Air Canada and WestJet cite steady demand as they work to launch new subsidiaries

Canada's two largest carriers, Air Canada and WestJet, are voicing no concerns about declining demand even as some indicators show that high debt levels and high unemployment rates are weakening Canadian consumer confidence. If that weakness intensifies, both carriers could face significant headwinds in 2013 as they endeavour to launch new airlines to broaden their reach into new markets. If domestic conditions worsen it could affect the necessary cash flow generation required by those airlines to support the launch of their new business platforms.

But in the meantime Air Canada and WestJet are confident the demand that helped each carrier to achieve strong operational results in Aug-2012 will continue. Air Canada recorded a 88% load factor on essentially flat traffic and capacity growth while WestJet recorded 5.6ppt growth in loads to 89% on 9.2% growth in traffic and 2.3% expansion of supply year-over-year.