INTO THIN AIR
Alberta weakness takes its toll on WestJet profits, carrier says,
WestJet Airlines says its first-quarter profits were hit by economic weakness, especially in its home base of Alberta, but believes things are starting to turn around.
The airline has made adjustments to its flight network, moving some routes out of Western Canada and Newfoundland, which have been struggling with the steep drop in oil prices, into places like Toronto and elsewhere in Ontario.
“All things considered, we feel better (than three months ago),” said Bob Cummings, executive vicepresident commercial, during a conference call Tuesday with analysts, pointing to a “little bit of creep in oil prices.
“Alberta is getting to a healthier place. The sentiment, I will say, is changing,” he said, though he wouldn’t say “whether we have the bottom or not.”
The Calgary-based company reported an $87.6-million profit, or 71 cents per diluted share, in the first quarter. That was down substantially from a year earlier, when it had a record profit of $140.7 million.
Revenue for the quarter was $1.03 billion, including $145.2 million from additional fees and other nonticket sources, down almost 5 per cent from a year earlier, with $1.08 billion in revenue.
The airline has said it had to cut fares on some routes to get passengers to purchase seats.
WestJet president and CEO Gregg Saretsky repeated that company’s business fundamentals remain strong, with wide-body flying to London’s Gatwick Airport starting this week.
He noted that international bookings are strong, with the planes expected to be very full, similar to its routes to Dublin and Glasgow.
The airline says it expects to benefit on partnerships with other carriers including a new deal with Emirates. WestJet expects the Gatwick route to be profitable this year.
Saretsky added that the airline has made other adjustments, deferring delivery of three Boeing 737 aircraft and returning one aircraft lease in April, while considering the option to return more if needed.
The airline is also close to an agreement for a charter program, with details to be announced in a few weeks.
Robert Kokonis, president of AirTrav Inc., said it makes sense to reduce scheduled flying if it’s not needed, and looking to do some regular charter flying.
“The key is fly your assets as often as possible at the highest price possible,” he said. “That’s a good thing.”
WestJet’s chief financial officer Harry Taylor said revenue for extra fees, including preassigned seating to checked bags, grew almost 15 per cent in the first quarter.
Taylor said it was $95.4 million in the quarter, or $18.05 per passenger, the highest ever, with much of the additional growth credited to checked-bag fees, which were also introduced on international flights in 2016.
At WestJet’s annual meeting in Calgary on Tuesday, Emma Pullman of the activist group SumOfUs, asked Saretsky about whether he would commit to releasing the framework for an investigation into how the airline deals with allegations of sexual assault.
The probe comes after Mandalena Lewis, a former WestJet flight attendant filed a lawsuit in March, claiming that the airline failed to investigate or respond to her report of a sexual assault by a WestJet pilot.
Saretsky noted that a team from Ernst & Young, who were at the meeting, has been hired to review WestJet’s investigative reporting procedures.
“We will not be releasing the terms of the engagement,” he said.
“More important is what we are doing to make sure we have a safe and harassment-free workplace.