Will Westjet survive?

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Realitychex
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Re: Will Westjet survive?

Post by Realitychex »

GS didn't get to where he is today by saying "woah" when any sector he competed in was in a mud puddle.

WS is in much the same position as SW in the US.

https://www.bizjournals.com/dallas/news ... id-19.html

WS has significantly lower unit costs when compared to their competition on an ASL basis. This core advantage has been in place since day one and it hasn't changed that much. As much as others have gotten much more efficient over time, so too has WS.

We know what WS's unit costs and ASL's have been historically up to end of 3Q 2019. They won't have meaningfully changed, other than fuel costs which rise and fall virtually equally for all, up to about the end of Feb 2020.

We know what it cost WS to move one seat, one mile with an asl under 900 miles. We know what it costs their major competitor to move one seat one mile with an asl over 1,600 miles. It's just math to figure out what it costs WS to move one seat, one mile over 1,600 miles. It's a heck of a lot less than their major competitor. That is a tremendous advantage during the recovery phase, even if recovery takes, (optimistically), 18 months. We've all seen what 3 bad months can do to the industry. Those with lower unit costs are going to be in far better shape than those without.

I don't think there are many who would argue that high yield business travel is going to come back anywhere near as quickly as back of the bus travel. High net worth, yield juicing execs aren't going to be crowding the front of airplanes anytime soon, nor will their employers force them to do so for fear of litigation should illness occur. On the other hand, should borders open and quarantines end, just wait till the snow starts flying in November to see how quickly "back of the bus" demand returns.

On a positive note, US TSA throughput has increased over the past few weeks. If it's anything close to linear, the market will be back to fall 2019 numbers far faster than anticipated by the "if it bleeds, it leads" media crowd.

8)
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Gino Under
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Re: Will Westjet survive?

Post by Gino Under »

This thread began with a simple question.
Do you think Westjet will make it?

I’m sticking my neck out here but, some are likely to think they will survive and some, regrettably will think they won’t. Isn’t that how these exchanges work?
For whatever reason a contributor’s motivations might be for responding to the question, they remain not much more than personal ‘opinions’. Informed or otherwise. Pretty straight forward.
It’s too bad some intellectual feedback doesn’t go beyond “I enjoy reading posts from people who have no idea what they're talking about. It's entertaining.” The reality must be that you yourself have nothing to say.

Time well wasted?
:drinkers:
Cheers
Gino
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sarg
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Re: Will Westjet survive?

Post by sarg »

Furloughed wrote: Sat May 23, 2020 12:46 pm
Realitychex wrote: Sat May 23, 2020 12:14 pm .Costs are king folks. Airlines that relied on high yield business travel are going to have far more difficulty getting back to where they were than those whose core business was the back of the bus.

8)
Certainly not disagreeing with you there. Cost is King, especially in the environment we now find ourselves in.

One option for Onyx is to spin off and sell Swoop. The ULCC model is what is going to thrive for the next couple years as we painfully emerge from this Infodemic induced recession resulting in the worst downturn in Aviation history. It will be like the early 2000's where people bought a ticket because it was $2 cheaper. Swoop already has the infrastructure and a customer base.

Swoop has next to no infrastructure that doesn't belong to WestJet. Dispatch, crew sked, AMO, aircraft, flight crew currently, fuel and most likely ground handling. Spinning off Swoop would mean contracts for all these services that would most likely increase Swoop's cost.
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NoSocks
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Re: Will Westjet survive?

Post by NoSocks »

WestJet (in its current form) will not survive.

WestJet is faced with a massive payout to those who are set to be moved from LOA to layoff in September. A group layoff (50 or more) entitles those being laid off with 16 weeks notice or payment in lieu. The first batch (about 5000) will be laid off September 25th.

Imagine the average pay being about $1000.00. Each employee would be owed (on average) 16 weeks x $1000.00 PLUS any accumulated vacation time and Overtime. Lets imagine there is only the matter of 16 weeks pay at an average of $1000.00 per week for 5000 employees.

$80 MILLION DOLLARS

Then the next batch to follow on October 1st, then the last batch end of November-ish.

All in all, WestJet will be paying out close to $100 million to lay people off.

They have already asked for an exemption. My assumption is, they asked for this exemption as soon as they found out no bail out was coming.

1. Bail out? - No!
2. Exemption from Canadian Labour Law No?
3. Bankruptcy

It is my bold prediction that WestJet will be in credit protection by the end of summer.
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kiaszceski
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Re: Will Westjet survive?

Post by kiaszceski »

NoSocks wrote: Sun May 24, 2020 12:48 pm WestJet (in its current form) will not survive.

WestJet is faced with a massive payout to those who are set to be moved from LOA to layoff in September. A group layoff (50 or more) entitles those being laid off with 16 weeks notice or payment in lieu. The first batch (about 5000) will be laid off September 25th.

Imagine the average pay being about $1000.00. Each employee would be owed (on average) 16 weeks x $1000.00 PLUS any accumulated vacation time and Overtime. Lets imagine there is only the matter of 16 weeks pay at an average of $1000.00 per week for 5000 employees.

$80 MILLION DOLLARS

Then the next batch to follow on October 1st, then the last batch end of November-ish.

All in all, WestJet will be paying out close to $100 million to lay people off.

They have already asked for an exemption. My assumption is, they asked for this exemption as soon as they found out no bail out was coming.

1. Bail out? - No!
2. Exemption from Canadian Labour Law No?
3. Bankruptcy

It is my bold prediction that WestJet will be in credit protection by the end of summer.
Are you from Onex or WJ financial team?
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NoSocks
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Re: Will Westjet survive?

Post by NoSocks »

kiaszceski wrote: Sun May 24, 2020 1:29 pm
NoSocks wrote: Sun May 24, 2020 12:48 pm WestJet (in its current form) will not survive.

WestJet is faced with a massive payout to those who are set to be moved from LOA to layoff in September. A group layoff (50 or more) entitles those being laid off with 16 weeks notice or payment in lieu. The first batch (about 5000) will be laid off September 25th.

Imagine the average pay being about $1000.00. Each employee would be owed (on average) 16 weeks x $1000.00 PLUS any accumulated vacation time and Overtime. Lets imagine there is only the matter of 16 weeks pay at an average of $1000.00 per week for 5000 employees.

$80 MILLION DOLLARS

Then the next batch to follow on October 1st, then the last batch end of November-ish.

All in all, WestJet will be paying out close to $100 million to lay people off.

They have already asked for an exemption. My assumption is, they asked for this exemption as soon as they found out no bail out was coming.

1. Bail out? - No!
2. Exemption from Canadian Labour Law No?
3. Bankruptcy

It is my bold prediction that WestJet will be in credit protection by the end of summer.
Are you from Onex or WJ financial team?
Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.
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Realitychex
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Re: Will Westjet survive?

Post by Realitychex »

And where, pray tell, do you think AC is going to be by summer's end?

:roll:
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NoSocks
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Re: Will Westjet survive?

Post by NoSocks »

Realitychex wrote: Sun May 24, 2020 4:17 pm And where, pray tell, do you think AC is going to be by summer's end?

:roll:
In a far better position then Team Teal that's for sure.

If you are on LOA...start looking for work.
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kiaszceski
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Re: Will Westjet survive?

Post by kiaszceski »

NoSocks wrote: Sun May 24, 2020 4:35 pm
Realitychex wrote: Sun May 24, 2020 4:17 pm And where, pray tell, do you think AC is going to be by summer's end?

:roll:
In a far better position then Team Teal that's for sure.

If you are on LOA...start looking for work.
Well... a Walmart job doesn't pay the house anyway. Going bankrupt
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fish4life
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Re: Will Westjet survive?

Post by fish4life »

Doesn’t Onex also own the aircraft leasing company that leases a bunch of WJ’s airplanes?
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swimming
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Re: Will Westjet survive?

Post by swimming »

Onex owns 35% of BBAM which leases some aircraft to WestJet.
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Blue42
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Re: Will Westjet survive?

Post by Blue42 »

fish4life wrote: Mon May 25, 2020 8:24 am Doesn’t Onex also own the aircraft leasing company that leases a bunch of WJ’s airplanes?
I believe only the first 3 B787s were sold to and then leased ba k from BBAM
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CaptainHaddock
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Re: Will Westjet survive?

Post by CaptainHaddock »

NoSocks wrote: Sun May 24, 2020 3:41 pm
kiaszceski wrote: Sun May 24, 2020 1:29 pm
NoSocks wrote: Sun May 24, 2020 12:48 pm WestJet (in its current form) will not survive.

WestJet is faced with a massive payout to those who are set to be moved from LOA to layoff in September. A group layoff (50 or more) entitles those being laid off with 16 weeks notice or payment in lieu. The first batch (about 5000) will be laid off September 25th.

Imagine the average pay being about $1000.00. Each employee would be owed (on average) 16 weeks x $1000.00 PLUS any accumulated vacation time and Overtime. Lets imagine there is only the matter of 16 weeks pay at an average of $1000.00 per week for 5000 employees.

$80 MILLION DOLLARS

Then the next batch to follow on October 1st, then the last batch end of November-ish.

All in all, WestJet will be paying out close to $100 million to lay people off.

They have already asked for an exemption. My assumption is, they asked for this exemption as soon as they found out no bail out was coming.

1. Bail out? - No!
2. Exemption from Canadian Labour Law No?
3. Bankruptcy

It is my bold prediction that WestJet will be in credit protection by the end of summer.
Are you from Onex or WJ financial team?
Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.

Ha, if that’s what’s panning out for WJ, then they’ll be holding hands with AC then on their way to the bankruptcy court-what is AC, 35000 employees?
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NoSocks
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Re: Will Westjet survive?

Post by NoSocks »

CaptainHaddock wrote: Mon May 25, 2020 1:36 pm
NoSocks wrote: Sun May 24, 2020 3:41 pm
kiaszceski wrote: Sun May 24, 2020 1:29 pm

Are you from Onex or WJ financial team?
Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.

Ha, if that’s what’s panning out for WJ, then they’ll be holding hands with AC then on their way to the bankruptcy court-what is AC, 35000 employees?
AC is currently sitting on 2.3 billion in cash PLUS they have a large credit facility available to them. Secondly, the majority of those on LOA are there for up to 2 years (where WestJet is 6 months). The opportunity for recovery in 2 years is higher then that of 6 months.

Based on the current moves by Sims and company, it tells me there is a bit of a cash problem (asking for bail outs/exemptions etc). Onex isn't dropping another dime into this company.
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jetav8r
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Re: Will Westjet survive?

Post by jetav8r »

WestJet not going anywhere. It will survive albeit a smaller airline.

Onex spent billions on it purchase and will work towards making it a leaner meaner carrier. WestJet is no longer a small 2 province carrier. The bean counters will look at all aspects of the operation and see where cuts will be made and improvements to the operation.

AC has been bankrupt how many times and comes back stronger. The feds won't let AC be the only game in town again. They will prop up WestJet one way or another to maintain competition.

I am fortunate that I have never been laid off and am currently working but it is heart breaking for everyone who is on layoff or soon will be. For the yungins' its a bit easier, they can ride out the storm, but for the old farts it will be difficult to start over.

This might be the best time to reset the mindset and do something else that will actually make more money. I've had a backup plan for years just in case. Its lonely flying around and not hear anyone for minutes thinking do I have a comm failure. Chin up, things will get better.
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Bede
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Re: Will Westjet survive?

Post by Bede »

jetav8r wrote: Mon May 25, 2020 5:50 pm Onex spent billions on it purchase and will work towards making it a leaner meaner carrier.
Onex only spend around $300M on the purchase (sorry, don't have the exact number). The rest came from other unknown investors.
jetav8r wrote: Mon May 25, 2020 5:50 pm AC has been bankrupt how many times and comes back stronger. The feds won't let AC be the only game in town again. They will prop up WestJet one way or another to maintain competition.
AC has been through CCAA once. The Fed's don't need to support WJ for competition. They need a flag carrier and can promote any number of other smaller carriers to be the competition. The Liberals are all about shoring up their vote. There is no political reason to support WJ. No one in AB will vote for them anyways regardless of who they bail out so why bother blowing the money?
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Big Pistons Forever
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Re: Will Westjet survive?

Post by Big Pistons Forever »

When it comes to airlines, normal business practices don’t seem to apply. The status of owning an airline seems to be a big deal for many heavy weight investors and JS seems no different. He is still pissed he was frozen out of a deal with Air Canada when it was in CCAA.

I would suggest that he would be more willing to hang in there with WestJet, than if it were say in the waste management business.
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Re: Will Westjet survive?

Post by Old fella »

Bede wrote: Tue May 26, 2020 8:35 am
jetav8r wrote: Mon May 25, 2020 5:50 pm Onex spent billions on it purchase and will work towards making it a leaner meaner carrier.
Onex only spend around $300M on the purchase (sorry, don't have the exact number). The rest came from other unknown investors.
jetav8r wrote: Mon May 25, 2020 5:50 pm AC has been bankrupt how many times and comes back stronger. The feds won't let AC be the only game in town again. They will prop up WestJet one way or another to maintain competition.
AC has been through CCAA once. The Fed's don't need to support WJ for competition. They need a flag carrier and can promote any number of other smaller carriers to be the competition. The Liberals are all about shoring up their vote. There is no political reason to support WJ. No one in AB will vote for them anyways regardless of who they bail out so why bother blowing the money?
No I don’t believe a WJ bankruptcy will be the headlines in the news. JT doesn’t hate Alberta although most Albertans hate him. A WJ abrupt failure will hurt many others outside of Alberta that is for sure, similar scenario with CAI couple of decades ago. The headlines would be disastrous.
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brooks
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Re: Will Westjet survive?

Post by brooks »

NoSocks wrote: Mon May 25, 2020 2:59 pm
CaptainHaddock wrote: Mon May 25, 2020 1:36 pm
NoSocks wrote: Sun May 24, 2020 3:41 pm

Nah.... Just a dude on LOA

Onex will move this corporation through bankruptcy and reacquire at 10 cents on the dollar. IPO not long after.

Its the circle of life in Canadian aviation. Rinse and Repeat.

Ha, if that’s what’s panning out for WJ, then they’ll be holding hands with AC then on their way to the bankruptcy court-what is AC, 35000 employees?
AC is currently sitting on 2.3 billion in cash PLUS they have a large credit facility available to them. Secondly, the majority of those on LOA are there for up to 2 years (where WestJet is 6 months). The opportunity for recovery in 2 years is higher then that of 6 months.

Based on the current moves by Sims and company, it tells me there is a bit of a cash problem (asking for bail outs/exemptions etc). Onex isn't dropping another dime into this company.
I wouldn't be worried about WJ as they don't have 100 widebody's sitting on the tarmac. AC just recently realized that they need to shed more jobs and the other day issued new shares and debt to raise a billion. ONEX and WJ have not issued bonds. Tells me JT told AC to pound sand or take the government loan. AC is burning through what 600 million a month? You're comparing Grapefruit to Kiwi. WJ isn't burning through the same respective rate of cash because they took the necessary steps early to stem the burn. From what I hear bookings are going up and they want to see the MAX back by end of Summer. Should be slow and steady rise back to normal by next summer.
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Hangry
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Re: Will Westjet survive?

Post by Hangry »

AC is here for the long game.

WJ is not.

Time will tell.

I’ll bet another 80 years on it.
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