Slawko From Canada, joined May 1999, 3799 posts, RR: 10 Posted (8 years 11 months 1 week 4 days 13 hours ago) and read 2188 times:
Not sure if I was suprised that no one posted any of this yet today, seeing as a.net has a good number of kool-aid drinkers posting on here, but anyway, Westjet is in the news again...
WestJet shares sliding on expansion, competition - From the Star...
Skywatcher From Canada, joined Sep 2002, 441 posts, RR: 4 Reply 1, posted (8 years 11 months 1 week 4 days 7 hours ago) and read 2066 times:
I hope the employees were doing routine selling of their shares before the drop or there's gonna be alot of disgruntled staff. Converting some of the gains into cash on a regular basis is a must.
It's great fun working at a company that offers you a generous stock purchase plan and profit sharing when the share price just seems to soar higher and higher.
When the stock tanks, everything changes. All of a sudden those lower LCC wages are all they have. I guarantee that morale is starting to sink.
There may soon be pressure to increase the basic wages instead of relying on the stock to provide wealth.
Reality is settling in slowly but surely. If their profits are sinking at a time of 15% traffic growth in Canada what'll happen during the next downturn?
Beddoe is human after all. Their growth is out pacing the ability of their corporate culture to handle it. Classic error.
CanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4 Reply 2, posted (8 years 11 months 1 week 4 days 5 hours ago) and read 2014 times:
You seem pretty bitter about Westjet lately Slawko, how come?
Not your usual WJA articles, but they seem to be popping up more often...
Investors hate underachievers. Westjet has constantly beat analysts expectations, up until Q1; that's where our stock began to drop. Until we regain that trend of beating expectations, our stock is going to float around what it's at now.
I guarantee that morale is starting to sink.
Skywatcher, I have to disagree. Morale is exactly the same as it was a year, two years, even three years ago. Our company has a long-term goal, and until we reach that goal every bump in the road to get us there is, well.. just a bump in the road. I'd rather be purchasing my shares at $14 vs. $30 or $40. The more shares I buy now, the better returns I'll have when things pickup.
There IS a collective understanding that our road to success isn't going to be easy and it isn't going to happen overnight. You may not believe it, but it's there.
Think back to, oh... November and how all of us seemed to agree on how "crazy" and "interesting" 2004 is going to be. Well, how's it lookin now?
Dash8King From Canada, joined Nov 2001, 2742 posts, RR: 12 Reply 3, posted (8 years 11 months 1 week 4 days 1 hour ago) and read 1959 times:
I agree I think Q3 will be less then normal. As I said when I first came to A.net I hope WJ doesn't overexpand. But I think it did I hope its alright in the long term. I checked out the prices this summer for YEG-SYWG and WJ is 10 more then Zip. So I will be choosing the WJ cuase I like them. However Jetsgo was 60 bucks cheaper but the time is way off cuase iI need to go to YK.
Slawko From Canada, joined May 1999, 3799 posts, RR: 10 Reply 4, posted (8 years 11 months 1 week 3 days 15 hours ago) and read 1901 times:
Not bitter at all... I've always respected the success that Wj has had in the last few years, but I've always maintained that something has to give sometime. Everyone always has ways of making their side of the fence look good, WJ has always been the expert at it, mainly because their side of the fence often was very good. But the shine is starting to fade now, and the "Real Airline" reality is starting to move in. These aren't doom and gloom articles but they do reflect the growth and maturation of WJ as a company.
"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
Yyz717 From Canada, joined Sep 2001, 15990 posts, RR: 59 Reply 5, posted (8 years 11 months 1 week 3 days 15 hours ago) and read 1877 times:
Slawko, it's all relative. WJ continues to report strong profits (indeed, record profits in certain quarters), double-digit revenue growth. Their unit costs continue to drop. The only thing dropping is YOY % revenue growth since the base is growing so much.
Meanwhile, AC is bankrupt and still may liquidate.
Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
Yegbey01 From United States of America, joined Nov 2003, 1679 posts, RR: 3 Reply 6, posted (8 years 11 months 1 week 3 days 14 hours ago) and read 1861 times:
I can't believe that someone would pay more to fly WJ..... to fly to YWG from YEG......
Planemaker From Tuvalu, joined Aug 2003, 5488 posts, RR: 34 Reply 7, posted (8 years 11 months 1 week 3 days 14 hours ago) and read 1855 times:
WestJet has been in the news... and magazines.
A Canadian Business reader's poll put WestJet at No. 3 for "Best Managed Canadian Brands" (Timmy's and PC were 1 and 2).
I won't give the name away of the worst managed brand... and it is by quite a margin!!!!! If you can't guess it, don't worry -- it is in fact the cover story:
Dash8King From Canada, joined Nov 2001, 2742 posts, RR: 12 Reply 9, posted (8 years 11 months 1 week 3 days 14 hours ago) and read 1850 times:
I can't believe that someone would pay more to fly WJ..... to fly to YWG from YEG......
What do you get for paying more??
It's ten bucks more and instead of a 732 I get a 73G. Also I'm sure it will be a very good flight. If it were 20 or more then I would have to go with Zip.
CanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4 Reply 10, posted (8 years 11 months 1 week 3 days 13 hours ago) and read 1832 times:
I can't believe that someone would pay more to fly WJ..... to fly to YWG from YEG......
And some people don't. It's all a matter of choice. People seem to like the personal, informal, friendly service that we provide and price isn't always a deciding factor. Welcome to the new world of aviation.
Now if we could only get our damn LiveTV approved..........
CO737800 From Canada, joined Dec 2003, 545 posts, RR: 1 Reply 12, posted (8 years 11 months 1 week 3 days 10 hours ago) and read 1788 times:
Westjet had adds in the Vancouver sun on new routes to San Fran, Phoenix and LA all out of Vancouver starting at the end of sept. I think it would have been better to start the routes around june for the summer season
Gmonney From Canada, joined Jan 2001, 2158 posts, RR: 22 Reply 13, posted (8 years 11 months 1 week 3 days 10 hours ago) and read 1777 times:
I just paid for my gf to fly WS to YYC from YYZ return. I did thiis because of peace of mind. Ontime performance was perfect, comfort and consistancy was the theme of their service. She has no idea from this or that, but she did say it was 100times better than SG (sorry Slawko) but you pay for that. I know SG is still new and I would assume that in 5 years SG will be where WS is now if things continue in the same manner..??
Slawko From Canada, joined May 1999, 3799 posts, RR: 10 Reply 15, posted (8 years 11 months 1 week 2 days 7 hours ago) and read 1561 times:
Problem is the WJ's success is built on constant growth, if you stop growing things catch up to you and you die. But if there is no place left to grow then what happens? You go to the US I guess, all I'm saying is that at some point there will come a time when you grow into markets that dont' need your service, and your loads drop off. You then find yourself in a position where you have hundreds of new flights and no one flying, so your constant growth strategy hits a brick wall. Don't get me wrong Im not making this out to be a WJ only problem. Its the same problem that many airlines are faced with or will soon be faced with. At some point your reach the end of your expansion leash and thats when the "Real Airline" economics are going to start to take over. Stock will flatten out, employee's will want more of their compensation in "real money" and the company will have to deal with all that, while paying for big new expensive tv's and airplanes. Lets just hope the team at WJ is ready to deal with that when the time comes, cuz I dont think its that far down the road.
"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
CanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4 Reply 16, posted (8 years 11 months 1 week 2 days 6 hours ago) and read 1554 times:
How fast is too fast? Westjet's growth has been around the 50% range and is projected to be 30% year-over-year in 2005 onwards. Compare that to Jetsgo who has been growing at a rate between 150-200% year-over-year. I believe, and this is just my opinion, that Jetsgo will hit that wall in your scenario faster than Westjet. While I don't deny that we will slow our growth down, we have plans to have 100 aircraft in the fleet by 2010. Not only are there more markets in Canada that need more point-to-point service, there is a lot of transborder markets that provide plenty of opportunity. The future looks bright for many many more years.
Chock head From Samoa, joined May 2002, 148 posts, RR: 0 Reply 17, posted (8 years 11 months 1 week 2 days 6 hours ago) and read 1553 times:
Problem is the WJ's success is built on constant growth, if you stop growing things catch up to you and you die.
This is not true. If WestJet never expanded out of western Canada they would not have died. They may reach a point where they stop adding new cities and keep putting lots of people on the flights they have, that point does not appear to be hear yet.
But if there is no place left to grow then what happens?
You service the customer you have, over and over and over...
all I'm saying is that at some point there will come a time when you grow into markets that dont' need your service, and your loads drop off.
Then they won't fly there. I do not se the correlation between a drop in loads and not going to new cities.
At some point your reach the end of your expansion leash and thats when the "Real Airline" economics are going to start to take over.
WS and a lot of the other LCC have redefined what real airline" economics are.
I know you have your opinion, I just think it is wrong.
Slawko From Canada, joined May 1999, 3799 posts, RR: 10 Reply 19, posted (8 years 11 months 1 week 1 day 17 hours ago) and read 1469 times:
If WestJet never expanded out of western Canada they would not have died. They may reach a point where they stop adding new cities and keep putting lots of people on the flights they have, that point does not appear to be hear yet.
If that were true then WJ would never had moved into Eastern Canada, they would not have moved from YHM to YYZ, and they wouldn't be going head to head with AC and SG on the golden triangle routes. Its a fact, not my opinion that WJ's success in large part is due to it's constant growth, the same applies to jetblue. WJ can not get to a point where they stop expanding, thats why they moved east, and now south.
WS and a lot of the other LCC have redefined what real airline" economics are.
No they haven't they have defined what Low Cost Startup airline economics are, there is a big difference between that and "Real Airline" economics, no LCC save for Southwest has yet to experience the Real Airline economics yet, but some are getting close. Employees can only be fed the stock option/low income stuff for so long, there will come a time when they demand more, and when management is unable to supply it things will not look as good as they do now. This goes for all LCC's, and new start-ups not WJ in particular, it will hit CJ, SG, UM, and all the other new guys on the block just the same, its how the company plans to deal with thes problems when the arise that will define success or failure. only time will tell.
"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
CaptainGomes From Canada, joined Feb 2001, 6413 posts, RR: 58 Reply 20, posted (8 years 11 months 1 week 1 day 13 hours ago) and read 1415 times:
I have heard the same theory as Slawko has, and it makes a lot of sense. I personally believe Westjet is presently preparing itself for the transition from a LCC to a "real" airline. They are doing this by adding amenities, and consequently cost to the bottom line.
It is argued that this increases revenue, and I buy that, but really, amenities and perks are what legacy airlines use to command higher prices, whether these higher prices are real or perceived. By adding the amenities and perks, Westjet will offer a product that is definitely not inferior to Air Canada's, but it also creates a space for new, fresh upstarts to offer true low costs to the consumers, and frankly, that's where I see Jetsgo.
As was said already, the growth can only go so far for Westjet, and they will have to continue with their strong brand loyalty, and continue to compete with amenities to charge higher prices, and consequently pay staff more than they do now when and if the growth stagnates in the future.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
Yyz717 From Canada, joined Sep 2001, 15990 posts, RR: 59 Reply 23, posted (8 years 11 months 1 week 1 day 11 hours ago) and read 1341 times:
Chicken or egg Neil...
The lower costs enable new market opportunities, that the high cost carriers cannot generate or exploit. Thats why the legacy carriers generally generate low single digit revenue growth while the LCC carriers all double digit.
You are right, it's both low unit costs and revenue growth, but it's the former that enable the latter.
Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
CanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4 Reply 24, posted (8 years 11 months 1 week 1 day 10 hours ago) and read 1333 times:
I personally believe Westjet is presently preparing itself for the transition from a LCC to a "real" airline.
Westjet's unit costs would say otherwise, Gomez. To call Westjet a "real" airline is just a silly name for a low-cost (CASM) airline with frills (LiveTV, buy-on-board meals, more legroom, etc). As long as our costs remain low, Westjet will always be a low-cost carrier. The low-cost model may not be what is was 15 years ago, but it is evolving.
[Edited 2004-06-22 01:05:46]
EH.
25 CaptainGomes: Brandon, no doubt the LCC model is evolving, but as you state, the key is to keep the costs low, and thus far Westjet has enabled to do this. But I st
26 WJA73G: HOLD ON!.. Westjet did not die, there is a -200 rocketing over my house right now with a 95% load factor. (my dad told me, he's on the plane) WJA73G
27 Captaingomes: HOLD ON!.. Westjet did not die, there is a -200 rocketing over my house right now with a 95% load factor. (my dad told me, he's on the plane) WJA73G A
28 B747-437B: my dad told me, he's on the plane You sure he isn't on an Air Canada plane? Last I checked, the Westjet 737-200s didn't have any Airfones installed to
29 CanadaEH: But I still say that by adding frills, costs money, even if at the same time, the CASM decreases. Adding costs will enable lower cost alternatives to
30 CaptainGomes: What you say is generally true as far as I can see. I also believe there is brand loyalty, and it's not just simply a commodity business. But let's fa
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