More WestJet seat sales as profits drop
Last Updated: Wednesday, November 4, 2009 | 3:34 PM ET
The Canadian Press
WestJet reported profits of $31.4 million, or 24 cents per share, down from $57.9 million, or 45 cents, in last year's third quarter. (Canadian Press)WestJet Airlines Inc. is offering a lot more seat sales to travellers than it has in the past as recession-weary consumers scrutinize every dollar they spend, says the chief executive of the Calgary-based carrier.
"We have felt over this recession how discretionary the buying of an airline ticket really is," Sean Durfy told analysts on a conference call to discuss his company's third-quarter results.
WestJet reported profits of $31.4 million, or 24 cents per share, down from $57.9 million, or 45 cents, in last year's third quarter. Revenue fell to $600.6 million from $718.4 million. Analysts polled by Thomson Reuters were, on average, expecting earnings per share of 27 cents and revenues of $603 million.
WestJet and its chief rival, Air Canada, have been vying for customers by aggressively pricing their fares, a factor Durfy said had led his company to post lower third-quarter revenues.
"It is intensely competitive in this marketplace," he said.
On Tuesday, WestJet added a twice-weekly flight to Ixtapa/Zihuatanejo, Mexico, bringing the number of cities it now travels to in that country to six. The airline also recently introduced several other routes to various Caribbean holiday destinations.
Website crashes with new reservation system
Last month, WestJet overhauled its reservation system, which in its initial few days caused headaches for some travellers. The airline's website crashed, and its call centre was overwhelmed with an onslaught of callers.
"That won't happen again. These are one-time events," said Durfy.
WestJet chose to install a new reservation system, called SabreSonic, to pave the way for code-share agreements with a number of other airlines worldwide. Code sharing means a traveller can transfer from one airline to another seamlessly, which essentially gives WestJet access to markets around the world.
WestJet is working with Texas-based Southwest Airlines on bringing their code-share agreement into effect, though the timing is uncertain, said executive vice-president Hugh Dunleavy.
Interline pacts, which lay the ground work for code-shares, with Air France and Dutch carrier KLM are working out well so far. Next month, WestJet plans to increase the number of Canadian cities that can connect to those European airlines.
"Look forward to 2010 with three or four additional announcements in terms of partnerships being put into production at WestJet," said Dunleavy, without disclosing which other airlines are involved.
For October, WestJet's load factor increased to 77.3 per cent, up 1.5 percentage points from the year-earlier period. For the July-September quarter, WestJet's load factor was down 1.7 points at 79.7 per cent from 81.4 per cent in 2008.
Shares in the airline were 14 cents higher at $11.23 in afternoon trading on the Toronto Stock Exchange.
