GREGG SARETSKY

AN MBA HELPED FOCUS HIS CAREER PATH AND NOW HE’ S FOCUSING HIS COMPANY ON STAYING ON THE RIGHT FLIGHT PATH BY KRISTINEOWRAM

WestJet Airlines Ltd. celebrates its 20 th birthday this year so the company couldn’ t be faulted for feeling a little smug that it has succeeded where so many others have failed. Starting a new airline in Canada is a high-risk venture that almost always ends in defeat—remember Canada 3000 and Roots Air ?— due to the high costs of operating ina big, sparse ly populated country with incumbents who will do whatever it takes to squeeze new players out of the market.

But West Jet had the luck to launch just before Canadian Airlines got into trouble, taking advantage of the resulting turmoil to carve out a niche for itself as a scrappy, low-cost western startup. The precariousness of those early days is hard to imagine no was West Jet embarks on an ambitious expansion plan that includes its first transatlantic flights and a new regional carrier, Encore. However, the airline industry is notoriously cyclic al and the good times never last forever. This year is shaping up to bea challenging one as a sputtering economy, particularly in West Jet’ s home market of Alberta, combines with a weak Canadian dollar to put pressure on travel demand.

WestJet CEO and president Gregg Saretsky says about 25% of the airline’ s capacity originates in Alberta, which is struggling with an oil-prices lump that shows no signs of abating .“Who knows exactly where we are in that cycle, but it doesn’ t feel like we’re at the bottom yet,” he says. “I think things are going to get a lot worse in Alberta before they get better, and we’ re sort of sitting herein the epicentre of a storm .”

Shares of both major Canadian airlines have taken a beating in recent months following two spectacular years of returns, largely over concerns that they’ re adding too much capacity in a weakening market. But jet fuel prices have plunged alongside crude oil prices, allowing the airlines to keep costs down. According to amid-January analysis from National Bank, fuel costs the airlines 43% less today than it did in 2014. Nevertheless, investors seem to be

assuming that 2016 will be as difficult for the airline as 2009 was, which is excessive. “The market’s baseline assumption seems to be that WestJet (and Air Canada) management will not act rationally should travel demand weaken significantly,” says National Bank analyst Cameron Doerksen. “In fact, the assumption appears to be that both airlines will self-destructively continue to add capacity, driving down pricing and profitability severely. We do not share this view .”

Neither does S are ts ky, who insists that West Jet will not blindly add capacity if the economy continues to deteriorate, despite its stated plans to increase available seat miles by 8% to 11% this year. “We’ve worked for 20 years to get our investment-grade credit and we’re certainly not going to sacrifice that for the sake of keeping planes flying ,” he says .“But I think there’ s enough strength in other geographies in Canada, in North America, that we can find homes for these aircraft .”

Saretsky is targeting a return on invested capital of 13% to 16%, and says he will evaluate every route through that lens .“We will continue to be opportunistic, to make sure that we’ re serving the demand that is available to us in the market, keeping a strong market presence but ensuring that we continue to do that at a profit .” So far, it seems to be working. West Jet has reported a stream of record quarterly earnings and return on invested capital, and load factors have remained relatively steady despite strong capacity growth. Now it’s up to West Jet to prove to investors that it has the discipline to keep generating strong earnings in a weak environment.

CLASS OF ‘84 UNIVERSITY OF BRITISH COLUMBIA

FP What made you decide to get an MBA?

GS It was important tome because my career path was following a bit of a winding road. I wasn’t exactly sure what I wanted to do in life, and getting an MBA provided a great foundation of general management skills. When I look back on that, I think getting that MBA was great training in a variety of business disciplines; it gave mean appreciation for many aspects of business and developed a curiosity to dig more where I needed.

FP What were you doing before you decided to get your MBA?

GS I actually thought I was heading to medical school. I wrote the MCAT and got accepted, but decided just before going into start my first year that I wasn’ t really sure that I had the calling to be a doctor, and thought perhaps a business degree would be better. So I quickly wrote my GM AT and I did my MBA.

FP What was your career goal? GS I don’ t know that I had a career goal because when I graduated I went into banking. I spent time in commercial banking and I thought, gee, this would be a great career. But after a couple years I thought, I’ m not sure that I’ m cut out to bea banker. People say ,‘ How the heck did you end up in the airline business when you had an undergraduate degree in science, thought you were going to medical school, did an MBA, and went into banking?’ Well, I ended up starting

WHENYOU FOLLOW YOUR PASSION, YOU LANDINA PLACEWHERE YOU LOVE THE WORK THAT YOU DO

in the finance side of the airline business, and then I moved from pillar to post inside as opportunities presented themselves. Did I know where I wanted to go? Not really, but, as I tell many people, many parents, who ask what advice would I give my children, just follow your passions and, ultimately, when you follow your passion, you land in a place where you love the work that you do and, as a result, you do well at what you do. Q Why did you choose Sauder?

A It’s at UBC, and UBC is one of the top 35 public universities in the world. Sauder has a great international reputation. Being on the West Coast, it has a great perspective on the Asia-Pacific region… and, frankly, for the last decade and the next many to come, it’ s going to be a Pacific Rim kind of economy, so studying at Sauder had advantages because of the focus it has on Asia-Pacific. I also liked that it was more practical than theoretical, they use the case-study methodology, and that’s a lot more interesting way to learn than reading textbooks.

F PW hat was the most important thing you got out of your degree?

GS The case-study methodology, which really forces students into collaboration and teamwork. Our small teams were really allowed — each of us, each member — to participate or contribute according to his or her strengths. I liked that a lot. I think what it taught me is that we all contribute differently, not necessarily one more than the other, but differently. So there’s a respect for the diversity of thought that comes from working in teams that I learned during my MBA.

F PW hat was the biggest challenge you had too vercome?

GS It’s heavy on coursework so there’s always that sense of being overwhelmed, especially in the first year when you’re studying all kinds of things that you hadn’t studied before. I have a science background, so very quantitative, and that aspect of my education helped me in the quant side of the MBA. I was good at statistics, I was good at math, so I had no problems there. But because my focus had been on sciences, some of the soft er life skills were areas where there was more of a stretch because I hadn’ t been exposed to that.

Q What advice do you have for someone who’ s thinking of doing an MBA?

A Make sure you’re doing it for the right reason, be prepared to work hard, learn as much possible and develop a lifelong relationship with learning. For me, doing the MBA taught me just as much about how to learn as about mastering the subjects that I was taking. Having a natural curiosity and looking always to solve interesting problems are great things that come from studying an MBA.