Starting up a new low-cost airline in a pretty crowded market presents a major challenge for WestJet's new CEO. Add on an expansion of its long-haul program, and you can see why aviation analysts are a little worried.
WestJet Airlines Ltd.’s new boss, working to reverse this year’s stock swoon, says he has a lot riding on the carrier’s new discount unit and a fleet expansion with Boeing Co. 787 Dreamliners.
Canada’s No. 2 airline has to show investors it’s able to execute both parts of its plan while also managing labor talks with its pilots and flight attendants, Chief Executive Officer Ed Sims said in an interview Monday. The budget operation, known as Swoop, is scheduled to start in June.
“As we hit each of those milestones, you will see the gap between a good strategy and effective execution close very rapidly,” Sims said by telephone. “Our approach, and a more methodical approach to execution, is what’s finally going to restore analysts’ confidence back to what I would believe to be more realistic share-price performance levels.”
The busy schedule of the next few months sets up an early test for Sims, who took the reins at WestJet after the sudden departure of Gregg Saretsky in March. Investors are concerned that the airline’s plan to begin Swoop while expanding international flying with its new Dreamliners will stretch management’s capabilities, Cormark Securities analyst David Tyerman said.
WestJet climbed less than 1 percent to C$22.67 at 12:14 p.m. in Toronto. The shares sank 14 percent this year through April 13, the third worst performance among Canadian industrial stocks. Canada’s benchmark S&P/TSX Composite Index fell 5.8 percent in the same period.
On the labor front, Calgary-based WestJet is looking to strike a deal with its pilots “as quickly as we can,” Sims said.
“I’m optimistic it will be this year,” he said.
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Photo credit: A WestJet Boeing 737. The company is launching a new low-cost airline. TMWolf / Flickr