WestJet’s London gaffes incur high costs

able seat mile, excluding fuel and employee profit share, to rise 2.5 to 3.5 per cent. This is above the previous forecast of 0.5 to 2.5 per cent due to “guest experience costs” and maintenance expenses associated with the London routes, said chief financial officer Harry Taylor.

WestJet blamed the problems on delays in getting the aircraft from the maintenance facility where they were being overhauled. This gave the airline less time than usual for the shakedown process, testing that’s done to make sure there are no problems or defects before the aircraft enter service.

Ho w e v e r, Saretsky stressed that the problems, which he characterized as “teething pains,” seem to be behind WestJet. The airline completed all of its transatlantic flights in the first 25 days of July.

“The guidance we gave when we announced service with wide-body aircraft to London was that we expected the operation to be accretive to earnings. That continues to be our expectation,” he said. “We’ve been very pleasantly surprised by the very robust demand that we’ve seen.”

He added that the London flights have been operating with above-average load factors, which “bodes well for future potential expansion of this new line of business.”

WestJet’s profit plunged 40.5 per cent to $36.7 million in the second quarter as lower fares and higher costs weighed on the airline’s bottom line. Earnings per share came in at 30 cents, one penny above analyst expectations, while revenue rose 0.8 per cent to $949.3 million.

Sare tsky blamed economic weakness in Alberta and Saskatchewan for the lower profit but said the airline’s “fundamentals remain strong.”

Load factor — the percentage of seats filled across the network — rose 2.7 points to 80.8 per cent, but yield — the average fare paid per mile, per passenger — fell 8.9 per cent. This led to an overall decline in revenue per available seat mile of 5.8 per cent, while cost per available seat mile excluding fuel and employee profit share rose seven per cent.

WestJet announced Monday that it will add dozens of new flights to its network this winter. The airline is facing new competition from NewLeaf Travel Co. Inc., a discount travel company that launched its first flights this week, although Saretsky dismissed the threat.

“Canada is a very sparsely populated country and this space that NewLeaf is competing in is a boneyard,” he said. “Just go back and think about Je tsgo and Greyhound Air and Roots Air (all failed airlines) — none of them made it. It’s a difficult space and we’re going to continue to protect our franchise.”