Westjet - Canada's Low-Cost Carrier

[hkskyline]

WestJet was founded in 1996 by four Calgary entrepreneurs led by Clive Beddoe, who saw an opportunity to provide low-fare air travel across western Canada. Through researching other successful airlines in North America - and in particular low-cost carriers from throughout the continent - the team followed the primary examples of Southwest Airlines and Morris Air and determined that a similar concept could be successful in western Canada.

Over the subsequent months, the team worked to develop a comprehensive business plan and financial model. With this information in hand, a number of local business people were approached and within 30 days the needed capital was raised. After purchasing the three original Boeing 737-200 aircraft, a second offering to retail and institutional investors was completed in January 1996, raising the necessary capital to commence operations.

On February 29, 1996, the airline started flight operations with 220 employees and three aircraft to the cities of Vancouver, Kelowna, Calgary, Edmonton, and Winnipeg. Since that time, the company has continued to expand, bringing more western cities into WestJet's world. In 1996, WestJet added Victoria, Regina and Saskatoon to its route network. In 1997, WestJet began service to Abbotsford/Fraser Valley, and in 1999 WestJet added Thunder Bay, Prince George, and Grande Prairie to its service area.

WestJet achieved a major milestone when in July 1999 it completed its Initial Public Offering of 2.5 million common shares. It was an exciting day for all WestJetters, representing the achievement of a key business goal and raising the necessary capital for expansion of the company into the coming years. With the help of lead underwriters CIBC World Markets and the dedicated executive team, WestJet has made a successful transition to a public company. The capital raised from the offering has been used for the purchase of additional aircraft, as well as the building of new Head Office and Hangar facilities in Calgary, in order to meet the needs of the company's expanding workforce.

1999 saw unprecedented change and restructuring in the airline industry in Canada, offering a window of opportunity for WestJet to expand its service beyond its current route structure. In December 1999, WestJet announced that it would be extending its successful low-fare airline across Canada. Between March and June 2000, the company added service to the eastern Canadian cities of Hamilton, Moncton, and Ottawa, creating an eastern network with Hamilton as the hub.

In 2000, WestJet's founders were honoured as 'The Ernst & Young Entrepreneur of the Year' for Canada, in recognition of the contributions they have made to Canadian travellers and the lives of all of WestJet's people and shareholders. In 2001, WestJet added new service to Fort McMurray, Comox, and limited addition flights to Brandon. In 2001, WestJet also added its first four Next-Generation Boeing 737-700 aircraft. Also, in 2001, the team of founders received an International Entrepreneurship award for Outstanding Teamwork.

In 2002, WestJet added service to two new Ontario destinations, London and Toronto. In February of 2002, the corporation successfully offered three million common shares yielding net proceeds of $78.9 million. The proceeds will fund aircraft additions, spare parts, and a third flight simulator. In 2002, WestJet was named one of Canada's top 100 employers.

In 2003, WestJet was named Canada's second most respected corporation in an annual survey conducted by Ipsos-Reid. The survey involved a randomly selected sample of 255 of the leading CEOs in Canada. Also in 2003, WestJet added service to the new markets of Halifax, Windsor, Montréal, St. John's, and Gander.

The airline operates a fleet of Boeing aircraft featuring new Next-Generation 737 aircraft with leather seats and more legroom. Transborder service commenced in the fall of 2004 to the cities of Los Angeles, San Francisco, Phoenix, Fort Lauderdale, Tampa, Orlando, and New York. Service to Palm Springs began in January 2005. WestJet is publicly traded on the Toronto Stock Exchange under the symbol WJA.

Website : http://www.westjet.com

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WestJet hopes booking system can streamline growth strategy: Add foreign partners
Chris Sorensen
14 June 2005
National Post

WestJet Airlines Ltd. will soon be in a position to increase traffic through partnerships with low-cost U.S. airlines and foreign international carriers following the adoption of a new, more universally compatible booking system.

Gillian Bentley, a spokeswoman for WestJet, said the company aims to implement a new computerized reservation system as early as the end of this year, making it easier for the Calgary-based carrier to enter marketing or customer-sharing agreements with other airlines.

Forging partnerships with other airlines could prove to be a crucial component of WestJet's future growth strategy as it runs out of new markets in Canada and faces tough competition from U.S. airlines and Air Canada on transborder routes.

"It will give us more opportunities," Ms. Bentley said yesterday, adding the new system is part of an overall effort to improve customer service.

"But there's no intention at the moment to do any interfacing [with other airlines] at this point."

WestJet's current "ticketless" reservation system is not necessarily compatible with systems used by other airlines, including low-cost carriers in the United States. Airline booking systems are complex software applications that enable airlines to adjust fares based on demand and availability of seats as well as a host of other variables such as competition and historical trends.

According to one analyst, the likely candidates to partner with WestJet once the new system is implemented are low-cost carriers in the United States such as JetBlue Airways and Southwest Airlines Co., or international carriers such as Cathay Pacific Airways, which last fall said it was in exploratory talks with WestJet.

Jennifer Pearson, a spokeswoman for Cathay Pacific in Canada, said yesterday the airline is still negotiating with WestJet as it looks for Canadian air carriers to feed traffic onto its TransPacific routes. She said the carrier has struck an agreement with Air Canada to provide some of the traffic and is also talking to Vancouver's Harmony Airways.

WestJet's move comes as rival ACE Aviation Ltd., the holding company for Air Canada, enters into a business relationship with US Airways and America West, which are hammering out the details of a merger that will pull US Airways out of its second round of Chapter 11 proceedings.

ACE Aviation said last month it would purchase a 7% equity stake in the newly-merged carrier in deal that promises to increase Air Canada's presence in select U.S. markets and drive traffic onto its international network via its Canadian hubs in Toronto and Vancouver. That's in addition to the traffic generated through Air Canada's membership in the Star Alliance, a global group of 16 airlines that have agreed to co-market their services and sell flights on each other's routes.

"If you look at the load factors that Air Canada enjoys today, a significant component comes from its Star Alliance partners," said David Newman, an analyst at National Bank Financial. "What WestJet needs to do is get this reservation system in place so they can communicate with the other reservation systems and co-ordinate more effectively."

There is also the possibility that WestJet could join the rival Oneworld Alliance, which includes American Airlines, Cathay Pacific and Lufthansa, but does not yet have a Canadian partner. However, Mr. Newman noted that WestJet has traditionally balked at the costs associated with global alliances and thus may be looking for a more "unique" arrangement. "It would seem to make sense to have a North American alliance of low-cost carriers," he said, noting WestJet, JetBlue and Southwest were among the few North American air carriers to show profits last year.

WestJet already has significant connections to Southwest, which served as a model for WestJet, and JetBlue, whose founder played a role in the Canadian carrier's start-up. More recently, WestJet purchased its live satellite television service from JetBlue, whose fleet of Airbus jets is also equipped with the seatback entertainment system.

[DrJoe]

Those bastards chopped the head off of Canada.

[FM 2258]

I'm happy for WestJet. They have beautiful looking livery.

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WestJet gains in business travel
More and more Canadian companies embracing discount airlines, survey says
BRENT JANG
15 June 2005
The Globe and Mail

Canadian companies are gradually embracing WestJet Airlines Ltd. as an alternative to Air Canada when booking business trips, underscoring a global trend of discount carriers gaining market share, a survey of corporate travel intentions has found.

The Association of Corporate Travel Executives surveyed 30 companies representing 27,000 employees in Canada and overseeing domestic air travel budgets totalling $100-million this year. Half of the companies said the lowest fare is their highest priority, while one-third picked convenience of schedule and service as the most important consideration. The study, conducted jointly with National Bank Financial, found that 83 per cent of the firms have not relaxed their policies to allow for more upgrades to business class on Air Canada.

“A budget-conscious mindset appears to have taken hold among Canadian companies,” National Bank Financial analyst David Newman wrote in a summary report. “While corporations are clearly taking steps to lower air travel costs, even as corporate profits improve, organizations have not gone so far as to take away frequent flier point privileges from their employees.” Air Canada offers Aeroplan miles to its frequent fliers while WestJet passengers can collect points with the rival Air Miles program.

Mr. Newman said companies have become more vigilant about their travel budgets because of “increased scrutiny on spending levels and corporate governance.”

Gone are the days when high-tech companies during the technology sector's boom six years ago wouldn't hesitate to send employees on trips in style. They paid premium prices for the flexibility of making changes without penalty, as well as the privilege of sitting on wider leather seats at the front of the plane with specialized service and extra legroom.

“In our view, corporations have permanently altered their approach to business travel, with far less tolerance and willingness to pay for upgrades or last-minute fares,” Mr. Newman said.

WestJet has narrowed the comfort gap by adding leather seats to its fleet of aircraft, as well as providing live satellite TV screens on the back of seats. Air Canada has been able to retain many cost-conscious business travellers by steering them toward Tango fares, its lowest category of ticket prices.

“Low-cost carriers are gradually being viewed as an alternative that is equal, if not superior, to the full-service carriers in meeting the needs of corporations and their travellers,” Mr. Newman said. He released a 24-page summary report about the travel survey along with a 132-page research study titled: Low-cost carriers leave legacy airlines in their vapour trails.

“Paying for a low-cost fare is one way business travellers can retaliate for previous gouging by these bloated behemoths,” he said.

However, Mr. Newman noted that Air Canada has staged a financial recovery and is still the dominant airline in Canada.

While legacy carriers have traditionally dominated the business market, low-cost airlines are now formidable rivals. Leading discount airlines in the world include WestJet, Dallas-based Southwest Airlines Co., Ryanair Holdings PLC of Ireland, JetBlue Airways Corp. of Kew Gardens, N.Y., and AirTran Holdings Inc. of Orlando, Fla.

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WestJet converts options, buys 2 more Boeing planes

TORONTO, June 15 (Reuters) - WestJet Airlines said on Wednesday it will convert purchase options to buy two more Boeing aircraft, bringing to 11 the number of new Boeing planes Canada's No.2 airline will receive next year.

The no-frills airline said the two Boeing 737-600 aircraft will be delivered in August 2006. The airline has one more purchase option on a 737 plane for delivery in 2006.

WestJet also said it will defer purchase options for four more 737 aircraft from 2006 to 2007.

WestJet is adding new jets to its fleet to replace older aircraft and boost capacity as it benefits from the demise of competitor Jetsgo earlier this year.

($1=$1.26 Canadian)

[rt_0891]

Discount airlines WestJet, Canjet increasing B.C. flights
WestJet plans to include new flights from Vancouver to Phoenix, Palm Springs

Derrick Penner
Vancouver Sun

Thursday, June 16, 2005

Two of Canada's discount air carriers, WestJet Airlines and Halifax-based Canjet, are increasing their attention to the British Columbia market with new flights, the success of which should be helped by the departure of bankrupt Jetsgo from domestic airline wars.

WestJet Wednesday announced new flights to Phoenix and Palm Springs from Vancouver and Las Vegas from Kelowna in its fall schedule at the same time it said it will abandon Windsor as a domestic destination.

Shawn Durfy, WestJet's executive vice-president for marketing and sales, said the new destinations are part of what the airline sees as its logical expansion rather than a response to Jetsgo's demise.

However, "when you take an irrational player out of the market and allow [the] industry to recover and be healthy, it allows you to do these things."

"One of the things we couldn't do before was put a rational price in the market," Durfy added.

Durfy said the airline is adding Vancouver to Palm Springs and Phoenix flights to its roster based on its experience with Calgary flights to those destinations starting in 2004.

"We had tremendous success in [Palm Springs] out of Calgary last year," he added. "When we did the analysis of what we could do, from the facility and from marketing and sales, we felt that this would be a very successful route for us."

Durfy said Phoenix was added because it is a strong leisure destination and because it is increasingly important as a hub for business travel.

To grow, WestJet needs to do more than expand its flight offerings, it must also increase its partnerships with other airlines to feed passenger traffic, and "there is great connectivity into and out of Phoenix" to link with other airlines, Durfy said.

WestJet is in the process of acquiring a new reservation system, which it hopes to have in place by the end of the year. It should give the airline the flexibility "to do tremendous things" in forming such partnerships, Durfy said.

Marc-David Seidel, a transportation expert in the Sauder School of Business at the University of British Columbia, suspects WestJet also feels that it is important to be in the Phoenix and Las Vegas markets because of Air Canada's interest in the proposed merger of U.S. Airways and America West Airline.

Air Canada has said it would invest some $95 million in such a merger, from which it would gain maintenance contracts and feeder traffic for some of its international flights.

Seidel said Phoenix and Las Vegas are key markets for America West.

"This strikes me as an anticipatory strike just to get some penetration to America West's core markets," he added.

In the meantime, the fledgling Canjet is set to add Vancouver to its flight schedule starting June 27 as planned in the announcement it made last February.

Canjet spokesman Wayne Morrison said the company's master plan "since day one" has been to serve all of Canada's major centres, and Vancouver is a dense, attractive market where executives feel they can carve a niche as a competitive, low-cost carrier.

"We were always determined to be price competitive," Morrison added. "Some prices [in the market] were too crazy to compete with, so we let them go. But we'll be good solid competition with Westjet and Air Canada."

Air Canada has also increased its capacity following Jetsgo's bankruptcy, said airline spokeswoman Angela Mah, with the addition of one daily round trip from Vancouver to Toronto in the peak summer season.

She added that they've also increased frequencies to Calgary, Edmonton, Quebec City and Halifax as well, and in the fall will offer daily service from Vancouver to Las Vegas.

With files from Canadian Press

depenner@png.canwest.com

© The Vancouver Sun 2005

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Canadian government signs travel deal with Westjet

OTTAWA, June 29 (Reuters) - WestJet Airlines Ltd. will offer discounts to Canadian government employees as part of a deal designed to save taxpayers money, officials said.

In a statement dated June 28, Canada's public works ministry said the deal would run until May 31, 2006, with an option to extend the agreement for two years after that. It did not say how deep the discounts would be.

In the 2003-2004 fiscal year, WestJet, Canada's second-largest airline, accounted for 13 percent of travel by government employees, the statement said.

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WestJet June Load Factor Increases To 73.5%
7 July 2005

CALGARY (Dow Jones)--WestJet Airlines Ltd. (WJA.T) flew 615.4 million revenue passenger miles in June, up 22.4% from 502.6 million a year ago.

In a news release, the airline said that, in the year to date, traffic increased 35.8% to 3.73 million revenue passenger miles.

In June, its capacity rose 19.8% to 837.8 million available seat miles from 699.3 million a year in June 2004. For the year to date, capacity rose 27.1% to 5.16 billion available seat miles.

The airline's load factor in the latest month was 73.5%, up from 71.9% a year ago. For the first six months of 2005, Westjet's load factor increased to 72.3% from 67.7% in 2004.

West-Jet is a low-cost airline.

[addisonwesley]

WOW! WestJet's been around since 1996?! I think I heard about it after Air Canada filed for protection from creditors (poor bastards). I've been seeing and hearing a lot of their commercials lately, sounds nice.

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WestJet aims to add extras — for a price
User-pay items may include satellite radio
BRENT JANG
9 July 2005
The Globe and Mail

Discount carrier WestJet Airlines Ltd. is seeking to add frills by bundling user-pay services aboard upgraded planes while still guarding its traditional strength in attracting budget travellers.

The Calgary-based airline, on the eve of celebrating its 10th anniversary next February, is considering a range of options to lure passengers willing to pay extra for everything from movies to Internet access to satellite radio.

Donald Bell, WestJet executive vice-president of customer service, said the strategy is designed to expand services for business and gadget-minded travellers without sacrificing the airline's appeal to budget-conscious consumers.

“This would be value-added stuff. You could buy different things,” Mr. Bell said in an interview. “As we become a bigger and bigger player in Canada, we have to appeal to more and more people — give them choices.”

The carrier is looking at the feasibility of installing satellite radio channels on WestJet's fleet, as well as equipping planes to handle cellphones, text messaging, BlackBerrys and Internet access for laptops.

“Those are all future things that we're looking at in the next couple of years,” he said. “It's something we're keeping a close eye on to see if it's technologically and economically viable.”

In introducing new offerings, WestJet hopes to boost its revenue by charging for frills. One idea up for discussion is to bundle various services for a single fee, so that a passenger pays the basic ticket price but has the option of upgrading in advance to receive a sandwich, drink, higher-quality headset and movie. Advance seat selection is free for now, but could become a user-pay perk.

Another possibility for upgrades at some airports could be admission to common-use lounges.

A $2.7-million computer reservation system would help keep track of passengers ordering bundled services. WestJet announced the new computer installation in February, after technical glitches wreaked havoc on customer bookings last fall. When the installation is completed in November, the new booking system will also allow WestJet to join airline partnerships, said Mr. Bell, who declined to discuss potential alliances.

Hong Kong-based Cathay Pacific Airways Ltd. said last fall that it held preliminary talks with WestJet about a possible strategic alliance, but cautioned that it could take until late 2005 to implement.

The goal is to connect to Cathay seamlessly on one WestJet booking, with bags transferred, too.

WestJet's free LiveTV has been popular with passengers since being introduced in 39 Boeing 737 aircraft this past spring, Mr. Bell said.

He said initial “amplifier” problems with 26 antennas have been largely overcome by installing new components. There are now plans to enhance the programming offered on the LiveTV screens, which are built into the back of each leather seat. Bell ExpressVu LP supplies the live satellite feed.

Besides continuing with 24 LiveTV channels, WestJet is considering launching four channels with “first-run” movies made available to airlines after hitting theatres but before they are released on DVDs. WestJet may charge $5 to each passenger ordering a movie on a personal LiveTV screen.

Other new channels could feature prerecorded Treehouse programming for children and a WestJet promotional broadcast, with content originating from video servers aboard planes.

“We had a few issues crop up, but it's way better now,” Mr. Bell said. “When you're moving a satellite receiver-antenna through the air at 800 kilometres an hour, and it's receiving 24 simultaneous channels from a satellite in space, there's a lot of technology involved.”

David Newman, an analyst with National Bank Financial Inc., said business travellers are irked at having to pay “exorbitant rates to legacy airlines,” so that leaves an opening for WestJet to outmanoeuvre rivals, notably Air Canada.

“Low-cost carriers, particularly WestJet, may be viewed more favourably by the corporate travel market, especially with improving service levels and perks,” Mr. Newman said in a recent report.

Starting this fall, WestJet will offer higher-quality headsets for $2 or $3 apiece. Last month, WestJet began charging $1 for each basic headset.

“We encourage people to bring their own headset since we have a jack that's the same as your iPod, but if you don't have a headset, we'll sell you one,” said Mr. Bell, who added that WestJet headsets left aboard planes get discarded in the garbage. “We hate throwing them out. Headsets are there for you to take and bring on your next flight.”

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WestJet Announces Completion Of Sale Of 737-200 Fleet
12 July 2005

CALGARY (Dow Jones)--WestJest Airlines Ltd. (WJA.T) has completed the sale of its Boeing 737-200 fleet to Miami-based Apollo Aviation Group.

It didn't provide financial details.

In a news release, WestJet said Apollo has also purchased WestJet's inventory of spare parts and engines, as well as the company's 737-200 flight simulator.

WestJet has 10 737-200 aircraft remaining in its fleet, all of which will be replaced by Next-Generation 737 aircraft by March 2006, it said. Beginning in March 2006, WestJet will operate a fleet made up exclusively of Boeing Next-Generation 737 aircraft. It currently operates 44 Next-Generation aircraft in its fleet of 54 aircraft.

WestJet is a low-cost airline.

[hkskyline]

WestJet sets flight bold new campaign
Also beefs up routes: Major drive to entice business travellers in 'Eastern Triangle'
Chris Sorensen
28 July 2005
National Post

Air Canada passengers flying through Toronto's Pearson International Airport might notice something unusual about the airline's departures and arrivals area in the palatial Terminal 1 -- giant billboards that trumpet the comfort and convenience of rival WestJet Airlines Ltd.

The bold ad campaign is part of a massive push by the Calgary-based low-cost carrier [which operates out of Terminal 3 in Toronto] to boost its presence in Eastern Canada following Jetsgo's abrupt collapse in March.

WestJet said yesterday it was adding more flights between Toronto and Vancouver and better flight times between the cities that comprise the so-called Eastern Triangle: Toronto, Montreal and Ottawa. The routes are viewed as key to capturing the business travel market, which has traditionally been dominated by Air Canada.

"We are very excited to offer Torontonians a more convenient schedule when travelling with WestJet," said Sean Durfy, the airline's executive vice-president of marketing and sales, in a statement.

But while WestJet is positioning itself to steal passengers from its competitors in Canada's largest city, some observers are wondering whether the airline's push into Central and Eastern Canada, where the former Jetsgo's operations were concentrated, is a case of too little, too late.

"Nothing is ever permanent, but as far as we are seeing now, WestJet appears to have missed an opportunity," said Nadi Tadros, an analyst at Desjardins Securities, referring to the gaping hole left by Jetsgo when it suddenly stopped flying on March 11 and filed for bankruptcy protection.

Mr. Tadros released a research note this week that showed that Air Canada added 916 flights to its domestic schedule since March while WestJet added just 137. Before its collapse, Jetsgo operated about 814 weekly flights, according to the survey.

That means Air Canada managed to capture five percentage points of Jetsgo's 7% market share while WestJet took just one percentage point, the report said. Moreover, the report noted that Air Canada's biggest gains came in Eastern Canada, where it has historically been the dominant carrier, although it also made gains in B.C. and the prairie provinces, WestJet's backyard.

"Air Canada appears to have filled the void," Mr. Tadros wrote. "(It) has added flight frequencies more broadly across the country than either WestJet or CanJet, gaining market share in every geography."

In other words, WestJet fought the war against Jetsgo only to see the spoils go to its main rival -- at least for the time being.

WestJet executives were not available for comment yesterday, but the airline said in a release it hoped to "develop Toronto as a centre for WestJet's domestic and transborder operations."

The airline also said it was planning to fly Toronto-Las Vegas and extend its summer service between Toronto and Charlottetown -- a route that Air Canada recently abandoned during the winter months because of a spat with the government of Prince Edward Island.

As well, Mr. Tadros acknowledged there is more than one way to measure the relative gains made by each airline. For example, Air Canada's post-restructuring business plan has called for more smaller jets flying more routes between more Canadian cities.

Meanwhile, WestJet has opted to retire its older, less-fuel efficient fleet of Boeing 737s and replace them with larger next-generation models. Hence, while Air Canada is offering more flights, WestJet is flying bigger planes.

Nevertheless, Mr. Tadros maintains that Air Canada's load factors, a measure of how well an airline fills its planes, are about 10 percentage points higher than WestJet on average.

The irony is that WestJet, which saw its shares rise 40% on the day Jetsgo died, was widely expected to be the chief beneficiary of Jetsgo's failure since both airlines prided themselves on offering the lowest available air fares and were thought to be chasing the same segment of the market. WestJet's share price peaked on March 22 at $17.11, but has since fallen to just above $13, about where it was in February.

Moreover, it was WestJet -- not Air Canada -- that is generally credited with running Jetsgo's founder and chief financier, Michel Leblanc, into the ground by matching Jetsgo's "irrational" $1 fare promotions with seat sales of its own. "Jetsgo hurt WestJet more than Air Canada because WestJet was fighting to meet those low prices," said Rick Erickson, a Calgary-based aviation analyst.

The impact of Jetsgo's pricing is still being felt by WestJet. Clive Beddoe, WestJet's CEO, told analysts earlier this year the airline's first and second quarter earnings would be impacted by a swath of cheap seats sold by WestJet before Jetsgo's March 11 collapse.

WestJet is scheduled to release its second quarter results today.

Horst Hueniken, an analyst at Westwind Partners, predicted in a research note that WestJet would make money in the second quarter after two consecutive quarterly losses -- the first ever in its history as a public company.

But Mr. Erickson said a return to profitability does not mean that WestJet's problems are over. He said a particular threat comes from Air Canada's plan to take delivery of as many as 90 regional jets over the next several years, opening up new domestic and transborder markets for the mainline carrier and regional operator Jazz.

"These little regional jets that Air Canada have coming are going to be a problem for WestJet," Mr. Erickson said. "They are going to open up these secondary centres that used to be the domain of WestJet. I have a feeling that 2006 is going to be real dogfight in the Canadian marketplace."

[EdZed]

I do not like the direction westjet is going. They are starting to get to comfortable where they are. There prices have gone up substantially and more more charges are coming up. In fact many flights are more expensive then air canada.

[hkskyline]

Will this signal the start of a duopoly in Canadian skies?

[hkskyline]

Fuel costs drag down WestJet profit
Firm also lost money on promotional fares and rivals' ‘deep discounting,' CEO says
29 July 2005
The Globe and Mail

WestJet Airlines Ltd. acknowledged yesterday that it is facing a tricky balancing act between keeping fares low and coping with rising fuel costs.

“That's going to be the art of the business from here onward,” chief executive officer Clive Beddoe told analysts yesterday during a conference call.

“There's no question that our average fare has risen significantly in the course of the last three or four months, but so have our costs. And so the big challenge will be to what degree they have been covered by the fare adjustments,” he added. “We can see that the market does adjust to higher fares just like it does at the pumps for gasoline, but there will be some decline in demand if we're not careful.”

Higher fuel costs pummelled WestJet's bottom line in the second quarter. The company posted a profit of $2.3-million, or 2 cents a share, for the quarter ended June 30. That compared with a profit of $7.5-million, or 6 cents a share in the year earlier period. Although the profit marked a turnaround from losses in the first quarter of 2005 and fourth quarter of 2004, the amount was far below analysts' expectations of 14 cents a share.

Revenue climbed to $326.4-million from $257.3-million.

Fuel prices soared 59 per cent in the quarter to $81.4-million, the company said. To illustrate the squeeze caused by rising oil prices, the company noted that a large number of the $172-million of advance tickets sold in the second quarter occurred with oil at around $50 (US) a barrel “and we will likely be flying these guests in a $60 fuel environment.”

“What we need above anything else is stability in fuel prices,” Mr. Beddoe said.

Rising fuel costs also pushed down the company's yield, a key measure of revenue per passenger mile, to 18.2 cents (Canadian) in the quarter from 18.5 a year earlier.

Meanwhile, ticket prices were still affected by steep discounts offered by Jetsgo Corp., which grounded its planes in March and filed for bankruptcy in May.

Mr. Beddoe said 42 per cent of WestJet's seats were sold at promotional fares, with half of those at “the more extreme levels.” He added that WestJet lost more than $20-million in revenue from deep discounting, largely by Jetsgo.

The demise of Jetsgo has stabilized the pricing environment and Mr. Beddoe said he is cautiously optimistic about earnings in the third quarter.

He noted that while WestJet has added a number of new flights and increased its capacity by 23 per cent, its load factor, a measure of the number of filled seats, increased to 71 per cent in the quarter from 67.5 a year earlier. Mr. Beddoe said that demonstrates that so far the company has been able to increase prices without scaring off passengers.

WestJet is also moving ahead with plans to replace its fleet of Boeing 737s with more fuel-efficient Boeing models. That move, coupled with longer flights, should help to offset some of the rising fuel costs, he added.

The airline's results did not impress Michael Linenberg, an analyst at Merrill Lynch.

“Although WestJet's earnings represented a return to profitability, albeit a modest one, we were disappointed with the bottom-line result,” he said in a research note yesterday. “In fact, WestJet's 5.7-per-cent operating margin for the quarter trails the profitability of most U.S. low-cost carriers that have reported thus far.”

[hkskyline]

WestJet, Air Canada join airline rate hike move

VANCOUVER, British Columbia, Aug 12 (Reuters) - Canada's two major airlines, WestJet Airlines Ltd. and Air Canada, have joined U.S. airlines in a round of fare increases aimed at recouping higher fuel costs.

WestJet said on Friday it will increase its base fares on short-haul flights of less than 300 miles by C$5 each way, with fares for longer flights increasing by C$8 to C$12. The higher fares will take effect on Monday.

Air Canada, a unit of ACE Aviation Holdings Inc , announced the same rate hikes on Thursday for both its flights in Canada and to the United States. Fares will also go up on regional carrier Air Canada Jazz.

Calgary, Alberta-based WestJet also said it will speed up the phase-out of its older and less fuel-efficient Boeing 737-200 aircraft. It said it expects to be flying only newer 737s by March 2006.

[katatonic]

how's those satellite TV on westjet? i hope they have them on every airline as well.

[hkskyline]

CanJet denies talk of takeover by WestJet
Brent Jang
27 August 2005
The Globe and Mail

Privately owned CanJet Airlines insisted yesterday that there isn't any substance to speculation that WestJet Airlines Ltd. is seeking to buy the Halifax-based carrier. “There's certainly nothing we've seen or heard that would lend credence to this,” CanJet spokesman Wayne Morrison said. Sean Durfy, a WestJet executive vice-president, said the Calgary-based carrier is continuing to promote its flights in Atlantic Canada, where CanJet has a strong presence. But Mr. Durfy said there aren't any plans to acquire CanJet. “To date, from our perspective, there are no thoughts of that. But as a corporation, we will continue to look at all avenues of growth,” he said. WJA (TSX) fell 4 cents to $11.50.

[hkskyline]

WestJet Commences Service to Las Vegas
Corporate Press Release
SEPTEMBER 1, 2005 - 18:00:05 ET

CALGARY, ALBERTA--(CCNMatthews - Sept. 1, 2005) - WestJet (TSX:WJA) will be celebrating the commencement of its new non-stop service between Las Vegas and Toronto on September 5. WestJet offers daily non-stop return flights between Toronto and Las Vegas.

Beginning October 6, WestJet will commence two non-stop return flights per week between Kelowna and Las Vegas, and Winnipeg and Las Vegas. On November 3, WestJet will commence two non-stop return flights per week between Calgary and Las Vegas, and Edmonton and Las Vegas.

Sean Durfy, WestJet's Executive Vice-President, Marketing and Sales, said today: "We are thrilled to be commencing non-stop scheduled service to Las Vegas on September 5. Previously, we had only flown to Vegas under charter arrangements. Canadians can now book their low-fare, high-value travel to Las Vegas directly from WestJet and our travel agent partners.

"Flights to Las Vegas will be operated on new Boeing Next-Generation 737 aircraft equipped with leather seats, more legroom and up to 24 channels of live seatback satellite television with service provided by Bell ExpressVu on our 737-700 fleet."

WestJet is Canada's leading low-cost airline offering scheduled service throughout its 34-city North American network. Named Canada's most respected corporation for customer service in 2005, WestJet pioneered low-cost high-value flying in Canada. With increased legroom and leather seats on its modern fleet of Boeing Next-Generation 737 aircraft, and live seatback television on its 737-700 fleet, WestJet strives to be the number one choice for travellers.