Looking over the results from WestJet and Air Canada you will see two companies with very different ways of doing business. WestJet, the friendly carrier with everyone within the company an owner and Air Canada, the union laden unfriendly national carrier. WestJet just keeps showing decent profits for it's shareholders(which includes everyone in the company) vs continued losses for Air Canada.
So what does this all mean? To an outsider i think it is obvious that The business model of WestJet needs to be studied and put in place with so many companies. It is a prime example of how private business can conquer the market while it's direct competitor has continued to get saddled with huge union contracts and which in turn leads to higher prices which of course makes them that much less competitive in the marketplace. Add to this the unfriendly and unhelpful union staff of Air Canada and you will see why they are failing to get ahead in the market. The unions have made for a miserable business model that is a complete failure and that sentiment and entitlement from it's union members make this a horrendous company to travel with much less invest in.
Air Canada, it is time to change your way of conducting business, including reeling in the unions and their fat contracts. Either this or you will be heading to the government again with your hands held out, this time they may not be very receptive!
Air Canada, it is time to change your way of conducting business, including reeling in the unions and their fat contracts. Either this or you will be heading to the government again with your hands held out, this time they may not be very receptive!
WestJet earnings rise 275%
Air Canada narrows loss
CBC News
Posted: Aug 4, 2011 12:32 PM ET
Last Updated: Aug 4, 2011 12:32 PM ET
WestJet expects revenue growth to moderate over the rest of the year. (CBC)Canada's two biggest airlines report very different results Thursday, with WestJet's profits up 275 per cent and Air Canada narrowing its loss.
WestJet reported second-quarter profits soared to $25.6 million as higher fares and cost controls helped offset increased fuel prices.
The Calgary-based carrier said profits amounted to 18 cents per share, up 274.7 per cent or five cents a share from net earnings of $6.8 million, in the same 2010 quarter. Revenues rose 21.4 per cent to $742.3 million from $611 million in the 2010 period.
Analysts polled by Thomson Reuters were on average expecting WestJet to report earnings of nine cents per share and revenue of $734 million. Revenue per available seat mile, or RASM, was 14.17 cents, up from 12.24 cents.
"WestJet anticipates continued year-over-year RASM growth for the third quarter of 2011 based on advanced bookings," the airline said.
"However, this year-over-year growth is expected to come at a moderated pace versus that seen during the first half of 2011, since the pricing environment was more robust during the second half of 2010 as compared to the first half of 2010."
Air Canada, the country's biggest airline, narrowed its losses to $46 million in the second quarter.
The loss amounted to 17 cents per share compared with a net loss of $318 million, or 20 cents per share, in the same period last year.
Air Canada will try to raise fares
On an adjusted basis, the loss was 20 cents per share, falling in line with average expectations from analysts polled by Thomson Reuters.
Operating income was up 55 per cent to $73 million compared with $47 million in the second quarter of 2010.
Passenger revenues increased $272 million or 11.7 per cent, to $2.9 billion, on a 6.1 per cent growth in traffic and a 5.2 per cent improvement in yield.
Premium business class revenues grew $54 million, or almost 11 per cent, from the same quarter in 2010 because of traffic growth of 13 per cent.
Air Canada said it will continue to try to raise fares and seek fuel surcharges where possible in the coming months as it tries to absorb elevated costs that threaten future profitability.
"High fuel costs and volatility clearly remain the single largest challenge facing our industry," CEO Calin Rovinescu said during a conference call.
Fuel costs surged by 40 per cent from a year ago and are expected to add about $800 million to the airline's operating expenses this year.
"To mitigate the impact of this fuel cost increase, we're looking at adding additional cost reduction opportunities beyond those identified through our cost transformation program and, where competitively feasible, we have increased fares and introduced fuel surcharges," Rovinescu told analysts.
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