is jetsgo shutting down
Moderators: Sulako, North Shore, sky's the limit, sepia
Sorry but that's not what the media is reporting, you Westjetters should get a life; read below...
Airline industry on shaky ground
anaylst's forecast: Premature to predict any firm's demise: independent's view
Chris Sorensen
Financial Post
January 29, 2005
Canada's airline industry continues to suffer from too much supply and not enough demand, a situation one analyst says will make it difficult for Air Canada and WestJet Airlines Ltd. to grow their profits.
Ben Cherniavsky, an airline analyst with Raymond James Equity Research, said the recent industry upheaval, including the court-protected restructuring of Air Canada, the country's largest airline, has done little to make the business environment more stable.
His report criticizes industry players for contributing to the problem by relentlessly pursuing growth strategies in a mature market, calling the trend a "perversity" of the airline business.
"The overriding theme, I think, is that there are too many seats in the market," said Jon De Vos, a Raymond James analyst and a co-author of the report. "And when you have too many seats chasing too many passengers, your pricing starts to go downhill."
Mr. De Vos said the biggest casualty in the battle for the domestic market could be Jetsgo, which the report dubs the industry's "weakest link".
The Montreal-based airline was founded by airline entrepreneur Michel Leblanc. Since its launch in 2002, Jetsgo has been dogged by questions surrounding its viability, but has continued to expand its operations -- most recently into Western Canada, where rival WestJet is based. As a privately held company, Jetsgo is not required to disclose its financial results.
According to the report, WestJet could pick up low-cost business in the event of a shakeup in the sector. After years of impressive quarterly financial statements, WestJet has seen its earnings growth slow dramatically as it struggles to fill planes profitably on expanded routes.
In fact, Mr. Cherniavsky said he would be inclined to downgrade WestJet's shares to "Sell" status, if it weren't for his belief that Jetsgo was a weak link.
He argues in the report that Jetsgo's aggressive pricing strategies, such as $1 fare promotions, are responsible for its rapid growth, but that its network is spread too thin across the country to be competitive over the long-term.
As well, he speculates the airline's 160-seat MD-83 aircraft are too large for most Canadian routes and that its recent purchase of 18 Fokker F-100s, although better suited for smaller markets, have added unnecessary complexity and expenses to Jetsgo's operations.
Tom MacMillan, a spokesman for Montreal-based Jetsgo, disagreed strongly with Mr. Cherniavsky's predictions, saying the analyst's firm has been a consistent critic of the airline since its inception. "Meanwhile, we've grown from three to 25 planes, serving 28 destinations, we provide a true competition in low fares and we have half a million Canadians enrolled in our Jetsmiles loyalty program.
"We must be doing something right."
Rick Erickson, a Calgary-based independent analyst, agreed it is premature to predict Jetsgo's demise without having access to its books. "Somebody must be making some investments in them so they can go out and buy aircraft," Mr. Erickson said. "And I don't hear of any airports going out trying to garnishee their aircraft, so they must be paying their bills."
© National Post 2005
Airline industry on shaky ground
anaylst's forecast: Premature to predict any firm's demise: independent's view
Chris Sorensen
Financial Post
January 29, 2005
Canada's airline industry continues to suffer from too much supply and not enough demand, a situation one analyst says will make it difficult for Air Canada and WestJet Airlines Ltd. to grow their profits.
Ben Cherniavsky, an airline analyst with Raymond James Equity Research, said the recent industry upheaval, including the court-protected restructuring of Air Canada, the country's largest airline, has done little to make the business environment more stable.
His report criticizes industry players for contributing to the problem by relentlessly pursuing growth strategies in a mature market, calling the trend a "perversity" of the airline business.
"The overriding theme, I think, is that there are too many seats in the market," said Jon De Vos, a Raymond James analyst and a co-author of the report. "And when you have too many seats chasing too many passengers, your pricing starts to go downhill."
Mr. De Vos said the biggest casualty in the battle for the domestic market could be Jetsgo, which the report dubs the industry's "weakest link".
The Montreal-based airline was founded by airline entrepreneur Michel Leblanc. Since its launch in 2002, Jetsgo has been dogged by questions surrounding its viability, but has continued to expand its operations -- most recently into Western Canada, where rival WestJet is based. As a privately held company, Jetsgo is not required to disclose its financial results.
According to the report, WestJet could pick up low-cost business in the event of a shakeup in the sector. After years of impressive quarterly financial statements, WestJet has seen its earnings growth slow dramatically as it struggles to fill planes profitably on expanded routes.
In fact, Mr. Cherniavsky said he would be inclined to downgrade WestJet's shares to "Sell" status, if it weren't for his belief that Jetsgo was a weak link.
He argues in the report that Jetsgo's aggressive pricing strategies, such as $1 fare promotions, are responsible for its rapid growth, but that its network is spread too thin across the country to be competitive over the long-term.
As well, he speculates the airline's 160-seat MD-83 aircraft are too large for most Canadian routes and that its recent purchase of 18 Fokker F-100s, although better suited for smaller markets, have added unnecessary complexity and expenses to Jetsgo's operations.
Tom MacMillan, a spokesman for Montreal-based Jetsgo, disagreed strongly with Mr. Cherniavsky's predictions, saying the analyst's firm has been a consistent critic of the airline since its inception. "Meanwhile, we've grown from three to 25 planes, serving 28 destinations, we provide a true competition in low fares and we have half a million Canadians enrolled in our Jetsmiles loyalty program.
"We must be doing something right."
Rick Erickson, a Calgary-based independent analyst, agreed it is premature to predict Jetsgo's demise without having access to its books. "Somebody must be making some investments in them so they can go out and buy aircraft," Mr. Erickson said. "And I don't hear of any airports going out trying to garnishee their aircraft, so they must be paying their bills."
© National Post 2005
Jetsgo has ALWAYS confouded industry analysts, (not to mention WestJet management) from its inception and continues to do so. Daily advanced bookings-information unavailable to analysts- remain strong, however, despite Dec23rd. Concerted efforts are being made to fix the issues brought to light by this event. As one who works there, I believe the mud hitting the fan in that regard was quite a healthy wake up call for us as a company that was too focused on growth.
The recent full page "expose" of the YYC incident was a sure plant to the National Post from some Westjet insiders with access to confidential CADORS reports. Whether that was fair or not, (or even legal) is not something I want to get into now, but let's just say if airlines start airing this kind of dirty laundry about each other in the press, then there's enough dirt on everyone's hands to go around. In any case,the Clive Beddoe "plumbers" are back at their dirty tricks, and that is a sure sign of desparation.
Planting/spreading such rumors is an attempt to palcate the restless WJetters from asking to be paid in real wages ( or maybe even unionizing, heaven forbid) rather than in "options" of increasingly diminishing value. That gravy train has certainly run its course, anyway.
If the vaunted WJ management made one serious error, it was to allow SG to get as big as we are today in eastern Canada due to its own stubborn adherence to the "slow as you go" (or, head in the sand) philosophy. They were not flexible/imaginative enough in 2002 to deploy 5-6 a/c in YYZ and YUL to snuff out SG in its crib. Now, they're trashing about and kicking themselves. Yes, the airline business is tough.
I can see SG scaling back its western expansion somewhat and concentrating on eatern Canada (where the country's population Cof G is located, this in itself is an important advantage to SG) and continuing to do quite well. The MD's won't be around much longer and its replacement might lead to oppotunities in other markets. The F100 has turned out to be a versatile moneymaker and a much in demand A/C for low cost upstarts around the world (several offers to buy!) and their value will continue to rise as they go on to perform flawlessly for us.
I'm sure WJ would like to see us dry up and go away-competeing against AC/Canadian only was so much easier... But it probably won't happen soon. This is a cutthroat business and the knife cuts both ways.
The recent full page "expose" of the YYC incident was a sure plant to the National Post from some Westjet insiders with access to confidential CADORS reports. Whether that was fair or not, (or even legal) is not something I want to get into now, but let's just say if airlines start airing this kind of dirty laundry about each other in the press, then there's enough dirt on everyone's hands to go around. In any case,the Clive Beddoe "plumbers" are back at their dirty tricks, and that is a sure sign of desparation.
Planting/spreading such rumors is an attempt to palcate the restless WJetters from asking to be paid in real wages ( or maybe even unionizing, heaven forbid) rather than in "options" of increasingly diminishing value. That gravy train has certainly run its course, anyway.
If the vaunted WJ management made one serious error, it was to allow SG to get as big as we are today in eastern Canada due to its own stubborn adherence to the "slow as you go" (or, head in the sand) philosophy. They were not flexible/imaginative enough in 2002 to deploy 5-6 a/c in YYZ and YUL to snuff out SG in its crib. Now, they're trashing about and kicking themselves. Yes, the airline business is tough.
I can see SG scaling back its western expansion somewhat and concentrating on eatern Canada (where the country's population Cof G is located, this in itself is an important advantage to SG) and continuing to do quite well. The MD's won't be around much longer and its replacement might lead to oppotunities in other markets. The F100 has turned out to be a versatile moneymaker and a much in demand A/C for low cost upstarts around the world (several offers to buy!) and their value will continue to rise as they go on to perform flawlessly for us.
I'm sure WJ would like to see us dry up and go away-competeing against AC/Canadian only was so much easier... But it probably won't happen soon. This is a cutthroat business and the knife cuts both ways.
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Canus Chinookus
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Rubberbiscuit
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Last edited by Rubberbiscuit on Mon May 30, 2005 9:15 pm, edited 1 time in total.
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Snow Monkey
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Hey Rebel perhaps you should read all the papers not just the post. Sounds like ACE is benifiting as well.
And yeah I work work for WJA and yeah I would hate to see any carrier go under because it would suck for all their employees. Maybe we are rival airlines but I don't think anyone should take satisfaction knowing many people could lose their jobs.
Lets wait and see what happens. To all you SG folks I hope it doesn't come to the worse. I think all the slamming should be directed at the management not at the front line employees.
At the end of the day we are all trying to make a living, whether at SG,WJA or AC.
WestJet shares gain on rumours of trouble at Jetsgo
By Brent Jang
Saturday, January 29, 2005 - Page B6
WestJet Airlines Ltd. shares rose 12 per cent yesterday in heavy trading after a leading industry analyst questioned rival Jetsgo Corp.'s ability to stay in business, calling it "the weakest link" in Canada's airline industry.
The buzz about Jetsgo spilled into trading in Air Canada's parent company, ACE Aviation Holdings Inc., whose shares spiked up in the last hour of trading on the Toronto Stock Exchange. ACE shares, which had been languishing for the past week, gained 4 per cent on the day.
Raymond James Ltd. analyst Ben Cherniavsky had severe doubts about Montreal-based Jetsgo's expansion strategy and how it can stave off brutal competition from Air Canada, WestJet and CanJet Airlines.
Jetsgo spokesman Brad Cicero played down speculation about the privately owned carrier's possible demise, saying that there are many "positives," such as Jetsgo's rapid growth since it got into the low-cost airline game in mid-2002.
"The airline industry is full of rumours," Mr. Cicero said. "People are still flying Jetsgo. We're going to look for opportunities to grow."
But Mr. Cherniavsky, the lead author of a new 76-page report on the country's airline sector, said this year is shaping up to be one where seat capacity will grow faster than demand, "until the weakest link breaks." He said Calgary-based WestJet would be the main beneficiary if Jetsgo were forced out of business.
Investors piled into WestJet yesterday, with volume of nearly 1.4 million shares, or five times its average daily volume on the TSX.
"We haven't released any information that would cause the price rise," said WestJet spokeswoman Siobhan Vinish, who added that the discount carrier didn't wish to comment further on "fluctuations in our stock price."
WestJet chief executive officer Clive Beddoe spoke about his airline Thursday at a New York aviation conference sponsored by Raymond James, she said.
In his report, Mr. Cherniavsky speculated that if Jetsgo vanished from the domestic market on April 1, then seat capacity would fall 2.4 per cent instead of rising 5.4 per cent.
Amid high jet fuel prices, cutthroat fares and aging Jetsgo aircraft, "there is indeed a good chance that Jetsgo will disappear," he wrote. "We believe Jetsgo has spread its network too thin."
Two U.S. hedge fund managers, who declined to be named, said they had acquired WestJet shares yesterday in the hopes of benefiting from the Jetsgo rumours. While there has been talk about Jetsgo running into trouble before, they said speculation intensified after Mr. Beddoe's visit to New York.
WJA (TSX) gained $1.56 to $14.13. ACE.B (TSX) climbed $1.23 to $34.50. Brent Jang
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And yeah I work work for WJA and yeah I would hate to see any carrier go under because it would suck for all their employees. Maybe we are rival airlines but I don't think anyone should take satisfaction knowing many people could lose their jobs.
Lets wait and see what happens. To all you SG folks I hope it doesn't come to the worse. I think all the slamming should be directed at the management not at the front line employees.
At the end of the day we are all trying to make a living, whether at SG,WJA or AC.
WestJet shares gain on rumours of trouble at Jetsgo
By Brent Jang
Saturday, January 29, 2005 - Page B6
WestJet Airlines Ltd. shares rose 12 per cent yesterday in heavy trading after a leading industry analyst questioned rival Jetsgo Corp.'s ability to stay in business, calling it "the weakest link" in Canada's airline industry.
The buzz about Jetsgo spilled into trading in Air Canada's parent company, ACE Aviation Holdings Inc., whose shares spiked up in the last hour of trading on the Toronto Stock Exchange. ACE shares, which had been languishing for the past week, gained 4 per cent on the day.
Raymond James Ltd. analyst Ben Cherniavsky had severe doubts about Montreal-based Jetsgo's expansion strategy and how it can stave off brutal competition from Air Canada, WestJet and CanJet Airlines.
Jetsgo spokesman Brad Cicero played down speculation about the privately owned carrier's possible demise, saying that there are many "positives," such as Jetsgo's rapid growth since it got into the low-cost airline game in mid-2002.
"The airline industry is full of rumours," Mr. Cicero said. "People are still flying Jetsgo. We're going to look for opportunities to grow."
But Mr. Cherniavsky, the lead author of a new 76-page report on the country's airline sector, said this year is shaping up to be one where seat capacity will grow faster than demand, "until the weakest link breaks." He said Calgary-based WestJet would be the main beneficiary if Jetsgo were forced out of business.
Investors piled into WestJet yesterday, with volume of nearly 1.4 million shares, or five times its average daily volume on the TSX.
"We haven't released any information that would cause the price rise," said WestJet spokeswoman Siobhan Vinish, who added that the discount carrier didn't wish to comment further on "fluctuations in our stock price."
WestJet chief executive officer Clive Beddoe spoke about his airline Thursday at a New York aviation conference sponsored by Raymond James, she said.
In his report, Mr. Cherniavsky speculated that if Jetsgo vanished from the domestic market on April 1, then seat capacity would fall 2.4 per cent instead of rising 5.4 per cent.
Amid high jet fuel prices, cutthroat fares and aging Jetsgo aircraft, "there is indeed a good chance that Jetsgo will disappear," he wrote. "We believe Jetsgo has spread its network too thin."
Two U.S. hedge fund managers, who declined to be named, said they had acquired WestJet shares yesterday in the hopes of benefiting from the Jetsgo rumours. While there has been talk about Jetsgo running into trouble before, they said speculation intensified after Mr. Beddoe's visit to New York.
WJA (TSX) gained $1.56 to $14.13. ACE.B (TSX) climbed $1.23 to $34.50. Brent Jang
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jetsgo
Rubberbiscuit, thank you I am glad to see there is someone else out there who realizes we are all just trying to get by and wishing the failure of a competitor is very bad manners. Happy flying.
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Canus Chinookus
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Canus Chinookus
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let's see, consistantly shitty service, otp, customer service, lost bags, Dec.23rd, YYC fuckup, Leblanc, just to name a few...
Honestly, i do feel for the crews, because you're getting screwed the hardest. You're all just trying to live your life, attempt a career, and your boss is the biggest dick in aviation since... well, I don't know when.
Honestly, i do feel for the crews, because you're getting screwed the hardest. You're all just trying to live your life, attempt a career, and your boss is the biggest dick in aviation since... well, I don't know when.
Im curious. JetsGo sold 2 planes that they bought out of the desert before they were even cleaned painted and cert. here in Canada, because it would be too much money. If the F100's are so cheap, just how long and how much money does it take to put one of these birds online.
Rubber mentioned A/C expenses are nothing for SG.
I beg to differ.
Rubber mentioned A/C expenses are nothing for SG.
I beg to differ.
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Canus Chinookus
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Exactly my point. Just because you wish that Clive had something to do with it, doesn't make it true. SG is it's own worst enemy. December 23rd is just one example of how fragile their operation is, and their customers are slowly but surely finding out what a 'top-notch' operation it really is... so don't go blaming Westjet for your own woes. You've done it to yourselves.Rebel wrote:Get real, all of what you have said has nothing to do with Clive’s latest attempt to blackball a competitor.
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Canus Chinookus
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...You completely missed the point, the truth is Clive did have something to do with this latest blackball attempt. Get your head out of the sand.
Oh and I don't work for JG or WJ nor do I have any desire to do so. The Owners CEO's folks behind the LCC's have ruined aviation. I'm just trying to keep the record straight.
Oh and I don't work for JG or WJ nor do I have any desire to do so. The Owners CEO's folks behind the LCC's have ruined aviation. I'm just trying to keep the record straight.
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Rubberbiscuit
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Rebel, all I have to say is that we need more Pilots like yourself on this forum. Not becuse you are defending Jetsgo, but because you are defending all Airline Pilots!
All Airline CEO's in Canada would cease any chance at bringing down the competition. Fact!
After Jetsgo's x-mas fiasko and incident in YYC you guys are telling me that it is a coincidense that Clive is trying by himself and through his aviation analyst "friends" to paint Jetsgo as a sinking ship in the media?
All Airline CEO's in Canada would cease any chance at bringing down the competition. Fact!
After Jetsgo's x-mas fiasko and incident in YYC you guys are telling me that it is a coincidense that Clive is trying by himself and through his aviation analyst "friends" to paint Jetsgo as a sinking ship in the media?
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Canus Chinookus
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I didn't miss the point, I ignored it for it's stupidity. Clive would have done this ALONG TIME AGO not just now, if in fact he did do it.Rebel wrote:...You completely missed the point, the truth is Clive did have something to do with this latest blackball attempt. Get your head out of the sand.
Oh and I don't work for JG or WJ nor do I have any desire to do so. The Owners CEO's folks behind the LCC's have ruined aviation. I'm just trying to keep the record straight.
As for you blaming LCC CEO's for for ruining aviation, wtf do you call Milton and all the big boy legacy carriers in the US trudging around with their pants down? I guess that's Jetblue and Sourthwest's fault to is it?
Rebel you are a joke. Prove to me.. no, prove to the FORUM that Clive was behind this. Raymond James, an investment firm (or whatever the hell they are) released a report ON FRIDAY. Clive also spoke at an airline conference that also had other airlines like JetBlue, Frontier, and Mesa speaking as well.Please fill us in as it appears to me that Clive is behind this latest shot at JG as that is his track record..
Jetsgo is killing itself - 10 people on a YVRYXS flight does NOT MAKE MONEY.
