While the past 12 months held its challenges for WestJet, the airline is looking ahead to 2019 as a year of growth and expansion, with a focus on product, partnerships and the ongoing assembly of a strong executive team.
During WestJet’s annual investor day event in Toronto, PAX caught up with Tim Croyle, WestJet’s interim executive vice-president commercial, who provided an insightful recap of 2018, as well as the airline’s plans for the year ahead. The event also served as a showcase for the airline’s new cabin classes and respective seating configurations, currently rolling out across the WestJet fleet.
While WestJet’s total revenue for the third quarter of 2018 was $1.26 billion – up from $1.21 billion reported this time last year – total earnings for the quarter were $45.9 million, compared to earnings of $135.9 million reported in the third quarter of 2017. However, the latest results marked a return to profitability following a $20.8 million loss in the second quarter, WestJet’s first money-losing quarter in 13 years.
Part of that impact was due to the rising price of fuel throughout the year, climbing from 62 cents in 2017 to 85 cents per litre this year, a jump of more than 37 per cent year-over-year.
According to Croyle, a number of savings initiatives have been identified, from using strategic navigation to fly as directly as possible to reducing the overall weight of the aircraft, including lighter paper for in-flight magazines.
These initiatives are part of $200 million in annual cost savings opportunities identified by WestJet through 2020, which also includes fleet reconfigurations, airport operations cost savings, optimized maintenance plans, digital self service, and sales and distribution channel efficiencies.
Similarly, a downturn in the Alberta economy has been weathered through an increase in connecting flights through Calgary from other Western Canada markets, Croyle said.
Tailored products, stronger partnerships
“We’re tailoring our cabins and fare products to suit the needs of our different guests,” Croyle said, explaining that a one-size-fits-all approach is not viable for the evolving airline.
In addition to the evolution of its cabins and fare families, the coming year will see the introduction of a new tier in the WestJet Rewards program for frequent flyers with the launch of Platinum. The new tier, which will have an $8,000 qualifying spend, will offer members an eight per cent earn rate for WestJet dollars on each booking, along with more premium services at the airport including priority check-in, boarding and screening, lounge access and a dedicated concierge help line.
“We’re finding that our Gold level members are spending beyond that threshold so we’re introducing a new level,” Croyle said.
Partnerships with other airlines will also define 2019 for WestJet, Croyle added. An application for a transborder joint venture with Delta is currently pending approval by the Canadian and U.S. governments, while it was also announced during yesterday that WestJet will expand its partnership with Australian carrier Qantas.
Further out, Croyle said that WestJet has entered early discussions with Air France-KLM on the possibility of a transatlantic joint venture, as the airline continues to eye expansion in Europe.
“We’re developing deeper relationships with partners,” he said. “We’ll be able to come together and act as one airline, offering seamless connections and top-level benefits.”
In a statement regarding its 2019 forecast, WestJet said that it expects to “expand margins through a combination of improved revenue performance, a continued focus on cost control and a prudent approach to capacity management.”
Regarding system-wide capacity growth, the airline anticipates an increase of between 6.5 and 8.5 per cent and domestic capacity growth of between one and three per cent. Growth in 2019 is attributed to the launch of transatlantic service on the airline's new Boeing 787 Dreamliner and the incremental capacity associated with Swoop increasing to ten aircraft, WestJet said.
Overseeing this growth is an evolving and expanding executive team; lead by President & CEO Ed Sims (who took on the role following the retirement of Gregg Saretsky last year), WestJet recently welcomed Arved von zur Muehlen to the position of chief commercial officer and Jeffrey Martin as new chief operating officer.
“We’ve assembled a very strong executive team with more than 150 years of experience, from around the globe,” Croyle said. “They’re excited to join an airline that’s on the cusp of transformation into a new carrier.
“We’ve got a lot of the foundations in place to make 2019 a very strong year.”