WestJet Delays some 737 max 8 deliveries

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Longtimer
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WestJet Delays some 737 max 8 deliveries

Post by Longtimer »

Canadian Aviation News

‎Today, ‎November ‎4, ‎2018, ‏‎29 minutes ago








Canada’s WestJet to defer four 737 MAX 8 deliveries on domestic overcapacity



‎Today, ‎November ‎4, ‎2018, ‏‎2 hours ago | Peter Muir


31 October 2018 – Air Transport World
Sean Broderick sean.broderick@aviationweek.com

Overcapacity in the increasingly competitive Canadian domestic market has led WestJet to defer four Boeing 737 MAX 8s scheduled for delivery next year. However, the Calgary-based carrier continues to see opportunities internationally and announced it would redeploy one of its Boeing 767s on a new transatlantic route after taking its first 787s.

“It is clear, we were long on domestic capacity,” WestJet president Ed Sims said. “I think the industry is long on domestic capacity across the length and breadth of Canada. We’ve looked at our domestic footprint; we’ve taken that opportunity to really concentrate our capacity into our hubs and our most profitable feeders and spokes of that hub.”

The 737-8 deliveries will now be split between 2020 and 2021, WestJet revealed Oct. 30. The carrier also extended leases on two 737-700s and two 737-800s set to expire next year and agreed to lease two 737-8s that will arrive next year.

“The [deferral] decision was based on our assessment of both the economic and competitive environment for next year,” CFO Harry Taylor said. “Obviously, this year has not turned out the way we expected or wanted it to, and we wanted to be proactive to support unit revenues and margin expansion and reduce our capacity growth to much lower levels in order to improve unit revenues and margin.”

WestJet is aggressive about mixing leased and owned aircraft to maintain capacity flexibility. The airline ended the third quarter with 174 aircraft, and is set up to have between 193 and 223 at the end of 2027, depending on what it does with expiring leases.

WestJet, which saw earnings from operations fall 70% year-over-year through the first three quarters, is slowing growth and aggressively cutting costs. The carrier pulled about 6% out of its planned fourth-quarter growth and will end the year with a 5.5%-6.5% increase in available seat miles, including 4%-5% domestically.

Next year’s growth will be 6.5%-8.5%, but almost all of this is its new international flying on three new 787-9s and the ramp-up of ULCC subsidiary Swoop. WestJet will launch international 787 services on April 28 with a fleet of three aircraft. ULCC Swoop, which operates six aircraft, will be up to 10 by year-end. Domestic capacity is projected to be up only 1%-3% next year.

Canada’s domestic market has benefited from the ramp-up of several carriers. Swoop, fast-growing ULCC Flair Airlines, and to a lesser extent, Air Canada’s leisure-market-focused rouge subsidiary have all added domestic routes.

While the domestic market is getting crowded, the carriers still see opportunities abroad. WestJet will launch service between Toronto and Barcelona on May 24 using one of the 767s that the new 787s—which will fly a mix of both new routes and existing 767 routes—will free up. The route is flown by rouge, which also uses 767s.

“We’ve been regularly reminded that we have not had the benefit of international revenue streams, which our competition has taken advantage [of],” Sims said. “If I look at a multi-layered strategy of a full-network carrier underpinned by a carrier like rouge, I think it is fair to say that the 767 is a very effective competitive weapon against that rouge product.”

WestJet said use of the 767s beyond the summer schedule remains up in the air. It will likely use some as long-haul spares, but may deploy others on winter routes. At the moment, there are no plans to retire them, Sims said.

Sean Broderick, sean.broderick@aviationweek.com
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jjj
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Re: WestJet Delays some 737 max 8 deliveries

Post by jjj »

Translation....


WS 737s shrink.
Swoop grows.
‘67s turn pink.

JJJ
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Demeter
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Re: WestJet Delays some 737 max 8 deliveries

Post by Demeter »

Let’s get it lean and mean
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Blue42
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Re: WestJet Delays some 737 max 8 deliveries

Post by Blue42 »

Or 4 aircraft could’ve returned to lessor, 2 MAXs not leased and 0 aircraft added in 2020 and only 3 in 2021. Guess it depends how you look at it. Instead we have 4 aircraft coming next year, not including the ‘87s....don’t worry ALPA will make it all better though :goodman: YOS, on an extended pay scale with no more up grades, no more part time, no more bank time, reserve plus 18 days worked, WINNING!!! :rolleyes:
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jjj
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Re: WestJet Delays some 737 max 8 deliveries

Post by jjj »

Blue42,

I only provided a read between the lines interpretation of the article. Time will tell if I’m right.

My comments are just my opinion and are frankly non-partisan.

Nice try at the ALPA jab.

I’m sorry if your momma didn’t always cut the crusts off your sandwiches and tell you that you’re special.

There there little bunny, there there - everything will be ok.

JJJ
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TheStig
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Re: WestJet Delays some 737 max 8 deliveries

Post by TheStig »

Can someone clarify, does the Westjet fleet described in the above article include Swoop aircraft? Or are they be separate? Most North American carriers seem to be curbing growth so deferring deliveries doesn't seem like a bad idea.I know originally Swoop was pitched as a path to continue growing, is the still the case? Or is everything to be determined?
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cloak
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Re: WestJet Delays some 737 max 8 deliveries

Post by cloak »

Airlines always adjust their orders and deliveries based on market forces. At the same time, without Swoop and/or the joint venture, there would be little to no growth. Swoop will bring growth in a different market segment that was falling out of WestJet's area of influence, namely the ULCC. The Joint Venture will likely bring growth in the mainline between underserved North American city pairs. The real opportunity for growth lies in the wide body fleet where there is so many new routes to be explored. Against the backdrop of recent turmoil, naturally management wants to ensure that it has a reliable and reasonable partner in the pilot group before embarking on this new journey.
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FL410AV8R
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Re: WestJet Delays some 737 max 8 deliveries

Post by FL410AV8R »

cloak wrote: Mon Nov 05, 2018 12:18 pm Against the backdrop of recent turmoil, naturally management wants to ensure that it has a reliable and reasonable partner in the pilot group before embarking on this new journey.
That sword cuts both ways.

The pilots would like to have a management that is reliable, reasonable and that they can trust not to decimate their careers and drive away our customers with continued botched projects and flawed executions.
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cloak
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Re: WestJet Delays some 737 max 8 deliveries

Post by cloak »

That may be one perception and reality, however the market, the passengers, the investment community, new recruits, all see "management" as the custodians, leaders and decision-makers of the company, any company.
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FL410AV8R
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Re: WestJet Delays some 737 max 8 deliveries

Post by FL410AV8R »

cloak wrote: Mon Nov 05, 2018 2:11 pm That may be one perception and reality, however the market, the passengers, the investment community, new recruits, all see "management" as the custodians, leaders and decision-makers of the company, any company.
The perception and reality are growing ever closer.

The market has been unimpressed by pretty much anything WestJet has done in the last 5 years, possibly longer. A look at the 5-year stock charts for WJ and AC show almost a mirror image of one another. AC management realized that it was a better approach not to be so adversarial with their employee groups and unions and WJ decided it was best to destroy the one thing that truly separated them from other airlines, the culture, and went to war on its employee groups. Slashing and burning everywhere until there was nothing left to slash and burn.
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The passengers are less and less impressed with the continued "unbundling" of fares and amenities. A good segment of the population doesn't care how cheap Swoop fares are because they are not interested in the ULCC experience and being forced off WJ mainline onto Swoop by a stupid marketing decision has driven many into the arms of the competition. WJ cut YEG-LAS and forced people onto Swoop only to partially renege after public outcry and AC added capacity to the YEG-LAS market to meet the demand for those uninterested in the ULCC offering. The reality is that once you add a carry-on fee, a checked bag fee, a seat selection fee, a boarding pass printing fee, and a $5 Coke the total fares on WJ vs. Swoop are remarkably close. Even though Swoop is bragging about 90% load factors I don't believe the ancillary fees that this business model depends on for profitability are being realized. Load factor does not equal profitability as we all know.

The investment community just like the stock market are growing increasingly tired of successive management teams at WestJet setting targets and failing to meet them. The credibility gap as mentioned by analysts is growing. The trust is lost.

Even the new recruits are seeing the shine come off the apple and the swing towards organized labour of 4 separate employee groups in the last 24 months can only be viewed as a total failure to meaningfully engage and value their existing workforce. Cost control is very admirable and definitely required but the "cutting costs at all costs" mindset has real and tangible impacts not seen on the balance sheet but nonetheless felt very acutely and having an equal if not more devastating effect on both morale and the bottom line. Again the trust is lost.

Management as opposed to the self-aggrandizing and self-imposed title of "Leadership" most definitely describes current and recent past executives at WJ, There is no humility and absolutely no acknowledgement of responsibility for their very large part in the labour unrest that has taken the brunt of the blame for recent financial under-performance. Once again the trust is lost. Companies get the unions they deserve and that seems very much the case at WJ in recent years.
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cloak
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Re: WestJet Delays some 737 max 8 deliveries

Post by cloak »

FL410AV8R wrote: Mon Nov 05, 2018 4:42 pm ... The reality is that once you add a carry-on fee, a checked bag fee, a seat selection fee, a boarding pass printing fee, and a $5 Coke the total fares on WJ vs. Swoop are remarkably close. Even though Swoop is bragging about 90% load factors I don't believe the ancillary fees that this business model depends on for profitability are being realized. Load factor does not equal profitability as we all know.
...
From the one hand you are saying that Swoop and WestJet fares, in reality, are very close, and from the other you are saying that high load factors of Swoop don't necessarily mean profit. That would make WestJet even less profitable, won't it?!!

At any rate, the difference is that with unbundling people have a choice of which items they buy. Plus, having different products for different market segments is smart. We see this example in many industries, including aviation such as Rouge.

I do however really like one word in your post: humility! It is so important for all to exercise humility including being respectful to others in discussions... hopefully reason will prevail.
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FL410AV8R
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Re: WestJet Delays some 737 max 8 deliveries

Post by FL410AV8R »

cloak wrote: Mon Nov 05, 2018 5:43 pm From the one hand you are saying that Swoop and WestJet fares, in reality, are very close, and from the other you are saying that high load factors of Swoop don't necessarily mean profit. That would make WestJet even less profitable, won't it?!!
Clearly I wasn’t very clear in putting my thoughts down. The total fares for an equivalent level of service are a lot closer than some would want you to believe. The bigger ticket add ons checked bag and carry on bag fees are already included in the WJ base fare but not in the Swoop base fare. From what I have heard the ancillary revenue expected and anticipated from Swoop is not materializing. People are bagging lunch, not checking bags and basically just paying for the seat and the seat belt which does not create the revenue required to show a profit at Swoop. The reality is that we will never know whether Swoop is truly profitable or not as the Swoop numbers will never be separated out from the WestJet Group numbers.
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Re: WestJet Delays some 737 max 8 deliveries

Post by Rezy »

FL410AV8R wrote: Mon Nov 05, 2018 8:20 pm
cloak wrote: Mon Nov 05, 2018 5:43 pm From the one hand you are saying that Swoop and WestJet fares, in reality, are very close, and from the other you are saying that high load factors of Swoop don't necessarily mean profit. That would make WestJet even less profitable, won't it?!!
Clearly I wasn’t very clear in putting my thoughts down. The total fares for an equivalent level of service are a lot closer than some would want you to believe. The bigger ticket add ons checked bag and carry on bag fees are already included in the WJ base fare but not in the Swoop base fare. From what I have heard the ancillary revenue expected and anticipated from Swoop is not materializing. People are bagging lunch, not checking bags and basically just paying for the seat and the seat belt which does not create the revenue required to show a profit at Swoop. The reality is that we will never know whether Swoop is truly profitable or not as the Swoop numbers will never be separated out from the WestJet Group numbers.
Management will know
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Re: WestJet Delays some 737 max 8 deliveries

Post by KAG »

Blue42 wrote: Sun Nov 04, 2018 8:31 pm Or 4 aircraft could’ve returned to lessor, 2 MAXs not leased and 0 aircraft added in 2020 and only 3 in 2021. Guess it depends how you look at it. Instead we have 4 aircraft coming next year, not including the ‘87s....don’t worry ALPA will make it all better though :goodman: YOS, on an extended pay scale with no more up grades, no more part time, no more bank time, reserve plus 18 days worked, WINNING!!! :rolleyes:
Lol extended pay scales....I'll make you a wager, they stay at 12 years. Lots of upgrades due to reserve, 17 days with a higher blocking window. This anti alpa crap is funny. But who knows it's out of our hands. If I'm wrong I'll create a label called my shoes, put it on a generic bottle of red or white wine ( you pick) and fed x it you. Seriously.
That said in 5 years WJ 737 flying will look like AC a320 flying unless we get a solid scope. Or similar wawcon then who cares.
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WestJet Delays some 737 max 8 deliveries

Post by TimothysAr »

On their online seat map for 737 Max 8, only 114 seats are shown for the Hiroshima flight. Maybe 30 seats not sold due to weight restrictions?
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Re: WestJet Delays some 737 max 8 deliveries

Post by moe »

Hmmm
🤣
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