WestJet changes Boeing order to include 737-10; 3Q net profit up 19.4%

Calgary-based LCC WestJet has modified its Boeing commitments to include the 737-10 model, the airline told analysts during its third-quarter earnings call Oct. 31.

Under the amended agreement, WestJet will take seven -10 aircraft instead of seven -8s originally slated for delivery between 2022-25. It will also add five additional -10 aircraft for delivery starting in 2022, raising its total firm MAX orders from 50 to 55 aircraft. The airline will also change seven -9 orders to four -8s and three -7s.

The -10 was not available when WestJet first placed the order, CEO Gregg Saretsky said.

The [-10] aircraft offers greater capacity for dense markets, and a [unit cost] advantage in relation to the [-9] aircraft that they will now replace, he said.

WestJet is planning to start flying the MAX soon. The airline has taken delivery of its first three Boeing 737-8s, and plans to put the aircraft type into service Nov. 9, Saretsky said. Meanwhile, the airline is working to add seats to its Boeing 737-700s and -800s, adding four to the -700s and six to the -800s. The added capacity will reduce unit costs for the -700 by 3%, and 3.6% for the -800.

“We expect to complete all the seat reconfigurations in 2018, with the reconfiguration of our Boeing 737-800 fleet starting in the first quarter of 2018,” Saretsky said.

WestJet also offered some more details about the plan to launch its new ultra-LCC Swoop. While this new, no-frills airline will be based in Calgary, Alberta, like WestJet, its brand and network will be completely separate. Swoop picked Navitaire for its reservation system, WestJet management said.

WestJet plans to reveal Swoop’s flight schedule in early 2018, and to start service in summer with two aircraft. It plans to increase that fleet to six by September 2018, and to 10 within its first year. The aircraft will be configured with 189 seats, Saretsky confirmed to an analyst.

WestJet’s third-quarter capacity grew 5.8% compared with the same period a year earlier, and reached a record load factor of 85.7%. Traffic grew 7.9% year-over-year (YOY). For the fourth quarter, WestJet predicts overall capacity will increase 5.5%-6% YOY. Domestic capacity is expected to rise 7.5%-8% YOY during that period.

The airline expects overall 2017 capacity to rise, driven by the level of flying in its WestJet Encore regional subsidiary and charter operations. WestJet expects capacity to grow 6% YOY in 2017, and domestic capacity to increase 8.5%.

WestJet expects capacity to grow in 2018 as well, in part because of the introduction of Swoop and the seat-reconfiguration program. For 2018, growth is targeted at between 6.5%-8.5% YOY, about 2% of which would be related to those specific programs.

WestJet reported net earnings of C$138.4 million ($107.3 million) in the third quarter, up 19.4% from the same period of 2016. Revenue increased 8.1% YOY to C$1.2 billion. 

(Kristin Majcher - Aviation Daily / ATWOnline News)