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.
ULCCs, hybrid airlines in the Americas. True LCCs start to look like a vanishing species
During the mid-2000s the term hybrid business model entered the North American aviation business vernacular as low cost airlines became more sophisticated, adding elements to their strategy outside the boundaries of the traditional low cost blueprint pioneered by Southwest Airlines. Fast forward to 2016, and the term hybrid is becoming outdated, as low cost airlines in North America have adopted many of the same product attributes as full service airlines, and as those airlines have blended in many low cost elements.
North American airlines can now be categorised into four business models – full service airlines; low cost, high value airlines; ultra-low cost airlines; and Southwest, which still aspires to the low cost paradigm but does not offer the product attributes of more upscale low cost airlines. jetBlue has pushed the boundaries of low cost product evolution with its successful Mint experiment, featuring a fully lie-flat business seat, but no other North American low cost airline has (yet) decided to follow suit. Canada's low cost model, WestJet, has hybridised, adding a regional fleet in Westjet Encore, expanding its competitive bandwidth against its main domestic opponent and going long haul on the Atlantic.
In the less mature Latin American aviation market, the low cost airline model is still evolutionary, with the exception of Mexico where three low cost airlines and one full service airline are competing to lure passengers from bus travel. Brazil and Colombia also have low cost airline representation, but the spread of the business model is generally slower in South America, partially due to challenges from the cumbersome regulations that the start-up companies face in bringing their visions to fruition.