slawko
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Westjet In The News.....

Sat Jun 19, 2004 5:10 am

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...

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&call_pageid=971358637177&c=Article&cid=1087467334641


High-flying WestJet develops wrong kind of momentum - From the post the printed/subscription version is a good half page read.

http://www.canada.com/national/nationalpost/search/story.html?id=12fc9221-5929-4fcc-9c1d-b1130e833f71

Not your usual WJA articles, but they seem to be popping up more often...
"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
 
Skywatcher
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RE: Westjet In The News.....

Sat Jun 19, 2004 11:35 am

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
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RE: Westjet In The News.....

Sat Jun 19, 2004 1:47 pm

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?  Smile
EH.
 
Dash8King
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RE: Westjet In The News.....

Sat Jun 19, 2004 5:54 pm

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
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RE: Westjet In The News.....

Sun Jun 20, 2004 3:05 am

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
 
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yyz717
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RE: Westjet In The News.....

Sun Jun 20, 2004 3:38 am

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.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
yegbey01
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RE: Westjet In The News.....

Sun Jun 20, 2004 4:27 am

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??
 
planemaker
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RE: Westjet In The News.....

Sun Jun 20, 2004 4:30 am

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!!!!!  Wink/being sarcastic If you can't guess it, don't worry -- it is in fact the cover story:

http://www.canadianbusiness.com/features/article.jsp?content=20040607_60349_60349
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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yyz717
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RE: Westjet In The News.....

Sun Jun 20, 2004 4:55 am

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??


The personal satisfaction that you are supporting a private sector carrier that tax payers will never have to prop up, as we have done with AC.



I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Dash8King
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RE: Westjet In The News.....

Sun Jun 20, 2004 4:57 am

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
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RE: Westjet In The News.....

Sun Jun 20, 2004 5:37 am

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..........
EH.
 
CanadaEH
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RE: Westjet In The News.....

Sun Jun 20, 2004 5:40 am

Oh, and Slawko regarding your post: fair enough.  Smile
EH.
 
CO737800
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RE: Westjet In The News.....

Sun Jun 20, 2004 8:12 am

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
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RE: Westjet In The News.....

Sun Jun 20, 2004 8:37 am

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..??

Grant
Drive it like you stole it!
 
WJA73G
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RE: Westjet In The News.....

Mon Jun 21, 2004 1:53 am

We'll get better, you wait and see....

We've expanded drastically and added hundreds more flights, a drop in loads is to be expected.
 
slawko
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RE: Westjet In The News.....

Mon Jun 21, 2004 11:44 am

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
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RE: Westjet In The News.....

Mon Jun 21, 2004 12:07 pm

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.
EH.
 
chock head
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RE: Westjet In The News.....

Mon Jun 21, 2004 12:09 pm

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.
 
Dash8King
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RE: Westjet In The News.....

Mon Jun 21, 2004 12:18 pm

I agree with Slawko. Although it might be 50% this wasn't it more last year.
 
slawko
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RE: Westjet In The News.....

Tue Jun 22, 2004 1:34 am

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
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RE: Westjet In The News.....

Tue Jun 22, 2004 5:56 am

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
 
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yyz717
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RE: Westjet In The News.....

Tue Jun 22, 2004 6:43 am

Problem is the WJ's success is built on constant growth, if you stop growing things catch up to you and you die.

Nope. WJ's success is based on lower unit costs. It's a commodity business Slawko.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
B747-437B
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RE: Westjet In The News.....

Tue Jun 22, 2004 6:44 am

WJ's success is based on lower unit costs

And WJ's lower unit costs are based on a constant growth model.

Chicken or egg Neil...  Big grin
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
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yyz717
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RE: Westjet In The News.....

Tue Jun 22, 2004 7:51 am

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.


I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
CanadaEH
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RE: Westjet In The News.....

Tue Jun 22, 2004 8:04 am

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.
 
captaingomes
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RE: Westjet In The News.....

Tue Jun 22, 2004 8:51 am

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 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 come in, so there comes a point down the road where passengers will either choose an airline based on costs, or amenities? I think Westjet is adding amenities to capture many of the latter passengers, because Westjet is infrequently the lower priced alternative on any given route.

No disrespect intended Brandon, I really do admire Westjet, and enjoyed my experience with them immensely. I would fly them again in a heartbeat.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
WJA73G
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RE: Westjet In The News.....

Tue Jun 22, 2004 12:57 pm

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
 
captaingomes
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RE: Westjet In The News.....

Tue Jun 22, 2004 1:07 pm

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


And this makes a heck of a lot of sense .......
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
B747-437B
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RE: Westjet In The News.....

Tue Jun 22, 2004 1:10 pm

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 permit air-to-ground communication. Big grin
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
CanadaEH
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RE: Westjet In The News.....

Wed Jun 23, 2004 1:20 pm

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 come in, so there comes a point down the road where passengers will either choose an airline based on costs, or amenities?

Adding frills does cost money, there's no denying that. LiveTV for example costs $500K per aircraft for installation (don't even get me started on tail 010). However, will these added short-term costs payoff in the long-term? The great thing about Westjet is the ability of our company to launch initiatives which a) increase revenue, b) save the company money, or c) lower our CASM. If we didn't see the potential for a return on our investment (LiveTV, for example) we wouldn't have done it. The same goes for removing 4 seats to create more legroom and having leather seats instead of cloth. Both have valid, cost related reasons.

Now, you kind of contradict yourself when you say that adding frills costs money even if at the same time CASM decreases. The only thing that could or would be affected by adding frills is Westjet's debt or the loans it has to obtain in order to pay for them. The Ontario Teachers Pension Fund or whatever its called injected $150M worth of capital to fund the purchase of additional aircraft and LiveTV installation. Fidelity also recently invested a significant amount of money into our airline, so not all of our costs are through loans or debts. That's just a guess, but am I correct in thinking that?

Westjet has a very competitive and low CASM, even with the perks/frills we have been and are adding. If a "lower cost alternative" enters the market, that airline won't have a significant cost advange over Westjet. Jetsgo, for example, probably does has a lower CASM than Westjet but it can't be by much. If airline X has a CASM of 9 cents while airline Y has a CASM of 10 cents, airline X is obviously at an advantage, cost-wise. However, if airline Y has IFE, food, more room, etc., etc., and airline X doesn't, airline Y can price competitively and attract more customers simply based on perks.

Anyway, the point I'm trying to make is this: there is an evolution of low-cost carriers going on right now. Airlines like JetBlue and yes, Westjet, are revolutionizing the way low-cost carriers operate. Carriers will be able to operate with low costs AND frills while others will try to compete with no-frills (or very limited frills) and low costs. If one customer can get more bang for his/her buck on one carrier over the other, than he/she is going to fly on that airline.

All this talk about customer loyalty being nonexistant is completely false IMO. With diversification of products, you'll see a lot of customer loyalty. Customer loyalty for rock bottom prices; customer loyalty for customer service; customer loyalty for IFE; customer loyalty for AirMiles or Aeroplan points. The list goes on and on. As long as an airlines costs remain low and competitive, the sky is the limit for what frills can or can't be added.

Or what I've been saying is all one big pipe dream.  Smile
EH.
 
captaingomes
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RE: Westjet In The News.....

Wed Jun 23, 2004 2:21 pm

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 face it, price is still by far the greatest determinant in a customer choosing one airline over another. Next on the list must be schedule, and what fits the customer best. Then you can add remaining items such as amenities, brand recognition, etc etc. Westjet still fills their aircraft from YYZ to YYC, despite having relatively high prices, IMHO.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster