WestJet profit hit by en­ergy down­turn

The Hamilton Spectator - - CANADA & WORLD - IAN BICKIS

CAL­GARY — Canada’s sec­ond­largest air­line saw its profit take a hit in the sec­ond quar­ter as it con­tin­ued to feel the pinch from the en­ergy down­turn and had a rocky start to its new U.K. route.

WestJet Air­lines re­ported earn­ings of $36.7 mil­lion for the months of April through June, a 40 per cent drop from the $61.6 mil­lion it had in net in­come for the same stretch last year.

The Cal­gary-based air­line said there was con­tin­ued down­ward pres­sure on its fares as a re­sult of the se­vere eco­nomic down­turn in the en­ergy sec­tor in Al­berta and Saskatchewan, con­tribut­ing to a de­cline in its op­er­at­ing mar­gin to 6.5 per cent from 10.7 per cent last year.

Costs were also up be­cause of early stum­bles on its new desti­na­tion to Lon­don’s Gatwick Air­port as the com­pany dealt with flight de­lays and can­cel­la­tions due to is­sues with the used Boe­ing 767 air­craft it added to its fleet for the route.

CEO Gregg Saret­sky said on a con­fer­ence call Tues­day that the prob­lems were height­ened be­cause the air­craft was de­liv­ered 55 days late.

But he said the “early teething pains” are be­ing worked out and the route has op­er­ated at a 100 per cent com­ple­tion rate so far this month.

“It was a blip and the blip is be­hind us, knock on wood,” said Saret­sky.

Rev­enue for the com­pany edged up slightly to $949.3 mil­lion from $942.0 mil­lion last year, de­spite con­tin­ued weak­ness in Al­berta and Saskatchewan, as the com­pany con­tin­ued to di­ver­sify its route of­fer­ings away from the two mar­kets.

On Mon­day, WestJet an­nounced its win­ter sched­ule that in­cludes more flights to trop­i­cal des­ti­na­tions, while in June the com­pany added non-stop flights be­tween Kelowna, B.C., and Win­nipeg and be­tween Hamil­ton and Ed­mon­ton.

Those ci­ties are the same main flight hubs of NewLeaf, the low­cost air travel com­pany that launched its maiden flight on Mon­day af­ter months of de­lays.

WestJet ex­ec­u­tive vice-pres­i­dent Bob Cum­mings said on the call Tues­day that they aren’t threat­ened by NewLeaf since it’s op­er­at­ing so few air­crafts and WestJet has com­pet­i­tive ad­van­tages. But he said they’re keep­ing an eye on it.

Saret­sky said the new en­trant was en­ter­ing a tough mar­ket.

“Canada is a very sparsely pop­u­lated coun­try, and this space that NewLeaf is com­pet­ing in is a bone­yard,” said Saret­sky.

“Just go back and think about Jet­sGo and Grey­hound Air and Roots Air. None of them made it. It’s a dif­fi­cult space, and we’re go­ing to con­tinue to pro­tect our fran­chise.”

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.