Southwest Airlines: “Once we get that code share service up and running with WestJet and Volaris, the technology will be much closer to us serving destinations on our own,” Brandy King, Spokeswoman. Source: Canadian Press, 25-Aug-09.
Southwest Airlines hopes to complete codeshare with WestJet by 2010
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Air Canada Part 2: Financial progress makes investment grade metrics more tangible
A decade ago it would have been unheard of for Air Canada to contemplate reaching an investment grade credit rating. The airline had emerged from bankruptcy protection, but was still struggling financially. It would teeter on the verge of another formal restructuring before setting out on a course to restructure its financial foundation – a process that has allowed the airline to improve its balance sheet and leverage.
Air Canada’s leverage targets for YE2018 will not meet the general proxy for an investment grade rating; however, its lower capital commitments and debt refinancing could create an opportunity for achieving that status beyond 2018.
Attaining an investment grade credit rating likely remains a longer term goal for Air Canada as its major financial goals in the short term remain paying down debt that is creeping up due to a fleet renewal, as well as funding growth to drive long-term shareholder value. More meaningful shareholder returns will likely occur once the company reaches what it deems as acceptable progress in debt management, and reaches a certain maturity level in growing its international network.
This is Part 2 in a two part series on Air Canada. Part 1 dealt with long haul LCC subsidiary, rouge.
Canada’s government paves the way for ULCCs Enerjet and Jetlines to jump into the marketplace
Two of Canada’s aspiring ultra-low cost airlines made a major breakthrough in Nov-2016 after they were granted exemptions from foreign ownerships restrictions, which allow foreign entities to hold up to 49% of Enerjet and Jetlines. Now Enerjet has taken on some heft by partnering with the global ultra-low cost airline investor Indigo Partners, which was instrumental in Spirit Airlines’ ULCC transition and now owns the ULCC Frontier Airlines. Another new Canadian ULCC, NewLeaf Travel, boasts former Spirit Airlines CEO as chairman of the board.
It is tough to predict how those influential backers will affect the outcome of efforts by the new crop of ULCCs to successfully execute the model in Canada. Although Canada is one of the few mature aviation markets without a true ultra-low cost competitor, the nuances of the Canadian domestic market could create challenges for the long-term viability of NewLeaf, Enerjet and Jetlines in the marketplace.
Jetlines and Enerjet, operating as FlyToo, aim to debut in Canada’s market during 2017. Unsurprisingly the country’s two airlines Air Canada and WestJet plan to compete vigorously with the start-ups, with WestJet vowing to defend its franchise and match the fares of its new competitors.