Westjet to be a global player by 2015

[matrix]

Canadian Press
June 11, 2007
CALGARY (CP) - WestJet Airlines Ltd. (TSX:WJA) is aiming to be a global player by 2015, the president of the Calgary-based no-frills airline said Monday.
"We believe we can be an international player within 10 years," Sean Durfy told shareholders gathered for the carrier's first-ever investor day.
"Our goal is to be one of the top five (international) airlines by 2015."
WestJet, which has been lauded as a Western Canadian success story over its 11 years, recently added flights into the Bahamas which Durfy says have been very profitable.
WestJet, with nearly 5,000 employees, is this country's second-biggest airline after Air Canada (TSX:AC.B), with flights to two dozen destinations across Canada and eight in the United States
The company generated revenues of $1.76 billion and a profit of $114.7 million in 2006.
In trading Monday on the Toronto Stock Exchange, WestJet shares rose 11 cents to $16.03 on a volume of more than 140,000 shares.

[Captain Crunch]

wont happen

[Flaps 1 Billion]

typical avcanada response.....

How do you know it won't????

[Mitch Cronin]

If I was a betting man.... .... and I'd be betting WestJet will do well on the international scene....

[Dockjock]

Well that basically confirms the rumour of their intent to enter into the widebody arena with either 767's or 787's at some point in the near future. Near, near future if that goal is to be achieved. A quick google of the world's biggest airlines yields the following results

1. American Airlines
2. Delta Air Lines
3. Southwest Airlines
4. United Airlines
5. Japan Airlines
6. Northwest Airlines
7. Deutsche Lufthansa
8. Air France
9. All Nippon Airways
10. US Airways
11. Continental Airlines
12. British Airways
13. Qantas Airways
14. Iberia
15. Korean Air
16. Ryanair
17. America West Airlines
18. Air Canada
19. Scandinavian Airlines
20. KLM Royal Dutch Airlines

Of course you can measure "top" 5 airlines by many ways other than passenger volume. Either way big news must surely be on the way...

[invertedattitude]

Id be doubtful they will ever purchase a 767, maybe a wet lease or something.

The 787 would be the ticket.

[Inverted2]

Pass the Koolaid!

[Golden Flyer]

Id be doubtful they will ever purchase a 767, maybe a wet lease or something.

The 787 would be the ticket.

Definetly, I don't see how they'd aim for the 767. I wanna think they'll aim for the 777 & 787. On a seperate note, why the need for espansions? They are already successful w/ the current business strategy. The international market is such an uncertain one. Does anyone have any figures for the top international players (in terms of profit/losses)?

[ei ei owe]

Of course you can measure "top" 5 airlines by many ways other than passenger volume. Either way big news must surely be on the way...

How then? The number of happy owners?

[wallypilot]

On a seperate note, why the need for espansions? They are already successful w/ the current business strategy. The international market is such an uncertain one.

2 words: Shareholder Wealth

If a company isn't growing, share prices don't climb. If share prices don't climb, people don't buy the stocks. If people don't buy the stocks, the company's ability to raise capital for fleet renewal, etc, evaporates. Management of stock price and company value enhancement is the biggest consideration in management strategy.

Also, if shareholder wealth isn't growing, the board comes under scrutiny and people get replaced by folks with strategies to grow the company and enhance shareholder wealth. See a trend here? Nothing really to do with aviation at all. Simple economics of big business.

[McPhoo]

and their in-lies the key problem with our handy dandy capitalist society. We just can't leave a winning formula alone. Growth is forced to a fault. This is why some of the most successfully NET profit companies in the world are private held. Not to rant! Just saying that WJ has it's work cut out if it thinks it can grow to compete with the larger airlines and not have their problems is all

[Dockjock]

Saying they want to be a "top" airline gives a wide band for achieving that goal. Top by passenger complaints, customer satisfaction, profitability, net margin, blah blah blah.
With respect to growth being required to goose the stock price that is true in a certain respect, but WJ will eventually make the transition from growth story to established business. At that point one could expect them to start paying a dividend to shareholders in place of focussing on growth exclusively to fuel shareholder returns.

[Bede]

Just because their is no growth doesn't mean share price stops climbing. If you have a winning formula, but see no growth, you start issuing a dividend. As the dividend increase, so does share price.

[Lommer]

If I'm not mistaken, Westjet has to grow to survive. Wasn't that the final word in all that hubbub about how they accounted for D-checks a while ago? I might be mistaken but there might've been something in their lease structure for aircraft that fit that profile too. Basically it boils down to the accounting methods they use making profits appear higher during growth periods, so if Westjet stops growing their "magical success" could evaporate quite quickly.

[RVR6000]

Old Ladies and New Routes to Spur WestJet Profit
Mon Jun 11, 2007 11:04 PM BST

CALGARY, Alberta (Reuters) - Charging "little old ladies" to carry excess baggage on its planes and adding new routes are some of the ways WestJet Airlines Ltd. (WJA.TO: Quote, Profile , Research) plans to boost its profit, the company's president said on Monday.

WestJet has grown into the largest domestic competitor to Air Canada (ACa.TO: Quote, Profile , Research) since starting up 11 years ago and expects to grow again by nearly half by the end of the decade.

While focusing on increasing its reach and the size of its fleet, the company said other items -- what it calls "ancillary revenues" -- are also becoming increasingly important.

Those items include things like baggage fees, vacation packages, inflight services and other non-fare items, some of which used to be provided free.


"There would be a little old lady coming up and she'd have a table and she'd have a chair and she'd have six or seven bags and we'd say 'Yeah, take it on the plane. No problem'," Sean Durfy, WestJet's president, said in a presentation broadcast over the Internet.

"Now we're actually going to charge a little bit of money for taking that table and chair and those extra bags on board. And that incremental revenue that we extract from that little old lady is very, very profitable to us. Some 85 percent goes to the bottom line."

The Calgary-based airline said last month that the sale of those ancillary items rose 66 percent in the first quarter of this year, to nearly C$23 million ($21.7 million).

Increasing ancillary fees is just one of the ways the airline plans to expand its revenues. WestJet will also add between six and nine aircraft a year to the end of the decade, bringing its fleet of Boeing 737s to 92 by 2010, up from 65 at the end of March

[yycflyguy]

Old Ladies and New Routes to Spur WestJet Profit
Mon Jun 11, 2007 11:04 PM BST

CALGARY, Alberta (Reuters) - Charging "little old ladies" to carry excess baggage on its planes and adding new routes are some of the ways WestJet Airlines Ltd. (WJA.TO: Quote, Profile , Research) plans to boost its profit, the company's president said on Monday.

Those items include things like baggage fees, vacation packages, inflight services and other non-fare items, some of which used to be provided free.

"There would be a little old lady coming up and she'd have a table and she'd have a chair and she'd have six or seven bags and we'd say 'Yeah, take it on the plane. No problem'," Sean Durfy, WestJet's president, said in a presentation broadcast over the Internet.

"Now we're actually going to charge a little bit of money for taking that table and chair and those extra bags on board. And that incremental revenue that we extract from that little old lady is very, very profitable to us. Some 85 percent goes to the bottom line."

While this may hold true, it is not a smart move to make this sort of public statement which may alienate the very customers that helped create the positive situation that the company is in today. Is this the first sign that customer satisfaction will take a back seat to driving up share values?

I guess to be a "major international player" the first step is to forget what made you successful and start with the "nickle and diming" and questionable press releases.

[Legacy]

Well on a pilot's side of things Westjet is hiring approximately 340 pilots between now and the end of 2009!

[KAG]

I guess to be a "major international player" the first step is to forget what made you successful and start with the "nickle and diming" and questionable press releases.

Press releases aside, customer service is made WJ what it is. I can assure they have not forgetten that. What I witnessed working at Jazz pissed me off on a daily basis, (gate agents, CSA, Rampies, no one really giving a shit in general).

Yes WJ has it's hills to climb getting into the international field, then again Big red also has it's hills to climb too.

[YYC-OPS]

I find it difficult to believe WJ will be in top 15 as a Canadian carrier unless they diversify into sub-airlines like Virgin with VS Australia, soon to be VS America etc.

Unless they wipe out AC altogether, I don't see how there can be not one, but two major international carriers both flying primarily in/out of canada with little fifth freedom rights. Short of creating a 'superhub' in Toronto with several feeder flights in from Europe, and several flights onwards to the US, they're going to find a tough time with just inbound/outbound Canada traffic.

Finally - there cost structure is going to change and evolve. Southwest vowed not to get into having wide bodies / long-haul, having seen too many 'low cost' carriers morph like this and then get into real trouble.

[Rudy]

Hey, business is good. Let's expand like crazy! Yeah! Wait.... uh oh. OH NOesss!!@$fjh

[invertedattitude]

While I think charging for extra bag fees and other ancilliary items is a good idea. The way Mr. Durfy presented it was a big mistake IMO.

There's no need to broadcast that sort of thing publically. First of all it alienates a large class of WJA's customer base, and secondly while fairly obvious it sort of gives competitors insight into how WJA is doing so well.

[.......]

[Charging "little old ladies" to carry excess baggage on its planes and adding new routes are some of the ways WestJet Airlines Ltd. (WJA.TO: Quote, Profile , Research) plans to boost its profit, the company's president said on Monday.

While focusing on increasing its reach and the size of its fleet, the company said other items -- what it calls "ancillary revenues" -- are also becoming increasingly important.

Those items include things like baggage fees, vacation packages, inflight services and other non-fare items, some of which used to be provided free.


Increasing ancillary fees is just one of the ways the airline plans to expand its revenues. WestJet will also add between six and nine aircraft a year to the end of the decade, bringing its fleet of Boeing 737s to 92 by 2010, up from 65 at the end of March[/quote]


Welcome to the Ryanair of Canada!!!!

[Golden Flyer]

I find it difficult to believe WJ will be in top 15 as a Canadian carrier unless they diversify into sub-airlines like Virgin with VS Australia, soon to be VS America etc.

YYC, I believe we're on the same page. I just can't see them keeping the low-cost carrier motto w/ such a huge expansion. If anything seperate the international and the current line.

[plhought]

Is it reasonable to assume that WestJet wont expand any larger then the existing Southweest...since that's the business model WJ is essentially based on?

[Ricky Bobby]

Looks like Southwest may do internatonal as well.....

http://www.homeandawaymagazine.com/content.cfm?n=190

Southwest Airlines Still Competitive
Monday - June 11, 2007 - 05:00 AM CT

Never afraid to spurn conventional wisdom, Southwest Airlines is doing it again. While other airlines are reducing domestic seats in response to softening demand, the low-cost carrier is doing the opposite, expanding routes and flights in pursuit of a decades-long growth plan.

But that approach comes with risks and may require executives to begin tweaking a business strategy that has helped revolutionize commercial aviation. Already, there are signs of trouble, some analysts say. Southwest's stock price has been stagnant. Its operating income dipped in the first quarter. Its planes have gotten less crowded. And it has begun losing the benefit of aggressive fuel hedges, which have saved the airline billions of dollars and kept it profitable while other carriers foundered in recent years.

"The current environment is a little tough," said Gary C. Kelly, chief executive. He added, however, that Southwest is "stronger than at any other point in our history."

The carrier's problems may stem from the same strategy that has rewarded the airline with 34 straight years of profit and a balance sheet that other airline executives envy. Last year, Southwest became the largest airline in terms of domestic traffic for the first time in its history.

Since its inception, Southwest has pursued a policy of adding flights, seats and planes to gain market share, even in tough times. While other carriers were reeling from a major economic downturn and slashing their fleets, Southwest has added 120 planes since 2002, bringing the total to 494. It also increased the number of flights by 15 percent and its available seat miles, an industry measure of capacity, by 35 percent from 2002 through the end of last year.

For the most part, Southwest used its growing fleet to serve less-expensive secondary airports near major markets, like Baltimore’s international airport, allowing Southwest to keep down costs and boost efficiency while reaching large numbers of customers.

But its growth, analysts say, has forced it to find airports that it had long avoided or abandoned. Last year, Southwest moved into Denver and Washington Dulles International Airport. In 2004, it launched service in Philadelphia. It also plans to return to San Francisco International Airport in August. Operations at those airports are more difficult for new entrants because the dominant carriers offer more destinations and have the muscle to weather fare decreases on their home turf, analysts said. Congestion at the hubs also can crimp Southwest's plan, which relies heavily on tight schedules and quick turnaround times.

Already, the number of passengers on each Southwest aircraft has fallen. The jets are about 69 percent full on average this year, compared with 71 percent during the corresponding period in 2006.

"This is a bump in the road, not a sinkhole," said Michael Miller, an analyst with the Velocity Group, who said he believes that Southwest will remain a dominant carrier.

Miller and other analysts are particularly interested in Southwest finding new sources of revenue.

Among the ideas: Charging a fee for customers who want an assigned seat to avoid the carrier's cattle-call boarding process, said Ray Neidl, an analyst with Calyon Securities.

It is not known whether Southwest would ever consider such fees or fare hikes. Kelly said he was unlikely to raise fares with his planes growing less crowded. He also said the carrier is reluctant to charge fees for pillows or blankets.

"We don't want to nickel and dime our customers," he said, adding that he was looking for other sources of cash because "we need to generate more revenue per trip."

Southwest is considering expanding travel packages on its Web site to include things such as cruises, he said. And Southwest is investigating whether it can get passengers to pay a fee for wireless Internet connections on its planes.

The biggest change could come in the next two years. Southwest is considering getting into a code-sharing agreement with an international carrier or offering its own overseas flights, Kelly said.

Such a move could help soften a domestic slowdown and boost revenue because international flights are generally more profitable than domestic ones. As for his company's expansion plans and performance in Philadelphia, Denver and Dulles, Kelly said he was optimistic.

"We are famous for being patient in developing our markets," he said.
—Washington Post