WestJet marks a milestone, sets a course for the future
WestJet Group CEO, Alexis von Hoensbroech is in an upbeat mood these days as he celebrates the company’s return to profit share for the first time since the pandemic, and talks about his outlook and strategy for the company as it heads into the new year.
What follows is von Hoensbroech’s message on what’s ahead:
“We marked a significant internal milestone today at WestJet, celebrating the return of profit share for the first time since the pandemic. Profit share has been synonymous with the WestJet culture for 27 years, meaning a portion of profit gets distributed among WestJetters in recognition of everyone’s contributions to our success.”
“The first three quarters of this year outpaced our earnings from pre-pandemic 2019 and I could not be prouder to celebrate and congratulate the team for the great work that led to a return to profit.”
Momentum and cautious optimism for 2024
“We owe this success to a few factors that go beyond our best-in-class team. First and foremost, we have a strong and sustainable business model, fine-tuned to meet the needs of Canadian travellers. Canadians are embracing our investments in the communities we serve, and we intend to build on this momentum, leveraging our strategy to expand affordable and accessible air connectivity from coast-to-coast.”
“This year was also uniquely positive in that we had market momentum on our side. Coming out of the pandemic, Canadians were ready to travel, and this pent-up demand resulted in one of the best economic environments for airlines that I have ever seen.”
“While 2023 was a favourable environment that paved the way to a return to profitability, we remain cautiously optimistic on our outlook for 2024. The same uniquely Canadian cost challenges will continue, while the economy is weakening and higher interest rates are catching up to all of us, but we built considerable momentum as we head into the new year.”
“We are growing, both in aircraft and in talent. We have the largest narrowbody orderbook in Canada and are considering adding even more.”
“Enabling this fleet growth are the most talented aviation professionals in Canada. In addition to the more than 2,000 people hired in 2023 across all areas of our business, we turned an important corner this year with full pilot training classes and more applicants than we can hire. We are also seeing remarkable success across the many teams who support our operations, particularly amongst our dedicated mechanics, cabin crew members, contact centre and airports teams who show up rain, snow, or shine to support our airline and our guests.”
“Our strategy to be Canada’s western leader and national leisure champion is working. Our revenue in the most recent quarter was the highest ever in our history. We have a robust balance sheet and enjoy a comfortable cushion of liquidity. This should come as no surprise for those who watched how we managed our finances during COVID, as we are perhaps the only airline of scale globally that did not accept government loans, or issue any equity or debt of any kind, during the pandemic.”
“Our approach to responsibly managing our finances goes beyond being able to give back to our WestJetters. It ensures that we can accelerate our growth, while remaining affordable and reliable for the millions of Canadians who travel with us each year. And we intend to keep at it, enhancing aviation as a critical building block for Canada’s economy.”
“We will work hard to stay lean, improve our cost advantage over our competitors, and accelerate our growth. Following the pandemic, we saw more than 60 airlines around the globe disappear and never return and, in a country where air travel is so essential, we have worked to design our business model to keep us profitable in all four quarters. Business models that make money in some months and lose money in others will find it tougher to survive and we saw the harsh reality of this during the pandemic.”
More choice and affordability in 2024 and beyond
“When talking about affordable airfares, I continue to get questions on our ultra-low-cost carrier (ULCC) strategy, following our integration of Swoop. I am firm in my belief that the pure play ULCC model is heavily challenged in Canada, given its vast geography, small population and high cost of air travel infrastructure. We have tried and learned a lot from Swoop. Once you grow beyond 10 ULCC aircraft you are forced to tap into smaller markets that don’t support a whole airplane full of ULCC capacity. Others have tried and failed, and some are still trying and challenging us.”
[You can read von Hoensbroech’s previous post at: https://www.linkedin.com/pulse/how-provideaffordable-flying-canada-westjet/ ]
“Our strategy of adding ULCC-style fares and products within our mainline aircraft is designed to give us flexibility to serve all Canadians, even the ultra-price sensitive ones, and to do so profitably. Once introduced in the new year, we will have a ULCC type product onboard our existing fleet of 180 aircraft. This allows us to easily offer an equivalent ULCC capacity of 50 Boeing 737 sized aircraft, while providing each market with an appropriately sized offering. As we receive deliveries of our MAX10 aircraft, starting next year, we will gain an unbeatable seatcost advantage, as these aircraft provide the most seating of any narrow-body aircraft in Canada with 212 seats.”
“The final piece to this strategy is integrating Sunwing Airlines and the perfect complement of Sunwing Vacations Group as the tour operator to our business. This year, one out of every two trips from Canada to the Latin Caribbean market will be on a WestJet Group aircraft. And equally on the tour operator side, one in two vacation packages sold in Canada will be sold through the various brands that make up our Sunwing Vacations Group. This gives us the scale and market presence to provide the most attractive vacation offerings to Canadians. This acquisition is of utmost importance to our strategy. I know integration is a heavy lift for our people, fortunately, as of now, we have no more need or appetite for further acquisition.”
Eye on the prize
“During our most recent leadership summit, I presented the many elements that are coming together to return WestJet to profitability and drive our success forward. I could not be more excited to see this come to fruition. The acquisition of Sunwing was the one missing piece required to deliver on our strategy to be the leader in the markets we serve.”
“We are on an exciting journey, and while there is a lot of heavy lifting still ahead as we integrate Sunwing Airlines into WestJet and modernize our company, the course is set. We know where we are going, we are maintaining our focus to keep our costs down, we have the order book required to deliver our growth and we have the most capable airline and tour operator team in the country. Today was an exceptional celebration of success for the WestJet Group. We have our eye on the prize and we are just getting started.”
