ALBERTA DRAGS DOWN PROFITS WestJet looks to new markets

Posted on 05/04/2016 | About Alberta

Westjet Airlines Ltd. says it plans to further diversify its markets as the downturn in its home base of Alberta continues to be a drag on earnings. Chief executive Gregg Saretsky told a conference call with investors Tuesday that he'll be announcing a new charter service shortly, and the airline is also only days away from launching its direct flights to London, England.

Saretsky didn't reveal details about the charter service, but said it would be an opportunity to redeploy capacity from Alberta where the market continues to be soft. “We're very excited about it, it is a new line of business,” he said. After the company's annual meeting, also held Tuesday, Saretsky said the wide-bodied Boeing 767s it will be flying to London will also open up the potential for other cities within the plane's 12-hour flight radius.

“It brings geographies like South America and Asia and other points in Europe all in play. And so ultimately those are all opportunities for WestJet,” Saretsky said. The talk of diversification comes as the company reported 38 percent drop in profit due in large part to Alberta's weak economy. The Calgary-based airline said it earned $87.6 million or 71 cents per share on $1.03 billion in revenue in the first quarter. That compared with a record net profit of $140.7 million or $1.09 per share on $1.08 billion in revenue in the first quarter last year.

Saretsky said it was the second-best first quarter for the company, with lower fuel prices helping buffer from the downturn. He said it was too early to call a bottom as the oil and gas downturn and layoffs continue to create knock-on effect on things like restaurants and real estate. “So to the extent that all those things create some drag on the economy, I think there's still some more tough times ahead,” Saretsky said.

At the company's annual meeting Emma Pullman of consumer watchdog SumOfUs delivered an online petition calling for Saretsky to step down because of his handling of accusations of sexual assault within the company. The petition comes weeks after a former flight attendant filed two lawsuits against the airline- one alleging the company failed to provide a harassment-free workplace for its female employees, the other accusing it of not taking proper action after she reported being sexually assaulted by a pilot. WestJet has rejected the allegations, saying it encourages staff to report inappropriate behaviour in confidence and it would not put its reputation at stake by inadequately dealing with complaints. The allegations haven't been tested in court.

The company has enlisted audit firm EY to look into its practices around the issue and Saretsky said the recommendations of the report will be made public when it's complete.