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AirCan, WestJet poised for growth

By: Ross Marowits

Thursday, Sep. 20, 2012 at 8:35 AM | Comments: 0

MONTREAL -- Canada's two largest airlines have their sights set on new growth plans, with Air Canada set to announce details of its separate low-cost carrier and WestJet establishing its new regional service.

Air Canada chief financial officer Michael Rousseau told a CIBC investment conference Wednesday the airline is just a couple of weeks away from announcing details of a new discount carrier that will serve transatlantic and leisure routes in the Caribbean and the United States.

It will be wholly owned by Air Canada (TSX:AC.B), but carry a different name.

"It is a very exciting initiative, not just for Air Canada, but our employees as well because it does provide growth opportunities for us," he said.

Meanwhile, WestJet plans to launch its new regional service in one half of the country next summer and expand the service in other side of the country about nine months later.

However, the Calgary-based airline, which is starting the regional service with seven aircraft and ramping up to 20 by 2016, has been coy about just which half of the country it was planning to start with.

WestJet marketing vice-president Bob Cummings said the airline hosted a meeting in June of representatives from 32 communities that could be added to the regional service.

"These communities very much want WestJet to come into their community and stimulate traffic and become a part of their community," he said.

The schedule for the regional service will be announced early next year.

Meanwhile, Air Canada said about half of incremental profits from its low-cost carrier will be derived from cramming more seats into a fleet of 20 Boeing 767s and 30 Airbus A319s. The rest will come from lower employee wages and increasingly flexible work rules.

The wide-body planes, for example, will be fitted with 20 per cent more seats, raising the number of passengers to 275 per aircraft.

The airline will serve new routes in Europe that currently aren't cost-competitive for Air Canada and allow it to be more competitive on Caribbean and some U.S. destinations.

"The majority of the transatlantic routes will be, in fact, growth routes for us that we think we can make adequate, if not very strong returns," Rousseau said.

Its approach to the leisure market is more defensive, he added, with some routes switching to the low-cost carrier to improve margins.

-- The Canadian Press

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