WestJet needs deal with pilots before fleet expansion
CALGARY Demand for WestJet’s new London-Gatwick flight is strong, CEO Gregg Saretsky said Tuesday, but the Calgary-based carrier will need to strike a deal with its pilots before it can realize any new international ambitions and expand its wide-body fleet.
On a conference call with analysts, Saretsky said traffic on the London route has exceeded expectations since its launch in May, something that “bodes well” for future expansion of the company’s wide-body plans.
“We like the early day returns that we’re seeing. It gives us a lot of encouragement about doing more of that,” he said.
But Saretsky acknowledged the existing contract between WestJet and its pilots limits the carrier to the four wide-body Boeing 767s it currently operates, and that if it were to expand, it would require a new round of salary negotiations. He added the current deal was reached when the wide-body service was being pitched as an “experiment,” and if it became more than that, pilots would likely have a different set of demands.
“So we’re in this waltz now around what might this look like? … It has to continue to provide economics that would make it in our best interest to expand that fleet. If we can’t come to terms on what those economics look like, then there will be no expansion of that fleet,” Saretsky said.
Saretsky’s comments came the same day the company reported secondquarter earnings of $36.7 million, down 40 per cent year-over-year. Though the airline flew a record number of guests and saw its revenues tick upwards by 0.8 per cent, its costs per available seat mile also increased by seven per cent.
Saretsky acknowledged that the “hiccups” encountered in the early days of the London- Gatwick route were costly for the airline. Mechanical difficulties with the 767s contributed to a 36-per-cent increase in maintenance costs in the second quarter, and forced flight cancellations and several delays in the month of June.
Saretsky said the early troubles encountered on the route were a “blip,” and added the London- Gatwick service is already profitable after just three months of operation.
But Chris Murray of AltaCorp Capital Inc. said many analysts still have concerns. He said long-haul international flying is a “different animal” that will require WestJet to tackle all kinds of different issues.