WestJet placed (28-Jun-2012) a conditional order with Bombardier Aerospace for 20 Bombardier Q400s with 25 options. The order amounts to CAD693 million (USD683) million at list price and could increase to CAD1.61 billion (USD1.59 billion) is all orders are exercised. [more - original PR]
WestJet places conditional order for 45 Bombardier Q400s
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WestJet prepares to lock in unit revenue growth to outpace cost inflation in 2017
Canada’s second largest airline WestJet believes it can attain a positive unit revenue result in 1Q2017, joining many other North American airlines in outlining specific timeframes for the reversal of negative trends. Unlike performance of most airlines in the region that are predicting sequential improvements from 3Q2016 to 4Q2016, WestJet’s performance will worsen during the last three months of 2016. The factors driving WestJet’s deeper unit revenue decreases include timing of the year-end holidays, competitive capacity pressure in warm weather markets, and fare matching of the start-up competitor ULCC NewLeaf.
Although WestJet believes it will make an important turn in its unit revenue performance in early 2017, it faces some cost inflation for the full year as it adds a larger number of smaller Bombardier Q400 turboprops, which have higher operating costs but in fact also help drive bottom line profitability. Although at this point WestJet cannot forecast its unit revenue performance for FY2017, its goal is to post unit revenue growth that outpaces unit cost increases.
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.