Monday, February 12, 2018

WestJet CEO Sees Boeing's Slow-Selling Max 7 as Key to Savings

Boeing’s slow-selling 737 Max 7 has a big fan in Western Canada.

WestJet Airlines next year will become the second carrier, after Southwest Airlines Co., to operate the smallest version of Boeing’s upgraded workhorse. The Calgary-based company is set to receive five of the single-aisle jetliners next year.

“We love those planes,” WestJet Chief Executive Officer Gregg Saretsky said in an interview, citing the aircraft’s range and 12 additional seats compared with the Boeing 737-700, a linchpin of the airline’s fleet. “It’s great for long, thin markets.”

Max Headroom

WestJet is adding more Max 7 planes than any other model through 2027.

Saretsky is counting on the Max 7 and two larger variants of the 737 to boost the number of seats and reduce fuel consumption, which should contribute to WestJet’s push to achieve annual savings of as much as C$200 million ($160 million) over the next five years. The CEO is also betting on efficiencies from the deployment of 10 Boeing 787 Dreamliners as WestJet expands long-distance service.

WestJet advanced 11 percent in the 12 months ending Feb. 9, while larger rival Air Canada surged 68 percent. Canada’s benchmark S&P/TSX Composite Index fell 3.7 percent.


Jetliner Rollout

Boeing rolled out the Max 7, the third member of its upgraded 737 family, at its Renton, Washington, factory Feb. 5. The milestone marked the first public appearance by the jet before it begins flight-testing.

The model is longer and flies a greater distance than Boeing had originally planned. With input from Southwest and WestJet -- and as sales flagged -- Boeing decided to stretch the frame to squeeze in two more rows of passengers. The Max 7 can now fly as many as 172 travelers, and as far as 3,850 nautical miles.

That’s the longest range of any member of the Max family. As travel demand and fuel costs rose over the past 15 years, airlines gravitated to larger single-aisle planes such as the Max 8 and Airbus A320neo. The Max 7 has also faced tough competition from the largest of Bombardier's C Series models, the CS300.

WestJet is scheduled to receive 23 of the Max 7 planes through 2027. It’s also taking 16 of Boeing’s Max 8 jets and 12 of the Max 10 aircraft.


Adding Dreamliners

The airline is adding its first three Dreamliners next year. Saretsky vows that the introduction will be smooth -- not like two years ago, when mechanical issues and delays marred the debut of used Boeing 767s that WestJet leased as it began flying to London from Toronto and western Canada. The 767s are now operating well, he said.

With the 787 in mind, WestJet has applied to civil-aviation authorities in Canada and abroad for permission to fly to China and Japan, Saretsky said. WestJet will probably announce in July which foreign cities it plans to serve initially with the 787.

“The beauty of the 787-9 is it has very long legs,” Saretsky said by telephone Thursday. “It can fly pretty much anywhere in the world from Canada. It can make India nonstop, it can make China nonstop, it can do any destination in Latin America or Europe nonstop.”


Discount Clash


WestJet is also starting a discount carrier called Swoop, which drew a labor complaint from the Air Line Pilots Association in connection with the airline’s efforts to recruit aviators.

WestJet declined Feb. 9 to comment on the complaint. A day earlier, Saretsky said Swoop would begin operating in June, as scheduled. The company has received more than 9,000 job applications for the 500 pilot and flight attendant positions it wants to fill this year, he said. It would prefer to hire as many WestJet pilots as possible.

Swoop is scheduled to begin operating with three Boeing 737 jets, rising to 10 by mid-2019. Over time, the unit could have as many as 40 planes in its fleet, Saretsky said, fueling the need for pilots.

“There won’t be a problem filling those roles,” he said. “If our pilots choose not to pursue that career path, we will go outside WestJet to fill those vacancies. We have several hundred applications already from very qualified pilots that are flying at other Canadian airlines, and from Canadians flying in the Middle East or China.”


(Frederic Tomesco - Bloomberg)

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