NEW CEO TAKES FLIGHT
West Jet boss faces daunting tasks
Launch a no-frills airline. Prepare for international expansion. Meet with employees. Seek labour peace with pilots. Protect a unique corporate culture.
The sheer number of items on the plate of new WestJet CEO Ed Sims are daunting, but the 54-year-old airline veteran, promoted to the top job last month after the sudden retirement of Gregg Saretsky, has to knock them off quickly.
That includes working on the frosty relationship with WestJet’s pilots, who unionized last year and are trying to negotiate a first contract with the Calgarybased airline.
One of the first things Sims did after taking the position five weeks ago was to meet with officials from the Air Line Pilots Association. The two sides, in contract negotiations since last fall, are now in a conciliation process that ends this month.
Saretsky was openly combative dealing with WestJet’s first union. Sims, who has spent three decades in the industry working at Air New Zealand, Virgin Groups and Thomas Cook, won’t be trading barbs in the media.
“I will not negotiate in public, but I will aim to reach a settlement as quickly as we possibly can,” Sims, who is from Swansea in South Wales, said in an interview Monday.
“But I will not reach a settlement for the benefit of one work group that has the potential to work to the detriment of any or every other work group.”
Sims joined WestJet last spring as executive vice-president of commercial, having previously worked as CEO for Airways, New Zealand’s air navigation service provider.
One of his first challenges will be to reach a deal with the pilots while protecting WestJet’s cost base, which has been a competitive advantage over unionized rivals such as Air Canada.
He will also need to preserve the company’s unique culture, built around a philosophy of customer service and the slogan “owners care.”
“Culture is organic. Culture has to change,” he said. “I think values are enduring and I think the values of this organization … are long-lasting and effectively the culture will revolve around those.”
Sims said he intends to be combative toward the company’s biggest competitor — Air Canada, based in Montreal — not WestJet’s employees.
“I don’t believe in an enemy within,” he added.
Last month, an official with ALPA, which represents about 1,500 WestJet pilots and 500 WestJet Encore pilots, was optimistic the two sides could come to an agreement within a few months.
But Rob McFadyen, chairman of the WestJet unit of ALPA, said Monday the union needs to see progress quickly.
“We still have some very significant issues to address,” he said.
Removing the potential of labour disruption is essential for the company to address its other priorities. WestJet is preparing to launch Swoop, its new ultralow-cost carrier, in June.
Last week, Kelowna-based Flair Airlines announced it will more than double its existing service, including adding flights into WestJet’s home turf of Calgary, starting June 15. Ultra-lowcost carriers such as Flair and Swoop offer deeply discounted fares while travellers pay more for additional service, such as extra legroom and checked luggage.
Sims said Swoop is important to WestJet’s future, helping it stimulate the market and reach out to travellers who cross the U.S. border to take cheap flights from places like Bellingham, Wash., or Buffalo, N.Y.
The company is also continuing its plan for international expansion, acquiring 10 Boeing 787-9 Dreamliners, with delivery of the long-haul aircraft expected between next year and 2021.
It has an option for another 10 Dreamliners, something Sims is confident will happen.
Industry analysts have criticized the company’s dual strategy of going after discount travellers while growing its international business, worrying management may lose focus.
Analyst Chris Murray of AltaCorp Capital said it’s critical the airline reach a deal with the pilots if management wants to concentrate on growth initiatives, such as starting Swoop and adding foreign destinations.
“The immediate challenge could get very tricky if he doesn’t get somewhere with the pilots,” Murray said.
“Mr. Sims has a number of challenges ahead of him.”
Queen’s University fellow George Smith, a former Air Canada chief negotiator, said the magnitude of all of these changes unfolding at once has left employees looking for some security.
“They are all related, in a sense. For the longest time, WestJet wasn’t unionized, prided themselves on this unique relationship with their employees,” he said.
“The international expansion, the prospects of a discount carrier — all of those things contributed to some uncertainty on the behalf of employees.”
Sims is confident of the company’s strategy and focused on its execution, such as Swoop’s first flight taking off June 20.
He has kicked off an initiative to find efficiencies, but said layoffs are not being planned. WestJet is trying to expand business in the province after seeing traffic drop off during the recession, and it’s building up its hub in Calgary for international travellers.
Sims acknowledges big changes are sweeping through the airline industry and the company, but said he wouldn’t want it any other way.
“I’ve never known any other operating environment, and for some reason masochists like myself stay in this industry for exactly that reason — because it sharpens your thinking between the immediate tactical and operational, and the long-term strategic,” he said.
“The ability to just transition back and forth between those two is either intimidating and daunting for some, or exhilarating for others. Fortunately, I’m in the latter camp.”