WestJet delays launch of discount airline until 2018

WestJet says the launch of its new no-frills, low-cost airline won't be until next summer after initially announcing plans it would start offering flights later this year.

Original plan had been to start discount airline this year

WestJet has delayed the launch of its no-frills airline until next year. (Albert Couillard/CBC)

WestJet says the launch of its new no-frills, low-cost airline won't be until next summer after initially announcing plans it would start offering flights later this year.

The delay comes in part after the airline decided to switch to a lower-cost booking system, CEO Gregg Saretsky said Tuesday as the company posted its second-quarter results.

"That adds a little bit of timeline to it, in terms of negotiating of an agreement, and then the physical implementation of all the plumbing that's required to support it. And we're taking our time to get it right."

He said WestJet also doesn't expect to get regulatory certificates until the first quarter of next year, which is when the airline aims to release an initial flight schedule and start selling tickets ahead of a June launch date for flights.

Saretsky said the delay means the company can use the quieter spring season to reconfigure the 10 Boeing 737s that it will be shifting over to the new carrier.

"They would have to have been done over the Christmas holiday period to be available for flying revenue service in January, and we'd rather not take that hit to capacity during a very strong time of year," he said.

Unionization push

The service will be separate from WestJet, with a new head-office staff moving to an independent location early next year. The new airline will also be separate from the various stages of union efforts underway at WestJet itself.

The company will start contract negotiations with the Air Line Pilots Association, International in September, after WestJet pilots voted in May to join the union. Five other unions are also campaigning to represent other WestJet employees.

"We're the largest non-organized enterprise in the country, a very attractive target, but ultimately it will be up to WestJetters to decide," Saretsky said.

He said he expects the pilot negotiations to be a lengthy process, noting that pilots at JetBlue Airways in the U.S. has gone four years without a first agreement. He did not see any impact on the company this year or next from the unionization of the pilots.

The union drives come as the company is moving ahead with its planned international expansion on larger planes, with Saretsky noting the potential of the Chinese market, and overall improved profitability at the airline.

In the quarter ending June 30, WestJet earned $48.4 million, or 41 cents per share, compared with $36.7 million or 30 cents per share in the same quarter last year.

WestJet's results were better than analysts expected, helping send the company's share price up 95 cents, or 3.84 per cent, to $25.81.

The airline's load factor, a closely watched metric of how full the company's planes are, rose to 82.8 per cent during the quarter.

WestJet said it expects to benefit from a resurgent economy in its home province of Alberta. "Alberta-based revenue was up 10 per cent, year over year," CEO Gregg Saretsky said. "It really bodes well for WestJet."

The airline did say, however, that it's paying more for jet fuel than it used to. The average cost of a barrel of jet fuel rose to $61 during the quarter. A year earlier, the airline paid on average $57 for a barrel of fuel.

With files from CBC News


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