WestJet Airlines Ltd.'s board of directors has installed a new chief executive officer, a move that comes with only three months to go before starting a discount arm for the busy summer travel season.
The shakeup marks the third time since the carrier launched in 1996 that a CEO has left abruptly as co-founder Clive Beddoe continues to wield influence.
Gregg Saretsky, who served as president and CEO at the airline for nearly eight years, stepped down immediately on Thursday. He has been replaced by aviation veteran Ed Sims, who joined WestJet as its commercial vice-president in May, 2017.
"Gregg and the board came to an agreement that it was the right time to retire, especially with the comfort that there is a strong successor in place with Ed Sims," a WestJet spokeswoman said in a statement.
Mr. Beddoe has been WestJet's chairman since September, 2007, when he voluntarily relinquished his role as CEO.
In a statement, he praised the 58-year-old Mr. Saretsky: "Gregg has taken WestJet to new heights during his tenure and the airline would not be in the strong position it is without Gregg's business knowledge, drive and work ethic, and his focus on low costs."
Mr. Beddoe has clashed in the past with WestJet CEOs, including Stephen Smith, who filled that role from February, 1999, until September, 2000. Back then, Mr. Beddoe said he didn't care for what he described as Mr. Smith's micromanagement style. Mr. Smith countered that Mr. Beddoe's "unfortunate" comments merely confirmed that exiting WestJet was the right thing to do.
Sean Durfy served as WestJet CEO from September, 2007, until his departure in March, 2010. Mr. Durfy left months after overseeing the botched introduction of the SabreSonic computer reservation system in the fall of 2009.
"Being the CEO in the airline business of a large carrier that is growing – it is a pressure-cooker position," Robert Kokonis, president of airline consulting firm AirTrav Inc., said in an interview. "Under Gregg, WestJet has undergone tremendous change."
While Air Canada's share price has skyrocketed 800 per cent over the past five years, WestJet stock has slipped slightly over the same period. WestJet shares fell 4.6 per cent to close on Thursday at $24.15 – down 29 per cent since late 2014.
"In the near term, we may continue to see a degree of investor apprehension," RBC Dominion Securities Inc. analyst Walter Spracklin said in a research note.
A combination of factors likely led to Thursday's announcement by WestJet that the board of directors and Mr. Saretsky agreed to a change of leadership, industry analysts say. A WestJet spokeswoman said Mr. Saretsky "didn't retire for health or family reasons," but declined further comment on the circumstances surrounding his exit and naming Mr. Sims as the new CEO. Mr. Sims is a former CEO at Airways, New Zealand's air traffic controller.
WestJet has been coping with the complications of launching discount arm Swoop this June, embarking on an international expansion with Boeing 787 Dreamliners next year, as well as enduring a continuing fight with unionized pilots and growing pains at the regional Encore unit.
BMO Nesbitt Burns Inc. analyst Fadi Chamoun said in a research note that Mr. Saretsky's surprising resignation "was unexpected and in our view reflects the growing tension between the company and labour groups, particularly the pilots."
Under Mr. Saretsky's watch, WestJet lost its bid in December to have a proposed class-action lawsuit against the carrier thrown out of court. The suit alleges the Calgary-based company failed to provide women with a harassment-free workplace. WestJet has appealed the B.C. Supreme Court judge's decision to not strike the case. None of the allegations has been proven in court.
Mr. Beddoe co-founded WestJet in February, 1996, with Mark Hill, Donald Bell and Tim Morgan. Mr. Hill resigned in 2004 as vice-president of strategic planning after rival Air Canada sued WestJet for spying on the larger carrier. Mr. Morgan stepped down in 2005 as executive vice-president of operations for "personal reasons," while Mr. Bell took early retirement in 2007 at the age of 52.
Over the past 22 years, however, Mr. Beddoe has remained. He has helped guide WestJet with strategic advice as it expanded, including the launch of Encore in mid-2013. Encore marked a significant move because the unit flies Bombardier Q400 turboprops, in contrast to the Boeing 737 jets that WestJet touted as one of the keys to keeping costs under control with a single type of aircraft. Devoting itself to one aircraft model, WestJet kept maintenance costs in check because the narrow-body planes have the same engine.
"I'm confident WestJet will continue to grow to the next chapter and beyond," Mr. Saretsky said in a statement. "I am proud of the many great things we have accomplished together during my time as president and CEO, and I wish WestJet well in the next chapter of its growth and evolution."
Last week, in another sign of change at Canada's second-largest airline, WestJet announced the appointment of Steven Greenway as president of Swoop, branded as an ultralow-cost carrier. He replaced Bob Cummings, who moved into the position of executive vice-president of strategy and guest services at WestJet.