Westjet Boeing 737-700 takes off at the International Airport in Calgary. (Todd Korol/Reuters)

WestJet to stick with low fares as it posts record quarterly profit Add to ...

WestJet Airlines Ltd. will fight vigorously with low fares to maintain its market share against incursions by new low-cost airlines that are starting up in Canada.

“We worked hard to build our franchise and we’re not going to let somebody come in and try to rob it,” WestJet chief executive officer Gregg Saretsky said Tuesday.

“We have the cost structure and the balance sheet and the loyal traffic base. We will defend our franchise.”

Mr. Saretsky made his comments on the airline’s third-quarter financial results conference call after being asked about matching low fares offered by startup NewLeaf Travel Co. Inc., which is already flying passengers in Western Canada.

Canada Jetlines Ltd., another so-called ultralow-cost carrier, wants the federal government to permit foreign entities to own 49 per cent of an airline before it begins flying.

“There is not a moment in history in the 70 years of aviation in Canada where more than two carriers can actually operate profitably,” Mr. Saretsky noted.

WestJet began life as a low-cost carrier operating in Western Canada, but has grown to be a national airline that has expanded to transborder and resort destinations and is now challenging Air Canada, the traditional flag carrier, on the lucrative transatlantic network.

The airline is planning to expand its international operations.

Mr. Saretsky said WestJet reached a tentative agreement with its pilots’ association on the weekend that applies to further international expansion. He did not reveal details.

The agreement likely centres on work rules and compensation for pilots who will be moving up from flying single-aisle Boeing 737s to wide-body planes, said industry analyst Chris Murray, who follows the company for AltaCorp Capital Inc.

“Part of that agreement with the pilots probably forms and shapes how the company will go forward with the wide-body strategy,” Mr. Murray said. “Pilot and crew compensation costs are a significant factor of any business decision for the airline.”

WestJet is considering buying more used Boeing 767s to supplement the four planes that flew across the Atlantic to Britain this summer, but is also thinking about new, wide-body aircraft, Mr. Saretsky said.

“We are engaging with Boeing and with Airbus, talking about how best to move forward, whether that’s brand-new Airbus or brand-new Boeing or used, or lightly used next-generation wide-bodies or some combination,” he said.

He said the teething pains on the transatlantic flights – which included costly emergency stops in Greenland and Iceland this summer – have been overcome and the flights to Britain are “making money for the company.”

The 767s are good airplanes, he said, and are not the cause of the problems WestJet faced in the early days of its first wide-bodied flights across the Atlantic this summer.

“We think it might make sense to add more 767s to our fleet,” he said. “They are very low capital cost and in a low fuel-cost environment, they actually generate great returns for us.”

Mr. Murray said adding Boeing 787s to WestJet’s fleet would make sense because the airline already has 737 Max planes on order and the systems and training on the larger 787 are similar.

The problem with the 787, he noted though, is that Boeing has a lengthy back-order list for the plane, so WestJet would not receive any from Boeing soon even if it were to order them immediately.

WestJet reported record third-quarter profit of $116-million, or 97 cents a share, compared with $101.8-million, or 82 cents, a year earlier.

Report Typo/Error

Follow on Twitter: @gregkeenanglobe

Next story

loading

In the know

The Globe Recommends

loading

Most popular videos »

Highlights

More from The Globe and Mail

Most popular