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jimbo737
Posts: 542
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 4:51 am

My oh my.

The armchair quarterbacks are busy on this one.

Before carving those epitaphs in stone, let's review what happened during those typically ugly 4th and 1st quarters a year ago, certainly before any impact of the potential strike in 2Q and 3Q 2018, (which was an enormous kick in the seeds to WS's P&L's) but certainly as WS was spooling up the spend on the introduction of the 787, which, for WS is a new business, and will generate a ton of expenses before a nickel of earned revenue appears on the P&L.

Those introductory expenses have since accelerated, and will continue to do so as they are introduced into the fleet. Revenues associated with the 787 program will not be spooled up to a somewhat normal rate per introduced tail until roughly 90 days after each tail is in revenue service.

For those who forget, WS lost money during it's pre launch phase and through May 1996. To be surprised that the 787's are a drain on profitability at this juncture is, quite frankly, a little silly. Of course they are. Duh.

4Q 2017 & 1Q 2018 Combined

AC
Revenues: $7.891b
Expenses: $7.772b
Profit/ Loss: $ .119B
Interest Expense: $ .162B
Profit / Loss:
(with Interest) $ .043B
Margin: -.54%

WS
AC
Revenues: $2.309b
Expenses: $2.175b
Profit/ Loss: $ .133B
Interest Expense: $ .024B
Profit / Loss:
(with Interest) $ .109B
Margin: 4.74%

To simplify, AC lost $238,888 a day in the period, WS made $607,855 a day in the period, but you'd never know it from all the chest thumping going on.

Let's see how 4Q 2018 and 1Q 2019 shape up before the frothing at the mouth gets out of hand.
 
cumulushumilis
Posts: 230
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 6:24 am

Skywatcher wrote:
adambrau wrote:
cumulushumilis wrote:
The O and D markets in the Montreal region are horrendously low yield except for the lucrative premium traveler. You have big players that can swap out metal in an instant such as in the triangle all the way from a Q400 to a 777. A contraction in those markets makes sense for a smaller carrier.



Obviously a small sample O/D flights but NYC-YUL fares are as ridiculously high in dollars as the delays are in minutes. I have often seen NYC-SIN fares lower/equal to NYC-YUL. The only difference is that from NYC: SIN is 8000+ miles and YUL is 400 miles. I would guess that NYC - YUL is one one of the most expensive/profitable flights per mile. Being most flights are RJ's almost makes me miss EA 727's back in the day!


On what basis is the "horrendously low yield" comment made anyway? Is this based on any facts or is it some sort of pre-existing bias?



My previous 20+ years experience in RM and Network
planning. The capacity that is positioned in that market is significant. Transat + AC +Rouge fly wide body metal into the market with a much lower CASM. The reason WS pulled capacity out of YUL is that it can redeploy those aircraft to higher yield markets. Until it can effectively compete with its competitors on higher yield stuff (ie proper premium cabin) high frequency flying is not a money making venture for WS in that market. Maybe Swoop will show up. Who knows. Gone are the days of slowly building marketshare. If an O and D does not perform out of the blocks it’s gone.

The example NYC - YUL works because because AC has the slots to do it. WS doesn’t so AC can charge a premium. WS has just enough slots to protect it’s position on YYZ-LGA and it works within its network and flow into DL.
 
cumulushumilis
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 6:35 am

adambrau wrote:
Skywatcher wrote:
adambrau wrote:

Obviously a small sample O/D flights but NYC-YUL fares are as ridiculously high in dollars as the delays are in minutes. I have often seen NYC-SIN fares lower/equal to NYC-YUL. The only difference is that from NYC: SIN is 8000+ miles and YUL is 400 miles. I would guess that NYC - YUL is one one of the most expensive/profitable flights per mile. Being most flights are RJ's almost makes me miss EA 727's back in the day!


On what basis is the "horrendously low yield" comment made anyway? Is this based on any facts or is it some sort of pre-existing bias?



I don't know is the answer. My one data point (which admittedly means little) - I have family in Montreal and every time I need to fly to YUL on short notice the fares have been $500+ RT.

Seems AC (+UA marketed codeshares) and UA Express (+AC codeshares) own the YUL-NYC route. DL Connection (+codeshares as WS) and AA Eagle offer lesser number of services.

I did a quick check on Orbitz and the fares a week from today (in January) seem low, to be honest, never close to what I find when I actually need to travel!

Seems like Montreal, as an AC (almost fortress-like?) hub would command decent yields. Or at least from me!


That’s the trouble with YUL. It’s highly seasonal unless your the dominant carrier. It is a fortress. For the others there is money to be made, just not year round.
 
Thenoflyzone
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 3:34 pm

cumulushumilis wrote:

That’s the trouble with YUL. It’s highly seasonal unless your the dominant carrier. It is a fortress. For the others there is money to be made, just not year round.


All of Canada is highly seasonal. Period.

Same thing for yields. Canada in general isn't high yielding. The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States. Why is that you think....? Same reason why AC started Rouge in the first place.

As for YUL being an AC fortress hub, that's not quite the case. AC represented 54% of all passengers at YUL in 2017. That's significantly less than DL at ATL (72%) or AA at PHL (73%) / CLT (90%) / MIA (68%), which are true fortress hubs.

There is room for WS at YUL. They're just too lazy to hunker down and seriously put up a fight, is all. Their operation in Quebec is pathetic really, ignoring close to 25% of Canada's population.
us Air Traffic Controllers have a good record, we haven't left one up there yet !!
 
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American 767
Posts: 4533
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 4:32 pm

September11 wrote:
Southwest can buy WestJet?


I don't see that happening. Southwest doesn't even fly to Canada. A US based airline buying a non US airline, I've never heard such thing. And even if something like this happens, more likely it would be Delta who will buy them, if ever, because DL already has worked out a deal to codeshare with WS on all transborder flights between the United States and Canada.
What I do see happening, however, is Westjet selling a few used 737-700s and 800s to Southwest, if Southwest needs to buy used 73Gs and/or 738s for expansion.
Ben Soriano
 
flyyul
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 4:42 pm

Thenoflyzone wrote:
cumulushumilis wrote:

That’s the trouble with YUL. It’s highly seasonal unless your the dominant carrier. It is a fortress. For the others there is money to be made, just not year round.


All of Canada is highly seasonal. Period.

Same thing for yields. Canada in general isn't high yielding. The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States. Why is that you think....? Same reason why AC started Rouge in the first place.

As for YUL being an AC fortress hub, that's not quite the case. AC represented 54% of all passengers at YUL in 2017. That's significantly less than DL at ATL (72%) or AA at PHL (73%) / CLT (90%) / MIA (68%), which are true fortress hubs.

There is room for WS at YUL. They're just too lazy to hunker down and seriously put up a fight, is all. Their operation in Quebec is pathetic really, ignoring close to 25% of Canada's population.


If Montreal is seasonal and low yield, what is Edmonton/Winnipeg/Calgary and Hamilton these days? This so called aviation expert is highly suspect.

In the airline business, brand equity is an important piece of the equation. Even sunwing has stronger brand equity in Quebec than WestJet. WestJet has low brand equity in Eastern Canada, hence the strategic retreat to Calgary and Hamilton.
 
EChid
Posts: 567
Joined: Fri Nov 03, 2017 4:00 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 5:41 pm

Skywatcher wrote:
WestJet has become reactionary and un innovative. Who would have thought just a few years ago that WestJet would be the struggling airline in Canada (unionization/failed 767 strategy/retreating in certain markets and so on). I feel that the "take a breather" strategy is not planned but necessary in any event. They'll have to fix many small issues before launching any major new strategies I suppose. If I were the CEO I would;

a) change the name from WestJet
b) fix the Encore mess on the eastern triangle.
c) buy some A220's and ditch the 737-600's.
d) try Swoop at YUL as marcogr12 says. The WestJet brand at YUL is not great.
e) cut costs at YYC/YEG to match the economic realities in the AB economy until it recovers (if ever?).
f) the domestic Canadian market is saturated. They'll have to figure out a better international strategy for the future. I'm thinking western Canada to Asia offers the best opportunities.

Just my 2 cents.

Ugh, you'd bankrupt them in a month. First, please explain to me how the 767s were a 'failed' strategy? They bought the 787s specifically because the 767s *weren't* a failed strategy. Now, for the rest.

a) They've worked for years to develop strong brand recognition. Just because Quebec doesn't like it, doesn't mean it shouldn't be retained.
b) Encore has been serving them well, it's hardly a mess.
c) Already answered by someone else - but adding another fleet type hardly seems like a sensible way to make things more cost efficient.
d) Already answered by someone else - plus the low-end market is more dominated by the (very French) AirTransat and well-liked Rouge there
e) No comment.
f) What? Have you even looked at the yields to Asia? They're pathetic. The fares, for a 15hr+ flight to Asia are similar, often cheaper, then the fares to fly across Canada. TPAC flying is overrun with tonnes of Chinese carriers that are making it hard for even the established players. YVR already dominates this anyway, so it's much easier to just connect there and have your pick of the litter as far as Asian cities to.
 
Noise
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 6:08 pm

With all the focus in Canada being on YVR, YYC, YYZ and YUL...what opportunities do YEG and YOW present to WS and AC? Both are relatively large metro areas and neither AC or WS have claimed them as focus cities/hubs.
 
ac7e7
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Joined: Mon Oct 25, 2004 7:27 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 6:14 pm

BML87 wrote:
I can see AC slowly scale down its YYC operations. They already dropped Tokyo for the winter and Red Deer all together. I can't see two carriers on the YYC to Medicine Hat, Lethbridge and Cranbrook routes, so I'm guessing they'll drop those too. It was also interesting to see AC add YEG to YLW, YYJ, SFO and LAS. All four of those routes are at the detriment of YYC.


I doubt AC will scale down YYC operations. Though it is WS headquarters, AC has a sizable operation there. Why would they scale it down?

Tokyo is seasonal, but they still have daily Frankfurt and London service.
 
ac7e7
Posts: 763
Joined: Mon Oct 25, 2004 7:27 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 6:22 pm

Thenoflyzone wrote:
ACDC8 wrote:
WS can expand all they want in YUL, they'll fail. Quebecers dislike things from Alberta, well, except their equalization payments :rotfl:


There is no such thing as an equalization payment. Alberta does not send a lump of money to Ottawa in an envelope marked equalization.

Besides, the last time the fiscal federalism system (which is what its called) was reworked - under Harper btw - Alberta was granted an extra $1 billion In annual healthcare funding.

So just shut up and say thank you.....


As much as ON and QC like to pretend otherwise, there is a significant wealth transfer from BC and AB to Central Canada. Tell you what, keep the additional $1B. On us.

AC has always been the dominant player in YUL. Others have tried and failed, including CP. What makes WS any different?
 
Skywatcher
Posts: 896
Joined: Sat Sep 14, 2002 11:19 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 7:20 pm

EChid wrote:
Skywatcher wrote:
WestJet has become reactionary and un innovative. Who would have thought just a few years ago that WestJet would be the struggling airline in Canada (unionization/failed 767 strategy/retreating in certain markets and so on). I feel that the "take a breather" strategy is not planned but necessary in any event. They'll have to fix many small issues before launching any major new strategies I suppose. If I were the CEO I would;

a) change the name from WestJet
b) fix the Encore mess on the eastern triangle.
c) buy some A220's and ditch the 737-600's.
d) try Swoop at YUL as marcogr12 says. The WestJet brand at YUL is not great.
e) cut costs at YYC/YEG to match the economic realities in the AB economy until it recovers (if ever?).
f) the domestic Canadian market is saturated. They'll have to figure out a better international strategy for the future. I'm thinking western Canada to Asia offers the best opportunities.

Just my 2 cents.

Ugh, you'd bankrupt them in a month. First, please explain to me how the 767s were a 'failed' strategy? They bought the 787s specifically because the 767s *weren't* a failed strategy. Now, for the rest.

a) They've worked for years to develop strong brand recognition. Just because Quebec doesn't like it, doesn't mean it shouldn't be retained.
b) Encore has been serving them well, it's hardly a mess.
c) Already answered by someone else - but adding another fleet type hardly seems like a sensible way to make things more cost efficient.
d) Already answered by someone else - plus the low-end market is more dominated by the (very French) AirTransat and well-liked Rouge there
e) No comment.
f) What? Have you even looked at the yields to Asia? They're pathetic. The fares, for a 15hr+ flight to Asia are similar, often cheaper, then the fares to fly across Canada. TPAC flying is overrun with tonnes of Chinese carriers that are making it hard for even the established players. YVR already dominates this anyway, so it's much easier to just connect there and have your pick of the litter as far as Asian cities to.


a) Westjet is too reminiscent of the airline's origins. I understand they've invested a lot in their brand but the name may not reflect an international carrier. I suppose Swoop really does the new name thing to a degree so take it off the list.
b) I flew Encore YUL-YYZ-YUL a few months ago. Unmitigated disaster. Never again. I also didn't criticize Encore in general-just Eastern triangle.
c) OK-get rid of the 600's at least.
d) Swoop is bottom feeding their own market the way it stands now to some degree. Something more innovative should be tried.
e) Alberta salaries in general are the highest average in Canada by quite a large margin. This must be hurting their competitiveness. AC cut thousands of maintenance personnel and outsourced overseas for example.
f) I'm looking at market growth. What is the fastest growing long haul market from Canada? AC appears to be very competitive Western Canada to Asia somehow.
 
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hOMSaR
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 7:54 pm

Skywatcher wrote:
a) Westjet is too reminiscent of the airline's origins. I understand they've invested a lot in their brand but the name may not reflect an international carrier.


Virtually every airline's name is reminiscent of the airline's origins. I guess Alaska shouldn't be flying from LA or Seattle to Washington DC, Southwest shouldn't be flying from Chicago to Baltimore, etc.

Why should someone fly Emirates if they're going from Europe to Australia?

The only reason to change a name is if its public image is tainted. WestJet is not.
I was raised by a cup of coffee.
 
ACDC8
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 8:33 pm

Skywatcher wrote:

a) Westjet is too reminiscent of the airline's origins. I understand they've invested a lot in their brand but the name may not reflect an international carrier.

Other than a handful of people on these boards, nobody in the real world really cares about an airlines name reflecting it being an international carrier or not. Half the people on any given flight probably couldn't even tell you what name is on the side of the aircraft they're sitting in. A company's brand recognition is worth more than a name itself ever will be and that is exactly what WestJet has.
A Grumpy German Is A Sauerkraut
 
ACDC8
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 8:35 pm

Noise wrote:
With all the focus in Canada being on YVR, YYC, YYZ and YUL...what opportunities do YEG and YOW present to WS and AC? Both are relatively large metro areas and neither AC or WS have claimed them as focus cities/hubs.

Can't speak for YOW, but both AC and WS have a very strong network out of YEG.
A Grumpy German Is A Sauerkraut
 
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longhauler
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 8:59 pm

hOMSaR wrote:
Virtually every airline's name is reminiscent of the airline's origins. I guess Alaska shouldn't be flying from LA or Seattle to Washington DC, Southwest shouldn't be flying from Chicago to Baltimore, etc.

And yet, there have been examples in the past where an airline's "regional" sounding name has been changed to reflect its expansion and growth.

North Central Airlines to Republic and Allegheny Airlines to USAir/US Airways comes to mind.

But I agree. In Quebec, Westjet does not have a bad reputation, more of a non-existent reputation. It is a large Canadian market, why they have chosen to ignore it is curious.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
Skywatcher
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 9:06 pm

I give-WestJet is staying! Swoop takes care of it anyway.
 
whywhyzee
Posts: 1119
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 10:03 pm

Skywatcher wrote:
EChid wrote:
Skywatcher wrote:
WestJet has become reactionary and un innovative. Who would have thought just a few years ago that WestJet would be the struggling airline in Canada (unionization/failed 767 strategy/retreating in certain markets and so on). I feel that the "take a breather" strategy is not planned but necessary in any event. They'll have to fix many small issues before launching any major new strategies I suppose. If I were the CEO I would;

a) change the name from WestJet
b) fix the Encore mess on the eastern triangle.
c) buy some A220's and ditch the 737-600's.
d) try Swoop at YUL as marcogr12 says. The WestJet brand at YUL is not great.
e) cut costs at YYC/YEG to match the economic realities in the AB economy until it recovers (if ever?).
f) the domestic Canadian market is saturated. They'll have to figure out a better international strategy for the future. I'm thinking western Canada to Asia offers the best opportunities.

Just my 2 cents.

Ugh, you'd bankrupt them in a month. First, please explain to me how the 767s were a 'failed' strategy? They bought the 787s specifically because the 767s *weren't* a failed strategy. Now, for the rest.

a) They've worked for years to develop strong brand recognition. Just because Quebec doesn't like it, doesn't mean it shouldn't be retained.
b) Encore has been serving them well, it's hardly a mess.
c) Already answered by someone else - but adding another fleet type hardly seems like a sensible way to make things more cost efficient.
d) Already answered by someone else - plus the low-end market is more dominated by the (very French) AirTransat and well-liked Rouge there
e) No comment.
f) What? Have you even looked at the yields to Asia? They're pathetic. The fares, for a 15hr+ flight to Asia are similar, often cheaper, then the fares to fly across Canada. TPAC flying is overrun with tonnes of Chinese carriers that are making it hard for even the established players. YVR already dominates this anyway, so it's much easier to just connect there and have your pick of the litter as far as Asian cities to.


a) Westjet is too reminiscent of the airline's origins. I understand they've invested a lot in their brand but the name may not reflect an international carrier. I suppose Swoop really does the new name thing to a degree so take it off the list.
b) I flew Encore YUL-YYZ-YUL a few months ago. Unmitigated disaster. Never again. I also didn't criticize Encore in general-just Eastern triangle.
c) OK-get rid of the 600's at least.
d) Swoop is bottom feeding their own market the way it stands now to some degree. Something more innovative should be tried.
e) Alberta salaries in general are the highest average in Canada by quite a large margin. This must be hurting their competitiveness. AC cut thousands of maintenance personnel and outsourced overseas for example.
f) I'm looking at market growth. What is the fastest growing long haul market from Canada? AC appears to be very competitive Western Canada to Asia somehow.


I don't agree with your assessment of Western Canada to Asia being a strong option. If it is any indication of how well a Canadian airline can compete, look at AC who has more capacity and virtually no seasonal variation from YYZ to Asia, compared to YVR which has a ton of variation, and AC who actually operates less capacity on most markets. The same can be said of YUL vs YYC. That's with an established network and strong connectivity. The challenge west coast to Asia is that the yields are trash because of all the secondary Chinese competition. That doesn't exist in eastern Canada where only the Big 4 (HU, CA, MU and CZ) have a presence, serving the major 3 airports in China.
 
LMFNINJA
Posts: 114
Joined: Fri Feb 10, 2017 5:11 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 12:13 am

Thenoflyzone wrote:
cumulushumilis wrote:

That’s the trouble with YUL. It’s highly seasonal unless your the dominant carrier. It is a fortress. For the others there is money to be made, just not year round.


All of Canada is highly seasonal. Period.

Same thing for yields. Canada in general isn't high yielding. The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States. Why is that you think....? Same reason why AC started Rouge in the first place.

As for YUL being an AC fortress hub, that's not quite the case. AC represented 54% of all passengers at YUL in 2017. That's significantly less than DL at ATL (72%) or AA at PHL (73%) / CLT (90%) / MIA (68%), which are true fortress hubs.

There is room for WS at YUL. They're just too lazy to hunker down and seriously put up a fight, is all. Their operation in Quebec is pathetic really, ignoring close to 25% of Canada's population.


Your assertion "The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States" is ludicrous.

The major Canadian centres such as YVR, YYZ YUL see state of the art aircraft from the major foreign carriers such as 777, 787, A380 and others. LH will fly the A350 to YYZ shortly. And do such American cities like Boston, Philadelphia, Chicago always see state of the art aircraft from the foreign carriers? I doubt it.

The issue is the smaller population in Canada as compared to the US. It is not a matter of not being high yielding. I can assure you that LH, BA, TY, AF, CX do very well in Canada.

And Rouge was started not because of a yield problem but because AC needed a ULCC to compete with Transat et al for the leisure markets and could not do it based on their collective agreements with the various AC unions.

I do not know which is greater- your arrogance or complete ignorance about the Canadian airline industry.
 
cumulushumilis
Posts: 230
Joined: Wed Jul 27, 2016 8:49 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 1:13 am

LMFNINJA wrote:
Thenoflyzone wrote:
cumulushumilis wrote:

That’s the trouble with YUL. It’s highly seasonal unless your the dominant carrier. It is a fortress. For the others there is money to be made, just not year round.


All of Canada is highly seasonal. Period.

Same thing for yields. Canada in general isn't high yielding. The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States. Why is that you think....? Same reason why AC started Rouge in the first place.

As for YUL being an AC fortress hub, that's not quite the case. AC represented 54% of all passengers at YUL in 2017. That's significantly less than DL at ATL (72%) or AA at PHL (73%) / CLT (90%) / MIA (68%), which are true fortress hubs.

There is room for WS at YUL. They're just too lazy to hunker down and seriously put up a fight, is all. Their operation in Quebec is pathetic really, ignoring close to 25% of Canada's population.


Your assertion "The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States" is ludicrous.

The major Canadian centres such as YVR, YYZ YUL see state of the art aircraft from the major foreign carriers such as 777, 787, A380 and others. LH will fly the A350 to YYZ shortly. And do such American cities like Boston, Philadelphia, Chicago always see state of the art aircraft from the foreign carriers? I doubt it.

The issue is the smaller population in Canada as compared to the US. It is not a matter of not being high yielding. I can assure you that LH, BA, TY, AF, CX do very well in Canada.

And Rouge was started not because of a yield problem but because AC needed a ULCC to compete with Transat et al for the leisure markets and could not do it based on their collective agreements with the various AC unions.

I do not know which is greater- your arrogance or complete ignorance about the Canadian airline industry.


I am not sure what a "first class" equipped aircraft is. Can you even define that? Do you mean cabin type? Aircraft type? Passenger Type? Fair class type?

Canada is seasonal but less so on key city pairs. The key is making sure that your capacity matches the seasonality and having an agile network to redeploy capacity to that shifting seasonality.

WS network strategy is very simple:
1) Build the hubs
2) Improve schedule utility
3) Support global travel through enhanced connectivity
4) Redeploy or reduce capacity in under performing markets (like pulling back capacity from YUL)

Its revenue model is a little more complex:
Segment and enhance profitability:
1) By brand WestJet/Swoop
2) By Cabin Business/Premium/Economy
3) Fare (Bundles)
4) Loyalty

WestJet's 2018 investor day presentation outlines this strategy in a little more detail as well as more details around yield. There appears to be a little more discipline coming from the teal guys around execution these days:
https://www.westjet.com/assets/wj-web/documents/en/investorMedia/InvestorDay-Final-Webcast-Nov30.pdf

Will this strategy work? Who the hell knows, but one thing is for sure 2019 is going to be a very interesting year.

One more comment on this east/west disparity that everyone is talking about. There have been comments how Alberta's economy has been hurting which to an extent is true, but it is also very telling that the new entrants originate from BC or Alberta (Jetlines, Swoop, Flair and Enerjet). Now either Western Canadians are crazy (somewhat true) or there is a fundamental shift in the regional economy (diversification and a bit of entrepreneurship going on). The west lost Greyhound bus lines and there is a whole new market that is ripe for the picking.
Last edited by cumulushumilis on Sun Jan 06, 2019 1:35 am, edited 1 time in total.
 
cumulushumilis
Posts: 230
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 1:34 am

flyyul wrote:
Thenoflyzone wrote:
cumulushumilis wrote:

That’s the trouble with YUL. It’s highly seasonal unless your the dominant carrier. It is a fortress. For the others there is money to be made, just not year round.


All of Canada is highly seasonal. Period.

Same thing for yields. Canada in general isn't high yielding. The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States. Why is that you think....? Same reason why AC started Rouge in the first place.

As for YUL being an AC fortress hub, that's not quite the case. AC represented 54% of all passengers at YUL in 2017. That's significantly less than DL at ATL (72%) or AA at PHL (73%) / CLT (90%) / MIA (68%), which are true fortress hubs.

There is room for WS at YUL. They're just too lazy to hunker down and seriously put up a fight, is all. Their operation in Quebec is pathetic really, ignoring close to 25% of Canada's population.


If Montreal is seasonal and low yield, what is Edmonton/Winnipeg/Calgary and Hamilton these days? This so called aviation expert is highly suspect.

In the airline business, brand equity is an important piece of the equation. Even sunwing has stronger brand equity in Quebec than WestJet. WestJet has low brand equity in Eastern Canada, hence the strategic retreat to Calgary and Hamilton.


I am going to add YXX and YHZ to YEG, YWG and YHM to the mix and take out YYC (That is a whole other can of worms). If you have a CASM that is significantly lower and flat RASM compared to the rest of the network on some routes it becomes an attractive proposition to compete against yourself if that is counter intuitive to keep low cost entrants out of the market (YEG-YWG/SWOOP versus WS) and preserve market share. Provided you don't sacrifice yield doing it and you optimize revenue through product segmentation.
 
YULACYYZ
Posts: 49
Joined: Fri Sep 01, 2017 2:00 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 3:04 pm

ac7e7 wrote:
AC has always been the dominant player in YUL. Others have tried and failed, including CP. What makes WS any different?


I am not a fan of the politic sides of everything, and unfortunately, it' is a major part of our life. As Canadians, we pride ourselves at being welcoming, friendly, caring and tolerant. But we often are forgetting these traits, when taking into consideration our regional divisions.

I've asked my family and friends from Quebec, why they did not fly WestJet. I mean they are safe, the seats are comparable and if the price is right, why not?Their feelings are they are not very well known, not bilingual and being treated differently because of it, and other few reasons. My brother took it a step further saying, ”don't call me a guest, when I'm paying”.

My sister from Medicine Hat Alberta, flew back home for the holidays using my go family discount confirmed ticket. Many of her friends asked her why she was flying Air Canada (the French airline) while WestJet was way better in every way. Her reply was ”better and based on what, you guys seldom fly anyway. They said that WestJet was local airline and needed tto be supported for the goods that they are doing, instead of keeping Air Canada subsidised by our taxe dollars. WestJet was such a great help with the unfortunate events of Fort McMurray, while Air Canada was the big greedy corporate entity taking advantage of this sad event.

Yes I know; it's a very long story!

People like Rouge and Air Transat with the ability to fly directly in locations without connecting in major hubs. But again some say, Air Transat flight attendants are dismissives and rude because they are French speaking only. I mean go figure, how does one argue statements like these.

I really do not understand why WestJet seems having troubles getting a market share from Quebec, which is a quarter the population of Canada. On the other hand SunWing seems to be holding their own.

My guess is that they just don't want it enough!
 
Thenoflyzone
Posts: 3015
Joined: Sun Jan 07, 2001 4:42 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 3:45 pm

LMFNINJA wrote:

Your assertion "The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States" is ludicrous.

The major Canadian centres such as YVR, YYZ YUL see state of the art aircraft from the major foreign carriers such as 777, 787, A380 and others. LH will fly the A350 to YYZ shortly. And do such American cities like Boston, Philadelphia, Chicago always see state of the art aircraft from the foreign carriers? I doubt it.

The issue is the smaller population in Canada as compared to the US. It is not a matter of not being high yielding. I can assure you that LH, BA, TY, AF, CX do very well in Canada.

And Rouge was started not because of a yield problem but because AC needed a ULCC to compete with Transat et al for the leisure markets and could not do it based on their collective agreements with the various AC unions.

I do not know which is greater- your arrogance or complete ignorance about the Canadian airline industry.


What on earth are you talking about?

Firstly, I never spoke about aircraft types. I'm talking about aircraft with first class service. (you know, first, business, premium economy, economy).

Second: smaller population? Really? So a tiny country like Switzerland should have shit yields then i guess, based on your theory.

Third: Rouge is not an ULCC.

Fourth : Rouge was started due to inability to compete with TS with a 210 seat B767, hence the need to densifiy, in order to increase yields. If the Canadian market was higher yielding, AC wouldn't need Rouge.

Everything comes down to yield in this industry you pretend I have no clue about.......

I do not know which is greater - your ignorance or complete incompetence.

cumulushumilis wrote:
I am not sure what a "first class" equipped aircraft is. Can you even define that? Do you mean cabin type? Aircraft type? Passenger Type? Fair class type?


First
Business
Premium Economy
Economy
us Air Traffic Controllers have a good record, we haven't left one up there yet !!
 
Skywatcher
Posts: 896
Joined: Sat Sep 14, 2002 11:19 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 5:50 pm

I was thinking a bit more about why WestJet is struggling while AC seems to be competing more effectively recently.
I mentioned further up the thread that AC cut a huge amount of cost out of their operations by shutting down AVEOS (heavy maintenance) and outsourcing overseas a few years ago.
It is my understanding that WestJet still does much of their heavy maintenance in Calgary, likely while paying the highest wage rates in Canada.
If this is true I would think this is a large reason why Westjet is underperforming compared to AC.

Does Westjet still perform heavy maintenance in YYC?
 
chrisp390
Posts: 723
Joined: Fri May 16, 2014 6:37 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 7:56 pm

I wonder if a merger with Sunwing could be in the cards...especially if the economy takes a turn for the worse this year, hurting Sunwing who is overwhelmingly leisure focused.
 
cumulushumilis
Posts: 230
Joined: Wed Jul 27, 2016 8:49 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 8:02 pm

Nope never has performed heavy maintenance. For C checks or higher it uses third parties like KF Aerospace and Premier Aviation which is ironically out of Trois-Rivières.
 
LMFNINJA
Posts: 114
Joined: Fri Feb 10, 2017 5:11 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sun Jan 06, 2019 8:37 pm

Thenoflyzone wrote:
LMFNINJA wrote:

Your assertion "The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States" is ludicrous.

The major Canadian centres such as YVR, YYZ YUL see state of the art aircraft from the major foreign carriers such as 777, 787, A380 and others. LH will fly the A350 to YYZ shortly. And do such American cities like Boston, Philadelphia, Chicago always see state of the art aircraft from the foreign carriers? I doubt it.

The issue is the smaller population in Canada as compared to the US. It is not a matter of not being high yielding. I can assure you that LH, BA, TY, AF, CX do very well in Canada.

And Rouge was started not because of a yield problem but because AC needed a ULCC to compete with Transat et al for the leisure markets and could not do it based on their collective agreements with the various AC unions.

I do not know which is greater- your arrogance or complete ignorance about the Canadian airline industry.


What on earth are you talking about?

Firstly, I never spoke about aircraft types. I'm talking about aircraft with first class service. (you know, first, business, premium economy, economy).

Second: smaller population? Really? So a tiny country like Switzerland should have shit yields then i guess, based on your theory.

Third: Rouge is not an ULCC.

Fourth : Rouge was started due to inability to compete with TS with a 210 seat B767, hence the need to densifiy, in order to increase yields. If the Canadian market was higher yielding, AC wouldn't need Rouge.

Everything comes down to yield in this industry you pretend I have no clue about.......

I do not know which is greater - your ignorance or complete incompetence.

cumulushumilis wrote:
I am not sure what a "first class" equipped aircraft is. Can you even define that? Do you mean cabin type? Aircraft type? Passenger Type? Fair class type?


First
Business
Premium Economy
Economy


I would suggest that next time you use proper grammar so members of this board know exactly what you mean when you state "First Class equipped aircraft". It could mean anything from obsolete aircraft to aircraft not having a First Class section as opposed to premium economy and economy.

The fact is today there are numerous carriers around the world that no longer have a first class section in their aircraft but rely instead on Business Class and Premium Economy. So it is not unusual to have aircraft flying to Canada and other countries with no First Class section.

And your other remark that traffic to Canada is highly seasonal is rubbish.Many foreign airlines flying to Canada fly here on a highly profitable basis all year round. I'm sure the CEOs of AF, BA TY, LH would disagree with your absurd remarks.

And yes I still maintain your are completely ignorant about the state of aviation in Canada.
 
Thenoflyzone
Posts: 3015
Joined: Sun Jan 07, 2001 4:42 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Mon Jan 07, 2019 12:58 am

LMFNINJA wrote:

And your other remark that traffic to Canada is highly seasonal is rubbish.Many foreign airlines flying to Canada fly here on a highly profitable basis all year round. I'm sure the CEOs of AF, BA TY, LH would disagree with your absurd remarks.


First, TY (Air Caledonie) doesn't fly to Canada. I'm obviously not the one that needs to check my grammar. Lucky for you I realize you probably meant TK.

Second : Really ! Virtually all the airlines you mentioned reduce service - and even cut certain routes - in winter, be it through frequency reductions or operating smaller frames, etc.

The only exception in your list is TK, which keep the same level of service to both YYZ and YUL, due to bilateral restrictions.

Third: "highly profitable basis year round". Really? So you think BA flying LHR-YUL in the dead of January is printing money on the route? I would argue the contrary in fact. The money they make in the summer helps offset some of the losses during the slower months, such as January. Also, why'd you think they cut LHR-YYC all of a sudden in winter? They must be leaving tons of money on the table !

Premium carriers, such as BA, try to keep certain routes year round to maintain their business clientele. Doesn't mean they are necessarily making money in the slower months.

LMFNINJA wrote:
The fact is today there are numerous carriers around the world that no longer have a first class section in their aircraft but rely instead on Business Class and Premium Economy.


BA, AF and LH all have aircraft with first class service. Granted, a limited number of frames, but they still have them nonetheless.

LH and AF dont operate any frames with First class service to Canada. Weird, isn't' it ? Wonder why ?

Only BA does to YYZ and YVR. Not YYC or YUL. When they use the B789 on the latter two destinations, the onboard first class is sold as Business. Hmm....wonder why.....

But keep beatin that drum......
us Air Traffic Controllers have a good record, we haven't left one up there yet !!
 
whywhyzee
Posts: 1119
Joined: Tue Jan 05, 2016 3:12 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Mon Jan 07, 2019 1:28 am

Thenoflyzone wrote:
LMFNINJA wrote:

And your other remark that traffic to Canada is highly seasonal is rubbish.Many foreign airlines flying to Canada fly here on a highly profitable basis all year round. I'm sure the CEOs of AF, BA TY, LH would disagree with your absurd remarks.


First, TY (Air Caledonie) doesn't fly to Canada. I'm obviously not the one that needs to check my grammar. Lucky for you I realize you probably meant TK.

Second : Really ! Virtually all the airlines you mentioned reduce service - and even cut certain routes - in winter, be it through frequency reductions or operating smaller frames, etc.

The only exception in your list is TK, which keep the same level of service to both YYZ and YUL, due to bilateral restrictions.

Third: "highly profitable basis year round". Really? So you think BA flying LHR-YUL in the dead of January is printing money on the route? I would argue the contrary in fact. The money they make in the summer helps offset some of the losses during the slower months, such as January. Also, why'd you think they cut LHR-YYC all of a sudden in winter? They must be leaving tons of money on the table !

Premium carriers, such as BA, try to keep certain routes year round to maintain their business clientele. Doesn't mean they are necessarily making money in the slower months.

LMFNINJA wrote:
The fact is today there are numerous carriers around the world that no longer have a first class section in their aircraft but rely instead on Business Class and Premium Economy.


BA, AF and LH all have aircraft with first class service.

LH and AF dont operate any frames with First class service to Canada. Weird, isn't' it ? Wonder why ?

Only BA does to YYZ and YVR. Not YYC or YUL. When they use the B789 on the latter two destinations, the onboard first class is sold as Business. again, why is that?

But keep beatin that drum......


While I don't disagree with you overall, in all fairness to Canada, there are few places around the world that don't see seasonal variation. Even the highest of the high yield destinations like JFK and LAX see considerable reductions. Main Canadian hubs also don't see excessive seasonality, YYZ for example peak to min quarter is about a 20% variation which isn't awful, and it's gradually reducing.

That doesn't mean Canada is the highest yielding country in the world either, it sure isn't, but it does reasonably well all things considered. Where there may not be extensive F traffic, there is considerable volume including J volume to makeup for that. Look at cities like YUL, not may airports around the world at the 20 million mark boasting the level of service it has.
 
wave46
Posts: 185
Joined: Mon Jan 29, 2018 12:02 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Mon Jan 07, 2019 1:50 am

whywhyzee wrote:
While I don't disagree with you overall, in all fairness to Canada, there are few places around the world that don't see seasonal variation. Even the highest of the high yield destinations like JFK and LAX see considerable reductions. Main Canadian hubs also don't see excessive seasonality, YYZ for example peak to min quarter is about a 20% variation which isn't awful, and it's gradually reducing.

That doesn't mean Canada is the highest yielding country in the world either, it sure isn't, but it does reasonably well all things considered. Where there may not be extensive F traffic, there is considerable volume including J volume to makeup for that. Look at cities like YUL, not may airports around the world at the 20 million mark boasting the level of service it has.


The traffic doesn't so much peak and fall, but shifts destinations. During the winter, sun travel picks up. Destinations like Mexico, the Caribbean, Florida and Arizona peak. As the seasons change, so do the destinations. Summer means peak European and domestic flying.

A perfect example of this trend might be Air Transat and Air Canada Rouge. During the winter, they ramp up their sun operations, while during the summer, they do Europe and secondary Canadian cities in the case of Rouge.

I'd expect that Canada overall is a mid-yielding market. There's enough premium carriers in this market that they can't all be losing their shirts. However, we're not something like JFK-LHR - the cream of the crop for the wealthy.
 
whywhyzee
Posts: 1119
Joined: Tue Jan 05, 2016 3:12 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Mon Jan 07, 2019 4:05 am

wave46 wrote:
whywhyzee wrote:
While I don't disagree with you overall, in all fairness to Canada, there are few places around the world that don't see seasonal variation. Even the highest of the high yield destinations like JFK and LAX see considerable reductions. Main Canadian hubs also don't see excessive seasonality, YYZ for example peak to min quarter is about a 20% variation which isn't awful, and it's gradually reducing.

That doesn't mean Canada is the highest yielding country in the world either, it sure isn't, but it does reasonably well all things considered. Where there may not be extensive F traffic, there is considerable volume including J volume to makeup for that. Look at cities like YUL, not may airports around the world at the 20 million mark boasting the level of service it has.


The traffic doesn't so much peak and fall, but shifts destinations. During the winter, sun travel picks up. Destinations like Mexico, the Caribbean, Florida and Arizona peak. As the seasons change, so do the destinations. Summer means peak European and domestic flying.

A perfect example of this trend might be Air Transat and Air Canada Rouge. During the winter, they ramp up their sun operations, while during the summer, they do Europe and secondary Canadian cities in the case of Rouge.

I'd expect that Canada overall is a mid-yielding market. There's enough premium carriers in this market that they can't all be losing their shirts. However, we're not something like JFK-LHR - the cream of the crop for the wealthy.



I'd call that a very accurate assessment. The top hubs see the flights to the other top hubs stay relatively consistent, and smaller destinations see more seasonal variations.

The challenge this presents for WestJet is they don't have a presence at the traditional top hubs outside of Canada, so it'll be tougher for them to break in and sustain a profit year round. That's why I like the JV strategy, it helps them build an international presence while gradually introducing their own metal on routes that prove themselves to be high yield and high demand. Once the DL deal is in place, they will benefit by providing passengers the DL network, which then helps them allure business contracts from both the US and Canada, because they have the ability to serve international destinations. They can then finalize their deals with AF/KLM and pursue an Asian partner to help them on the trunk routes to gain a more direct presence, allowing for more non-stop options vs connecting via domestic or DL hubs. This reduces their required investment as they won't need as large of a widebody fleet to build a network that is sufficient to win over business travellers. They can focus their 10 789s on the most popular routes, and grow that fleet little by little as required.
 
EChid
Posts: 567
Joined: Fri Nov 03, 2017 4:00 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 8:39 pm

LMFNINJA wrote:
Thenoflyzone wrote:
LMFNINJA wrote:

Your assertion "The vast majority of foreign carriers that fly into YYZ, YVR, YUL and YYC dont send First class equipped aircraft. They rather send them down to the States" is ludicrous.

The major Canadian centres such as YVR, YYZ YUL see state of the art aircraft from the major foreign carriers such as 777, 787, A380 and others. LH will fly the A350 to YYZ shortly. And do such American cities like Boston, Philadelphia, Chicago always see state of the art aircraft from the foreign carriers? I doubt it.

The issue is the smaller population in Canada as compared to the US. It is not a matter of not being high yielding. I can assure you that LH, BA, TY, AF, CX do very well in Canada.

And Rouge was started not because of a yield problem but because AC needed a ULCC to compete with Transat et al for the leisure markets and could not do it based on their collective agreements with the various AC unions.

I do not know which is greater- your arrogance or complete ignorance about the Canadian airline industry.


What on earth are you talking about?

Firstly, I never spoke about aircraft types. I'm talking about aircraft with first class service. (you know, first, business, premium economy, economy).

Second: smaller population? Really? So a tiny country like Switzerland should have shit yields then i guess, based on your theory.

Third: Rouge is not an ULCC.

Fourth : Rouge was started due to inability to compete with TS with a 210 seat B767, hence the need to densifiy, in order to increase yields. If the Canadian market was higher yielding, AC wouldn't need Rouge.

Everything comes down to yield in this industry you pretend I have no clue about.......

I do not know which is greater - your ignorance or complete incompetence.

cumulushumilis wrote:
I am not sure what a "first class" equipped aircraft is. Can you even define that? Do you mean cabin type? Aircraft type? Passenger Type? Fair class type?


First
Business
Premium Economy
Economy


I would suggest that next time you use proper grammar so members of this board know exactly what you mean when you state "First Class equipped aircraft". It could mean anything from obsolete aircraft to aircraft not having a First Class section as opposed to premium economy and economy.

The fact is today there are numerous carriers around the world that no longer have a first class section in their aircraft but rely instead on Business Class and Premium Economy. So it is not unusual to have aircraft flying to Canada and other countries with no First Class section.

And your other remark that traffic to Canada is highly seasonal is rubbish.Many foreign airlines flying to Canada fly here on a highly profitable basis all year round. I'm sure the CEOs of AF, BA TY, LH would disagree with your absurd remarks.

And yes I still maintain your are completely ignorant about the state of aviation in Canada.

Sorry LMFNINJA, the original meaning of this post was quite clear. 'First class equipped,' aside from perhaps some missing hyphens, is pretty evidently a reference to the type of classes configured within the aircraft. That assessment is also correct. Aside from EK, LX and a few other exceptions, many carriers opt to NOT send their First Class-equipped planes to Canada. LH, AF, CX (exception YVR due to ongoing NYC leg), CA, QR, KE, BA (exception YVR due to a/c size), etc. All have First Class services, yet they send few or no of those cabins to Canada. As a country, we don't support it.
 
EChid
Posts: 567
Joined: Fri Nov 03, 2017 4:00 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 8:41 pm

YULACYYZ wrote:
ac7e7 wrote:
AC has always been the dominant player in YUL. Others have tried and failed, including CP. What makes WS any different?


I am not a fan of the politic sides of everything, and unfortunately, it' is a major part of our life. As Canadians, we pride ourselves at being welcoming, friendly, caring and tolerant. But we often are forgetting these traits, when taking into consideration our regional divisions.

I've asked my family and friends from Quebec, why they did not fly WestJet. I mean they are safe, the seats are comparable and if the price is right, why not?Their feelings are they are not very well known, not bilingual and being treated differently because of it, and other few reasons. My brother took it a step further saying, ”don't call me a guest, when I'm paying”.

My sister from Medicine Hat Alberta, flew back home for the holidays using my go family discount confirmed ticket. Many of her friends asked her why she was flying Air Canada (the French airline) while WestJet was way better in every way. Her reply was ”better and based on what, you guys seldom fly anyway. They said that WestJet was local airline and needed tto be supported for the goods that they are doing, instead of keeping Air Canada subsidised by our taxe dollars. WestJet was such a great help with the unfortunate events of Fort McMurray, while Air Canada was the big greedy corporate entity taking advantage of this sad event.

Yes I know; it's a very long story!

People like Rouge and Air Transat with the ability to fly directly in locations without connecting in major hubs. But again some say, Air Transat flight attendants are dismissives and rude because they are French speaking only. I mean go figure, how does one argue statements like these.

I really do not understand why WestJet seems having troubles getting a market share from Quebec, which is a quarter the population of Canada. On the other hand SunWing seems to be holding their own.

My guess is that they just don't want it enough!

I live in Montreal, although I'm an Anglophone. We don't use WS because a) I find their planes inferior to Air Canada's equipment (no IFE, etc.)., and b) the number of routes, elite program, and lounges, are also inferior in YUL. I expect a significant amount of people in YUL simply fall into that category, especially when we're well served by Air Canada, AirTransat, etc.
 
Dominion301
Posts: 2876
Joined: Wed Jul 20, 2016 1:48 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 8:46 pm

chrisp390 wrote:
I wonder if a merger with Sunwing could be in the cards...especially if the economy takes a turn for the worse this year, hurting Sunwing who is overwhelmingly leisure focused.


Which airline are you referring to merging with Sunwing? I don't think Sunwing are interested in merging with anyone. Sunwing can easily weather any economic storm. They have their smaller year-round in-house fleet and then the larger winter seasonal fleet they swap with the likes of Thomson overseas. If the economy tanks, they could easily just take on fewer overseas frames one winter and adjust accordingly.
 
ACDC8
Posts: 7884
Joined: Thu Mar 10, 2005 6:56 pm

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 8:58 pm

EChid wrote:
Sorry LMFNINJA, the original meaning of this post was quite clear. 'First class equipped,' aside from perhaps some missing hyphens, is pretty evidently a reference to the type of classes configured within the aircraft. That assessment is also correct. Aside from EK, LX and a few other exceptions, many carriers opt to NOT send their First Class-equipped planes to Canada. LH, AF, CX (exception YVR due to ongoing NYC leg), CA, QR, KE, BA (exception YVR due to a/c size), etc. All have First Class services, yet they send few or no of those cabins to Canada. As a country, we don't support it.

Correct me if I'm wrong, but I seem to remember that in years before, airlines such as BA would send their "less premium" configuration to Canada, so I agree with your post.
A Grumpy German Is A Sauerkraut
 
EChid
Posts: 567
Joined: Fri Nov 03, 2017 4:00 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 9:14 pm

whywhyzee wrote:
Skywatcher wrote:
EChid wrote:
Ugh, you'd bankrupt them in a month. First, please explain to me how the 767s were a 'failed' strategy? They bought the 787s specifically because the 767s *weren't* a failed strategy. Now, for the rest.

a) They've worked for years to develop strong brand recognition. Just because Quebec doesn't like it, doesn't mean it shouldn't be retained.
b) Encore has been serving them well, it's hardly a mess.
c) Already answered by someone else - but adding another fleet type hardly seems like a sensible way to make things more cost efficient.
d) Already answered by someone else - plus the low-end market is more dominated by the (very French) AirTransat and well-liked Rouge there
e) No comment.
f) What? Have you even looked at the yields to Asia? They're pathetic. The fares, for a 15hr+ flight to Asia are similar, often cheaper, then the fares to fly across Canada. TPAC flying is overrun with tonnes of Chinese carriers that are making it hard for even the established players. YVR already dominates this anyway, so it's much easier to just connect there and have your pick of the litter as far as Asian cities to.


a) Westjet is too reminiscent of the airline's origins. I understand they've invested a lot in their brand but the name may not reflect an international carrier. I suppose Swoop really does the new name thing to a degree so take it off the list.
b) I flew Encore YUL-YYZ-YUL a few months ago. Unmitigated disaster. Never again. I also didn't criticize Encore in general-just Eastern triangle.
c) OK-get rid of the 600's at least.
d) Swoop is bottom feeding their own market the way it stands now to some degree. Something more innovative should be tried.
e) Alberta salaries in general are the highest average in Canada by quite a large margin. This must be hurting their competitiveness. AC cut thousands of maintenance personnel and outsourced overseas for example.
f) I'm looking at market growth. What is the fastest growing long haul market from Canada? AC appears to be very competitive Western Canada to Asia somehow.


I don't agree with your assessment of Western Canada to Asia being a strong option. If it is any indication of how well a Canadian airline can compete, look at AC who has more capacity and virtually no seasonal variation from YYZ to Asia, compared to YVR which has a ton of variation, and AC who actually operates less capacity on most markets. The same can be said of YUL vs YYC. That's with an established network and strong connectivity. The challenge west coast to Asia is that the yields are trash because of all the secondary Chinese competition. That doesn't exist in eastern Canada where only the Big 4 (HU, CA, MU and CZ) have a presence, serving the major 3 airports in China.

Yes, and the assessment that WS can do it because AC does it out of YYZ ignores a bunch of other factors as well. AC has a JV with CA, which helps them manage capacity and get better yields, but also helps them offer improved connectivity through Chinese hubs. Similarly, they have better connectivity through most other Asian hubs, through alliance pals OZ (ICN), NH/TG (NRT, HND, etc.), SQ (everywhere), CX (HKG), etc. WS lacks most of that. Have a look at DL's decisions to drop major Asian hubs recently, or AA's inability to profitably fly from ORD to several major Asian destinations. It's not just a question about where you're flying, it's all about your customers, hubs, onward connectivity, and (at the heart of it, these days), your JVs.
 
EChid
Posts: 567
Joined: Fri Nov 03, 2017 4:00 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 9:20 pm

ACDC8 wrote:
EChid wrote:
Sorry LMFNINJA, the original meaning of this post was quite clear. 'First class equipped,' aside from perhaps some missing hyphens, is pretty evidently a reference to the type of classes configured within the aircraft. That assessment is also correct. Aside from EK, LX and a few other exceptions, many carriers opt to NOT send their First Class-equipped planes to Canada. LH, AF, CX (exception YVR due to ongoing NYC leg), CA, QR, KE, BA (exception YVR due to a/c size), etc. All have First Class services, yet they send few or no of those cabins to Canada. As a country, we don't support it.

Correct me if I'm wrong, but I seem to remember that in years before, airlines such as BA would send their "less premium" configuration to Canada, so I agree with your post.

That's exactly what they're doing. And that's not necessarily a bad thing, since these days we end up often getting newer a/c as a result. Look at the number of 787s rolling into all three major airports now, or the fact that CX and LH are sending their F-classless A350s. These are nice a/c that deliver a better pax experience for the vast majority not in F.
 
whywhyzee
Posts: 1119
Joined: Tue Jan 05, 2016 3:12 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 9:37 pm

EChid wrote:
LMFNINJA wrote:
Thenoflyzone wrote:

What on earth are you talking about?

Firstly, I never spoke about aircraft types. I'm talking about aircraft with first class service. (you know, first, business, premium economy, economy).

Second: smaller population? Really? So a tiny country like Switzerland should have shit yields then i guess, based on your theory.

Third: Rouge is not an ULCC.

Fourth : Rouge was started due to inability to compete with TS with a 210 seat B767, hence the need to densifiy, in order to increase yields. If the Canadian market was higher yielding, AC wouldn't need Rouge.

Everything comes down to yield in this industry you pretend I have no clue about.......

I do not know which is greater - your ignorance or complete incompetence.



First
Business
Premium Economy
Economy


I would suggest that next time you use proper grammar so members of this board know exactly what you mean when you state "First Class equipped aircraft". It could mean anything from obsolete aircraft to aircraft not having a First Class section as opposed to premium economy and economy.

The fact is today there are numerous carriers around the world that no longer have a first class section in their aircraft but rely instead on Business Class and Premium Economy. So it is not unusual to have aircraft flying to Canada and other countries with no First Class section.

And your other remark that traffic to Canada is highly seasonal is rubbish.Many foreign airlines flying to Canada fly here on a highly profitable basis all year round. I'm sure the CEOs of AF, BA TY, LH would disagree with your absurd remarks.

And yes I still maintain your are completely ignorant about the state of aviation in Canada.

Sorry LMFNINJA, the original meaning of this post was quite clear. 'First class equipped,' aside from perhaps some missing hyphens, is pretty evidently a reference to the type of classes configured within the aircraft. That assessment is also correct. Aside from EK, LX and a few other exceptions, many carriers opt to NOT send their First Class-equipped planes to Canada. LH, AF, CX (exception YVR due to ongoing NYC leg), CA, QR, KE, BA (exception YVR due to a/c size), etc. All have First Class services, yet they send few or no of those cabins to Canada. As a country, we don't support it.


KE has F on all long haul aircraft in their fleet, hence F is offered on all Canadian routes. BA also has F to YYZ.

BA to YYZ and YVR sends a fair volume of premium seats, with YYZ on the double daily flights plus the LGW flight operating with the higher J configuration. YYZ also sees 747s during high demand periods such as this past Christmas season, all in the super high J configuration. Compared to other airports, this might not seemike much, but not many have another carrier with 4x daily service. If you look at the seat counts, YYZ has among the highest numbers of daily premium seats to many major hubs compared to many north american destinations.

QR only offers F on their small fleet of A380s, so probably not the best one to use as a metric.

LH will offer F in YVR-MUC this year due to swapping the A359 for A346.

Like I said before, Canada certainly isn't the premium center of the world, and can't compete with JFK or LAX, but if you look at the actual numbers, it does certainly pull some considerable weight.
 
EChid
Posts: 567
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 9:56 pm

whywhyzee wrote:
EChid wrote:
LMFNINJA wrote:

I would suggest that next time you use proper grammar so members of this board know exactly what you mean when you state "First Class equipped aircraft". It could mean anything from obsolete aircraft to aircraft not having a First Class section as opposed to premium economy and economy.

The fact is today there are numerous carriers around the world that no longer have a first class section in their aircraft but rely instead on Business Class and Premium Economy. So it is not unusual to have aircraft flying to Canada and other countries with no First Class section.

And your other remark that traffic to Canada is highly seasonal is rubbish.Many foreign airlines flying to Canada fly here on a highly profitable basis all year round. I'm sure the CEOs of AF, BA TY, LH would disagree with your absurd remarks.

And yes I still maintain your are completely ignorant about the state of aviation in Canada.

Sorry LMFNINJA, the original meaning of this post was quite clear. 'First class equipped,' aside from perhaps some missing hyphens, is pretty evidently a reference to the type of classes configured within the aircraft. That assessment is also correct. Aside from EK, LX and a few other exceptions, many carriers opt to NOT send their First Class-equipped planes to Canada. LH, AF, CX (exception YVR due to ongoing NYC leg), CA, QR, KE, BA (exception YVR due to a/c size), etc. All have First Class services, yet they send few or no of those cabins to Canada. As a country, we don't support it.


KE has F on all long haul aircraft in their fleet, hence F is offered on all Canadian routes. BA also has F to YYZ.

QR only offers F on their small fleet of A380s, so probably not the best one to use as a metric.

LH will offer F in YVR-MUC this year due to swapping the A359 for A346.

Yes, yes. There are always going to be exceptions. We can nitpick about this all day. BA only flies F to YYZ seasonally, by the way. EY has a multitude of aircraft equipped with F, yet they don't fly one to YYZ. LH flies a 747 to YYZ, but not one equipped with F. AF flies their 77Ws frequently to both YYZ and YUL in the high season, but not one equipped with F, etc.

The general trend is that airlines, generally, tend to not to fly many or any F cabins to Canada when they have a choice, and that airlines doing significant business in Canada or based in Canada don't bother with it.
 
whywhyzee
Posts: 1119
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 10:17 pm

EChid wrote:
whywhyzee wrote:
EChid wrote:
Sorry LMFNINJA, the original meaning of this post was quite clear. 'First class equipped,' aside from perhaps some missing hyphens, is pretty evidently a reference to the type of classes configured within the aircraft. That assessment is also correct. Aside from EK, LX and a few other exceptions, many carriers opt to NOT send their First Class-equipped planes to Canada. LH, AF, CX (exception YVR due to ongoing NYC leg), CA, QR, KE, BA (exception YVR due to a/c size), etc. All have First Class services, yet they send few or no of those cabins to Canada. As a country, we don't support it.


KE has F on all long haul aircraft in their fleet, hence F is offered on all Canadian routes. BA also has F to YYZ.

QR only offers F on their small fleet of A380s, so probably not the best one to use as a metric.

LH will offer F in YVR-MUC this year due to swapping the A359 for A346.

Yes, yes. There are always going to be exceptions. We can nitpick about this all day. BA only flies F to YYZ seasonally, by the way. EY has a multitude of aircraft equipped with F, yet they don't fly one to YYZ. LH flies a 747 to YYZ, but not one equipped with F. AF flies their 77Ws frequently to both YYZ and YUL in the high season, but not one equipped with F, etc.

The general trend is that airlines, generally, tend to not to fly many or any F cabins to Canada when they have a choice, and that airlines doing significant business in Canada or based in Canada don't bother with it.


BA brings F class aircraft year round, though wether or not they sell it depends on them I suppose. I haven't seen it on sale this winter, but I don't imagine that is an isolated trend.

AF won't be bringing the 77W any longer, it'll be 10x weekly 772, but that's a moot point, no F regardless.

What I'm trying to get at is it's not a very good metric because F by in large isn't successful anywhere, and it's a cabin that is shrinking all over the world. If you look at J volume, YYZ is up there, as are YVR and YUL to a much lesser extent. Given the relative sizes of the airports, they have very extensive J service, which is still a very good evaluation of total premium demand.
 
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rikkus67
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 10:59 pm

wave46 wrote:

Link seems like a weird side distraction. I'm legitimately curious why management thought this was an avenue worth pursuing. I'll wait and see on that one - many large airlines are backing away from tiny markets as the energy put into chasing crumbs is more than the benefit.



Considering the complete lack of service and care that AC has been providing since the CAI/AC merger, those small markets have responded with healthy load factors since inception. Just remember, Pacific Coastal is the at risk carrier in this instance.
AC.WA.CP.DL.RW.CO.WG.WJ.WN.KI.FL.SK.ACL.UA.US.F9
 
EChid
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 11:23 pm

whywhyzee wrote:
EChid wrote:
whywhyzee wrote:

KE has F on all long haul aircraft in their fleet, hence F is offered on all Canadian routes. BA also has F to YYZ.

QR only offers F on their small fleet of A380s, so probably not the best one to use as a metric.

LH will offer F in YVR-MUC this year due to swapping the A359 for A346.

Yes, yes. There are always going to be exceptions. We can nitpick about this all day. BA only flies F to YYZ seasonally, by the way. EY has a multitude of aircraft equipped with F, yet they don't fly one to YYZ. LH flies a 747 to YYZ, but not one equipped with F. AF flies their 77Ws frequently to both YYZ and YUL in the high season, but not one equipped with F, etc.

The general trend is that airlines, generally, tend to not to fly many or any F cabins to Canada when they have a choice, and that airlines doing significant business in Canada or based in Canada don't bother with it.

What I'm trying to get at is it's not a very good metric because F by in large isn't successful anywhere, and it's a cabin that is shrinking all over the world. If you look at J volume, YYZ is up there, as are YVR and YUL to a much lesser extent. Given the relative sizes of the airports, they have very extensive J service, which is still a very good evaluation of total premium demand.

No arguments on J, lots of J opportunity out of YYZ and YVR. But J demand is pretty separate from F demand though. J is built into many company policies, F is not. F is a representation of pure 'luxury' buy, aka high-end market, wealthy pleasure-travellers. J can be too, but to a lessor extent.
 
whywhyzee
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 11:26 pm

EChid wrote:
whywhyzee wrote:
EChid wrote:
Yes, yes. There are always going to be exceptions. We can nitpick about this all day. BA only flies F to YYZ seasonally, by the way. EY has a multitude of aircraft equipped with F, yet they don't fly one to YYZ. LH flies a 747 to YYZ, but not one equipped with F. AF flies their 77Ws frequently to both YYZ and YUL in the high season, but not one equipped with F, etc.

The general trend is that airlines, generally, tend to not to fly many or any F cabins to Canada when they have a choice, and that airlines doing significant business in Canada or based in Canada don't bother with it.

What I'm trying to get at is it's not a very good metric because F by in large isn't successful anywhere, and it's a cabin that is shrinking all over the world. If you look at J volume, YYZ is up there, as are YVR and YUL to a much lesser extent. Given the relative sizes of the airports, they have very extensive J service, which is still a very good evaluation of total premium demand.

No arguments on J, lots of J opportunity out of YYZ and YVR. But J demand is pretty separate from F demand though. J is built into many company policies, F is not. F is a representation of pure 'luxury' buy, aka high-end market, wealthy pleasure-travellers. J can be too, but to a lessor extent.


I'd love to see how much of F is actual payed vs upgraded/mileage. Not much I don't imagine. In any case, we should probably put this one to rest since we are nitpicking the minor details or something we largely have agreed on in any case. :white:

What was the original discussion again?
 
cumulushumilis
Posts: 230
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 11:35 pm

rikkus67 wrote:
wave46 wrote:

Link seems like a weird side distraction. I'm legitimately curious why management thought this was an avenue worth pursuing. I'll wait and see on that one - many large airlines are backing away from tiny markets as the energy put into chasing crumbs is more than the benefit.



Considering the complete lack of service and care that AC has been providing since the CAI/AC merger, those small markets have responded with healthy load factors since inception. Just remember, Pacific Coastal is the at risk carrier in this instance.


Eight months in and YQL has one flight a day that’s been upgauged to Encore. Link provides high yield flow onto core trunk routes. The demand and capacity must be there.
 
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rikkus67
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Tue Jan 08, 2019 11:51 pm

cumulushumilis wrote:
rikkus67 wrote:
wave46 wrote:

Link seems like a weird side distraction. I'm legitimately curious why management thought this was an avenue worth pursuing. I'll wait and see on that one - many large airlines are backing away from tiny markets as the energy put into chasing crumbs is more than the benefit.



Considering the complete lack of service and care that AC has been providing since the CAI/AC merger, those small markets have responded with healthy load factors since inception. Just remember, Pacific Coastal is the at risk carrier in this instance.


Eight months in and YQL has one flight a day that’s been upgauged to Encore. Link provides high yield flow onto core trunk routes. The demand and capacity must be there.


That's GREAT to hear! YQL really got slaughtered after Time Air merged with Ontario Express to form Canadi>n Regional, way back when. It only got worse after the majors merger, with people either paying exorbitant fares, or having to drive 2 hours to YYC. I am sure YXH and the rest of the Link network could also share similar stories.
AC.WA.CP.DL.RW.CO.WG.WJ.WN.KI.FL.SK.ACL.UA.US.F9
 
CFWAD
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Wed Jan 09, 2019 1:29 am

That Encore upgauge ends at the end of February. Albeit in the future there is an opportunity to up gauge to any Link operated route, this gauge change was due to crewing and equipment scheduling.

If YQL could support a Q400, AC would have easily placed it on the market earlier. It doesn't and they didn't. Eventually? Yes. Now? No.
CaVOK
A300.310.319.320.321.332.333.343.B722.732.733.734.735.736.73G.738.739.742.74M.752.762.763.772.773.779.CR2.CR7.DC9.DC10.DH1.DH3.DH4.E135.E175. E195.MD83
 
timtam
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Wed Jan 09, 2019 5:07 am

Maybe this is nuts but from a distance I have wondered if QF could have closer ties with WestJet. Swoop would have been a good opportunity for a Jetstar JV ala Jetstar Japan. QF could invest in Westjet and bring it into the OneWorld fold and thereby Westjet could work more closely with the strong QF/AA relationship - and even BA and CX.

Canada is a market that is not strongly linked to Australia by air however there are a lot of similarities between Australia and Canada including very similar cultures and business environments.
 
Thomaas
Posts: 687
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 10, 2019 6:58 am

timtam wrote:
Maybe this is nuts but from a distance I have wondered if QF could have closer ties with WestJet. Swoop would have been a good opportunity for a Jetstar JV ala Jetstar Japan. QF could invest in Westjet and bring it into the OneWorld fold and thereby Westjet could work more closely with the strong QF/AA relationship - and even BA and CX.

Canada is a market that is not strongly linked to Australia by air however there are a lot of similarities between Australia and Canada including very similar cultures and business environments.


I think that this ship has sailed given WS’ JV with Delta. American and OW would have been better partners geographically (BA’s extensive Canadian network, NRT + HKG in Asia, EI/IB, LATAM) but ultimately DL was willing to offer more to WS than AA was.
 
whywhyzee
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 10, 2019 4:06 pm

Thomaas wrote:
timtam wrote:
Maybe this is nuts but from a distance I have wondered if QF could have closer ties with WestJet. Swoop would have been a good opportunity for a Jetstar JV ala Jetstar Japan. QF could invest in Westjet and bring it into the OneWorld fold and thereby Westjet could work more closely with the strong QF/AA relationship - and even BA and CX.

Canada is a market that is not strongly linked to Australia by air however there are a lot of similarities between Australia and Canada including very similar cultures and business environments.


I think that this ship has sailed given WS’ JV with Delta. American and OW would have been better partners geographically (BA’s extensive Canadian network, NRT + HKG in Asia, EI/IB, LATAM) but ultimately DL was willing to offer more to WS than AA was.


WestJet made their choice, they had extensive codeshares with BA and AA, and chose to terminate both of those.
 
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longhauler
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Mon Jan 14, 2019 5:33 pm

jimbo737 wrote:
The armchair quarterbacks are busy on this one.

Before carving those epitaphs in stone, let's review what happened during those typically ugly 4th and 1st quarters a year ago, certainly before any impact of the potential strike in 2Q and 3Q 2018, (which was an enormous kick in the seeds to WS's P&L's) but certainly as WS was spooling up the spend on the introduction of the 787, which, for WS is a new business, and will generate a ton of expenses before a nickel of earned revenue appears on the P&L.

Those introductory expenses have since accelerated, and will continue to do so as they are introduced into the fleet. Revenues associated with the 787 program will not be spooled up to a somewhat normal rate per introduced tail until roughly 90 days after each tail is in revenue service.

For those who forget, WS lost money during it's pre launch phase and through May 1996. To be surprised that the 787's are a drain on profitability at this juncture is, quite frankly, a little silly. Of course they are. Duh.


Are you including Mr. Sims as an "armchair quarterback" as quite frankly, most here are just echoing his comments, which are likely an answer to the business community's (public and private) concerns.

The 1/4 quarter vice the 2/3 quarter swing has been going on for 20 years. The (original) Westjet gameplan, much like Southwest Airline's gameplan is quite a bit less vulnerable to seasonal swings. It is what made Westjet a consistently profitable and stable company. With that gameplan now in the rear view mirror, Westjet will find itself more vulnerable. Especially with the proposed increased flying on the Atlantic.

But, as I always say ... the bottom line is the bottom line. Really who gives a rat's ass how February looks, when at year end, Air Canada has had amazing yearly results in the last five years and Westjet ... hasn't. With their current aim, I can't see 2019 or even 2020 being much better.

You are right, every time Westjet has made a large equity investment in new aircraft types, that risk exists. The 737-200 to the NG to the Max. And they (using the old game plan) have been consistently profitable. The new airframes continued with the same function as the older ones it replaced, with the added bonus of lower operating costs and better reliability.

There is however, a very big difference now. The 787s are not replacing existing aircraft and functions. Not only are they starting new (untried) routes, but they are also introducing two new levels of cabins that have never before been seen on a Westjet aircraft. I am not suggesting they won't be able to "pull it off" just that there is significantly more risk now, than they have ever taken in the past.

My "armchair quarterback" opinion is that if they had proposed a similar cabin layout to their current 767s, it would appear a smarter move. A high density Y cabin and one premium cabin, likely sold as Premium Economy on international routes. The economies of the 787 are astounding, fill it with a bunch of Y seats and it's a CASM champion!
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!

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