Widebody announcement

[13820]

The only way Westjet could get a B787 on short notice (next 12-24) months would be to purchase someone else's planes or as Giles pointed out, through a lease holding company.The only way Westjet could get a B787 on short notice (next 12-24) months would be to purchase someone else's planes or as Giles pointed out, through a lease holding company.

Or strike a smoking deal on 4 of the orphans for a three to four year lease. Then slots to replace. After all half of the gas would be bought in Alberta. I am sure the added fuel burn could be offset in the lease terms and not as hard with cheap fuel.

[dukepoint]

The only way Westjet could get a B787 on short notice (next 12-24) months would be to purchase someone else's planes or as Giles pointed out, through a lease holding company.The only way Westjet could get a B787 on short notice (next 12-24) months would be to purchase someone else's planes or as Giles pointed out, through a lease holding company.

Or strike a smoking deal on 4 of the orphans for a three to four year lease. Then slots to replace. After all half of the gas would be bought in Alberta. I am sure the added fuel burn could be offset in the lease terms and not as hard with cheap fuel.

How many other operators in the world do you think may have considered aquiring the "four orphans", but passed? Answer, nearly every one. There's a reason. Bad idea.

DP.

[mikeecho]

Wj as most wj employees who've been around for a while all tell you it's dead. That doesn't mean we don't do things well it's just we've changed. I wouldn't be too concerned about us faltering just yet...

My point is not "Westjet is dead"............I meant the Westjet that modeled itself after an extremely successful US Airline we know as Southwest is dead. It's morphed into something else. Time will tell if it's sucessful.

DP.

WestJet stopped modelling itself after Southwest more than a decade ago and to this point it has worked out very well.

[dukepoint]

Wj as most wj employees who've been around for a while all tell you it's dead. That doesn't mean we don't do things well it's just we've changed. I wouldn't be too concerned about us faltering just yet...

My point is not "Westjet is dead"............I meant the Westjet that modeled itself after an extremely successful US Airline we know as Southwest is dead. It's morphed into something else. Time will tell if it's sucessful.

DP.

WestJet stopped modelling itself after Southwest more than a decade ago and to this point it has worked out very well.

Yes....to this point. The world of Widebodys is not a cheep one. Multiple aircraft types and multiple crew bases all have built in divisions and costs that have yet to leave their mark. Don't fix it if it ain't broke.

I remember one of the founding members of WJ with the initials BL, comment that up until 32'ish aircraft, WJ was a licence to print money for all involved, after that it was all downhill. At that point WJ should have moved from a growth company to a divided stock company, and stayed at 32 aircraft like he cautioned. Everyone on the property at that point would be a millionaire today. You cannot grow and print new stock forever. When Clive decided WJ would be a "growth company" indefinitely, he sealed it's fate, and he bailed for the most part.

The side effect of being a growth company, is that the plan eventually runs out of steam, and new revenue streams need to be found. I think Westjet is scrambling for new revenue streams.....this Widebody experiment and Encore are but two of them. Another consequence is that it leaves the company vulnerable to upstarts interested in only the gravy.

But good luck anyway, like I said, Canada needs two healthy airlines.


DP.

[Realitychex]

My point is not "Westjet is dead"............I meant the Westjet that modeled itself after an extremely successful US Airline we know as Southwest is dead. It's morphed into something else. Time will tell if it's sucessful.

DP.[/quote]WestJet stopped modelling itself after Southwest more than a decade ago and to this point it has worked out very well.

Yes....to this point. The world of Widebodys is not a cheep one. Multiple aircraft types and multiple crew bases all have built in divisions and costs that have yet to leave their mark. Don't fix it if it ain't broke.

I remember one of the founding members of WJ with the initials BL, comment that up until 32'ish aircraft, WJ was a licence to print money for all involved, after that it was all downhill. At that point WJ should have moved from a growth company to a divided stock company, and stayed at 32 aircraft like he cautioned. Everyone on the property at that point would be a millionaire today. You cannot grow and print new stock forever. When Clive decided WJ would be a "growth company" indefinitely, he sealed it's fate, and he bailed for the most part.

The side effect of being a growth company, is that the plan eventually runs out of steam, and new revenue streams need to be found. I think Westjet is scrambling for new revenue streams.....this Widebody experiment and Encore are but two of them. Another consequence is that it leaves the company vulnerable to upstarts interested in only the gravy.

But good luck anyway, like I said, Canada needs two healthy airlines.


DP.[/quote]

There's definitely some scrambling going on, but it's not at WJ.

Things are unfolding pretty much according to plan as far as I can see. Some might suggest Encore's growth velocity is a little "Neelemanesque", but then again, Encore isn't challenged with building a brand, as was the case in every market WJ expanded into over the first decade of heavy lifting.

There were high level conversations 10+ years ago to the effect that WJ should ultimately evolve into an airline with 3 aircraft types, a 75 seat highly efficient turboprop, the 737 family and a 250-275 highly efficient long haul jet. If individual markets didn't fit any of those 3 types, fuhgetaboutit. The list of airlines that have been successful trying to operate, whether themselves or by proxies, aircraft ranging from 19 to 500 seats is not very long.

Circumstances may delay the implementation of the 3rd phase, which I personally believe will ultimately be a 787 variant, but it's not as if WJ and others haven't had success operating low capital cost equipment head to head against the latest and greatest equipment in the past. In the initial stages of the WB roll out, it may be advantageous to not have to fly aircraft 17 hours a day, 7 days a week to be profitable.

I find it intriguing that when it is all rolled out, the product and service expectations across the WJ network will be consistent, just like McDonalds. Unless there is a change of strategy, that will not be the case at the other network sched carrier in Canada. I personally believe that is a mistake and will ultimately have to be corrected, one way or another.

The fact the peanut gallery is, once again, forecasting an impending apocalypse at WJ is as sure a sign that the strategy is sound as I can imagine.

It's pretty clear that Southwest's stubborn unwillingness to evolve is severely hurting its position in the marketplace. They remain a force to be reckoned with, but could have been so much more had they taken a few chances. Even today, SWA does not operate red eyes....

As has been correctly pointed out by others, WestJet has been steadily moving away from the generic SW model for years. Aside from some very basic similarities, strategically, SW and WJ were chalk and cheese from day 1. That was by design, not by accident.

To begin with, SW has always been a high frequency operator on high density routes. They would never even begin to contemplate the lower frequency operation WJ rolled out over the first decade and it continues even today.

Jetsgo tried that high frequency strategy out and it didn't work out so well. Porter is struggling to make a go of it, even with the advantage of a monopoly position at the downtown airport at the epicenter of, far and away Canada's largest single aviation market.

Had WJ copied the SW strategy, we would have started with 8x daily on each of the western Triangle routes.

I doubt WJ would be around today had that plan been implemented.

[mbav8r]

but it's not as if WJ and others haven't had success operating low capital cost equipment head to head against the latest and greatest equipment in the past

Would you agree that is partly because the captains worked for 55.00/hr at start up. Not the case this time around, or is it?

[Realitychex]

I don't think you'll find too many of those early guys complaining about their lot in life these days.

When one adds up their total earnings over the first 7 or so years, the total probably matched those of the most senior wide body guys in Canada.

[mbav8r]

Same old, same old sad justification for digging a big hole under the bar and crawling in it.
There is no difference in my mind between what they did and every CEO who squeezes employess wages so they can pad their bank account. There was no regard for anyone else in the industry, just greedy pigs.
So, Realitychex, what's the answer, will you undercut Rouge and Transat pay scales to have that same cost advantage this time around? A seperate AOC perhaps with those same greedy pigs willing to screw over all other pilots and work for Jazz wages on a heavy or maybe Encore Wages?
Otherwise, will you be able to compete on a level field, your cost creep is getting out of control, time for an "experiment" maybe?

[No Quarter]

Try milk in your corn flakes next time eh?

[Bede]

mbav8r,

Remind me again what Jazz was paying 757 guys? Hello Pot... Yes, yes, I know how the status pay system worked, you can spare us the explanation.

I am willing to be that once the WB scales are public, they will be about twice what a Jazz 757 captain earned.

Anyways, I've got an idea- how about we stop getting into these endless pissing matches about who lowered the bar in the past/who is lowering the bar now/who will be lowering the bar in the future.

[bcflyer]

Let's just end the debate right now. It's been said in this thread that there is already a WB pay scale. Publish it and we can decide for ourselves if it's competitive.

[bmc]

I think, more importantly, who ever has the biggest dick, should be the one gaining the most respect in this thread. I think we're close to finding that out.

[complexintentions]

Would you agree that is partly because the captains worked for 55.00/hr at start up. Not the case this time around, or is it?

I don't think you'll find too many of those early guys complaining about their lot in life these days.

When one adds up their total earnings over the first 7 or so years, the total probably matched those of the most senior wide body guys in Canada.

Uh...Realitychex...you missed his point and helped to reinforce it instead. Nice one.

If the most senior guys making the biggest wages - y'know, the ones "matching the most senior wide body guys in Canada" - are most likely to be the ones crewing a new WB operation, what exactly is the cost advantage? It certainly won't be in the scale of the operation, with four hulls.

The point mbav8r was making is that it would be a startup with exponentially higher costs than a comparable narrow body or turboprop op, without the advantage of startup wages. It wasn't a jab at WS compensation, don't be so sensitive.

No one is predicting an apocalypse, but only a complete fool would argue that a WB operation doesn't have more inherent financial risk than anything ever undertaken by the company before. The capital and operating costs are an order of magnitude greater.

I reiterate that I will happily offer my services for a oh, I dunno, 80% of a current senior 737 wage to crew a new WB operation. And there is a big list of similarly willing and qualified folks for whom money is not the primary motivation. Hey, it could be a new business model - repatriate highly experienced labour for a massive cost advantage!

Think of the multiple advantages:

-lower wages more in line with a startup operation - just like Encore.
-heavily reduced training costs for the direct hires, since already typed and current. Direct hires - also a precedent at Encore.
-huge cost savings of not having to train a mainline pilot PLUS their replacement. Look how well that's worked for Encore! Can you imagine what it would have costed to re-train mainline pilots for Encore? Luckily, the mainline guys weren't rushing to move over!

And unlike the Sunwing/CanJet scam, I at least have a Canadian passport.

Seems to me it would be a business plan worth a look. I mean, anything that would increase shareholder value is good, right?

[Realitychex]

Suffice it is to say that it would be an exercise in futility entering a niche without a very significant unit cost and / or market advantage over the incumbent operators and expecting it to result in profitability.

It's the relentless focus on the pennies that save the dollars.

WJ isn't going to bother with the niche unless it can achieve the cost structure necessary to have the competitive advantage it requires to be successful. The guys on the BoD, at least the guys I know on the BoD, completely, utterly get that, which is why I spend little time worrying about WJ's strategic direction.

The issue becomes executing the plan. I freely admit I was concerned that after a couple of previous large execution misadventures, that WJ might stumble with the launch of Encore. After a year, those concerns are no longer there. I am considerably less concerned at the prospect of WJ taking some 737's on steroids and flying them on 8-10 hr sectors vs the current longest sector of, on a windy day call it 7 hrs.

Virtually anyone can launch and airline and fill seats. That is not a measure of success.

Filling seats and producing the sorts of margins the elite airlines based in North America do on an annual basis is the benchmark that counts.

Making money six months a year and then giving most of it back the other six is not a good way to run a business that is painfully cyclical, (and we're in a good part of the cycle at this time. It won't last forever. Then what?)

There are countless examples of airlines that have tried this and the results speak for themselves. A few years of reasonable profitability followed by a meltdown. The good six months turn into "ok" six months, the bad six months turn into "horrible" six months, the wheels fall off and then we see the inevitable "restructuring" press release.

It's like clockwork and history tends to repeat itself.

[yycflyguy]

So, Realitychex, what's the answer, will you undercut Rouge and Transat pay scales to have that same cost advantage this time around?

You shouldn't be comparing the WB rates to rouge or Transat. Westjet is a mainline operation. The rates should be compared to other international WB mainline operators such as AC, Continental, Delta, Lufthansa, Cathay etc... otherwise, yes, the bar is being lowered.

[True North]

So, Realitychex, what's the answer, will you undercut Rouge and Transat pay scales to have that same cost advantage this time around?

You shouldn't be comparing the WB rates to rouge or Transat. Westjet is a mainline operation. The rates should be compared to other international WB mainline operators such as AC, Continental, Delta, Lufthansa, Cathay etc... otherwise, yes, the bar is being lowered.

No, an astute business person (read not a pilot) would compare wages with the direct competion.

[yycflyguy]

So, Realitychex, what's the answer, will you undercut Rouge and Transat pay scales to have that same cost advantage this time around?

You shouldn't be comparing the WB rates to rouge or Transat. Westjet is a mainline operation. The rates should be compared to other international WB mainline operators such as AC, Continental, Delta, Lufthansa, Cathay etc... otherwise, yes, the bar is being lowered.

No, an astute business person (read not a pilot) would compare wages with the direct competion.

As a pilot, I am ONLY concerned with compensation set by those, so-called, astute business people. Pilot compensation is around 4% total CASM at AC. Pilots do not make or break profitability. Pilots pointing out discounted wages for comparison is flawed. Do you think other professions approach their compensation in this manner?

[Donald]

As a pilot, I am ONLY concerned with compensation set by those, so-called, astute business people. Pilot compensation is around 4% total CASM at AC. Pilots do not make or break profitability. Pilots pointing out discounted wages for comparison is flawed. Do you think other professions approach their compensation in this manner?

Remind me again why it was so important for the Encore pilots to be paid competition -10% and given 1/2 ESOP?

[True North]

As a pilot, I am ONLY concerned with compensation set by those, so-called, astute business people. Pilot compensation is around 4% total CASM at AC. Pilots do not make or break profitability. Pilots pointing out discounted wages for comparison is flawed. Do you think other professions approach their compensation in this manner?

What a classically myopic pilot viewpoint.

So, pilots account for 4% of CASM, hence a 5% or even 10% raise is inconsequencial. Except that when the pilots get their raise, every other employee asks where theirs is too so your 4% all of a sudden is 20% or more.

But it's okay, I understand you are only concerned about yourself, not the health of the company that pays you.

[yycflyguy]

It's not myopic at all. In fact, my comment is more on a macro scale than yours. By using the wrong comparator groups you are lowering the WAWCON for all Canadian pilots and lowering the industry standard. Using the "health" of your airline (cash in hand) Westjet can afford, and should be paying, their mainline WB crews AC mainline rates... at a minimum! Take a look at what Delta just negotiated. When your single most expense cost is fuel, shouldn't you be paying the fuel operator (pilot) a premium? Especially on medium to long haul operations.

Pilots do not make or break an airline. The previous business model that Westjet was modelled, no make that copied from, Southwest pays their pilots the best in that category of aircraft. Why is that? Because pilot salaries do not make or break and airline. Take a look at Lufthansa and their operating revenue versus pilot compensation. Same with Air France.

Pilots should not concern themselves with what non-skilled labour (which can be replaced quickly, easily trained for lower cost) wants. You have a licence in your pocket. Same as the maintenance and dispatchers. THAT is what separates you from non-skilled groups. You think Lawyers concern themselves in compensation with the firm because para-legals will want a similar raise? Same analogy applies to Doctors. Once again, you have a licence in your pocket. Others do not.

If you truly concerned about your airline sustainability, why are there so many manager? Why are you deviating from what was successful? Why is management creating three pilot groups and three different WAWCONs under the same banner? Your group will be whipsawed in years to come. Count on it.

If you want to be an international airline, you best start comparing yourself to right groups.

I'm glad I struck a nerve because you know it might be true. Look at how the big boys compensate WB crews and then look at what is being offered and ask yourself: Is this lowering an industry standard?