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WestJet & SAA Ready To Order Boeing

Fri Feb 25, 2000 5:21 am

Transnet, the key shareholder in South African Airways (SAA), said on Thursday the purchase of new planes for the carrier was on course but no supplier had yet been chosen for the $679 million contract. It now seems likely that Boeing is now close to Airbus on this & that Delta has gotten it priority.

WestJet Airlines Ltd. said on Thursday it would buy 20 new 737-600 or 737-700 series planes from Boeing for $616 million, with an option for the Canadian regional carrier to buy 30 more aircraft before 2008. In the next eight years WestJet Expects to order 70 737NGs.

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RE: WestJet & SAA Ready To Order Boeing

Fri Feb 25, 2000 6:59 am

I herd that WJ was ordering 737-600 and 700 series. I think this asi a great start for a small regional airline thats is based in Calgary.
Keep up the good work.
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RE: WestJet & SAA Ready To Order Boeing

Fri Feb 25, 2000 7:46 am

Cool, I have yet to see a 737NG at YYC. Those 737-200 are so noisy.
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RE: WestJet & SAA Ready To Order Boeing

Sat Feb 26, 2000 2:04 am

It seems that the firm order for 20 breaks down to 14 737-700s and 6 737-600s. Can anyone confirm this?
"History does not long entrust the care of freedom to the weak or timid." D. Eisenhower

RE: WestJet & SAA Ready To Order Boeing

Sat Feb 26, 2000 12:32 pm

The following is a press release from Boeing about Westjet's 737NG order: "WestJet Airlines today announced an intent to order 20 Next-Generation 737s with options to acquire an additional 30 airplanes. The airline also announced it entered into an agreement with GE Capital Aviation Service (GECAS) for the lease of 10 of the same airplane type with the option to lease a further 10. The signing of these agreements will provide WestJet with the ability to add up to 70 737-700 or 737-600 series airplanes over the next eight years." The Edmonton Journal reported today that the first new aircraft is scheduled for delivery in July 2001. Sorry, don't have any info on how the order is to be split between 737-600 and -700. YEG 757

RE: WestJet & SAA Ready To Order Boeing

Sat Feb 26, 2000 2:16 pm

I saw the same article in the Journal(Yep, I'm an Edmontonian, too!). But other articles have said that WestJet is preferring to focus solely on the 737-700. That's no problem in itself, unless WestJet has future plans to fly to even smaller communites than Grande Prairie. I haven't heard these kind of plans yet, though. GP is the smallest place served by WestJet. It's where I flew to last weekend, as I have family there. and yes, it was on a WestJet plane! Like Prince Rupert, Terrace, Yellowknife, or Fort St. John, for example. It might either have to lower fares (to fill the planes up more) or get firm orders for 737-600s (lower capacity) for sure.

FYI - The 737-700 carries up to 142 passengers, and the -600 carries up to 125. As 737NGs, both have better range than the 737-200 or the 737 Classic series. For example, even when fully loaded, they're capable of flying from YVR to Halifax nonstop, or even further. That's why Aloha Airlines was able to start service from Oakland, CA to Hawaii nonstop on its 737-800s. It couldn't do that on a fully loaded 737-200 or -300.

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RE: WestJet & SAA Ready To Order Boeing

Sat Feb 26, 2000 2:36 pm

Today in the Winnipeg Free Press there was some comments by analysts that WestJet may be trying to expand a little to quickly. Personally I do have some reservations about expanding from 15 aircraft worth about $4 million each to some 70 aircraft worth $40 million each, but I will give WestJet the benefit of the doubt on this one, as they've proven to be very prudent managers thus far.

As far as aircraft splits, I take it that they're looking at some of each for -600/-700 choices. I'm not sure that even WJ knows yet how many of each, they may be able to specify closer to delivery so as to tailor them to what they find they need. That's just my guess, though.

As far as new destinations, I believe it was an interview with Mr. Smith (WJ president) in a paper today (the Globe and Mail, if I remember right, but don't quote me on that) that said they saw potential use for up to 100 aircraft in Canada without flying transborder routes. It also mentioned that the 30 firm orders they have will easily be utilized, and that with their expansion they may not only go east, but may develop routes to up to 12 additional western destinations, and add new routes and new flights to existing cities. That's good news for cities like Brandon, Lethbridge, Whitehorse, Medicine Hat, and a few others (those are only MY personal views on cities with a market for their flights). I sincerely hope that their expansion eastward doesn't ignore developing the western region's routes, but that statement by Mr. Smith at least quelled some of the fears I had that all their effort would be put into YHM and eastward.

Also of interest, WJ is reported to be considering flying into Moncton, in addition to their already announced Halifax intentions. That is unconfirmed rumour as well, though, at this point.

RE: WestJet & SAA Ready To Order Boeing

Sun Feb 27, 2000 4:52 am

A couple of thoughts on Westjet's rate of expansion:

a) Although Westjet is making a huge commitment (for an airline of their size) with an firm order for 30 aircraft, they are spreading acquisition of these aircraft over eight years. This permits them to phase in the new fleet gradually instead of taking the entire financial hit up front. Hopefully their business volumes keep growing to take advantage of the new aircraft as they are introduced. Also, if there is a downturn because of unanticipated competition or economic slowdown in Canada, I expect they could cancel options, defer some orders or return some surplus leased aircraft to GECAS.

b) I don't know if Westjet had much choice but to do what they're doing. They currently have a window of opportunity to grow into Eastren Canada, with the demise of CAI, and will need to act quickly if they want to fend off other entrants into that market. Westjet started from nothing in Western Canada and succeeded by flying to destinations that were underserved and/or over priced. If they take the same approach in Eastern Canada and avoid Toronto / Montreal, hopefully they will be alright. They have the advantage of a national reputation for success and low fares that preceeds them this time around. Should save a few advertising dollars! To handle this expansion, they would either need to invest in more 737-200's or buy new aircraft. If they were to buy -200's now, would they not need have to start replacing these within five or so years anyway? Perhaps they're better off to bite the bullet now.

c) From a cashflow perspective, Westjet needs to ensure is that the additional lease and borrowing costs are more than offset by savings in fuel and maintenance costs as the 737-200 fleet is gradually retired. Hopefully their beancounters have done their math right!

d) Westjet has been patterning itself after the Southwest Airlines model. Southwest has been very aggressive in fleet renewal (launch customer for the 737-700 with a large order). Despite this, they continue operate profitably and haven't abandoned their niche of low ticket prices. Their secret is having the lowest operating cost per available seat mile of any of the US majors, which is permitted in turn by the improved operating economics of new aircraft.

YEG 757
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RE: WestJet & SAA Ready To Order Boeing

Sun Feb 27, 2000 8:25 am

Yeah that would be nice for WJ to fly to those smaller cities. Also I think for American cities are concerned, I think WJ should fly into the closer cities to Canada first than the farther ones. The fleet can handle it. I hope WJ will use both hubs for this and develop YVR,YEG,YWG into thir minihubs...

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