WestJet aims to shed CAD100 million to stave off unit cost expansion

Canadian carrier WestJet is embarking on a CAD100 million (USD100 million) cost improvement programme to combat some of the cost challenges that a 17-year old carrier inevitably faces. The scheme is aimed at widening a shrinking cost advantage WestJet holds over its domestic rival Air Canada and ensuring its costs remain competitive with US low-cost carriers that operate in a number of WestJet's transborder markets. But even as the carrier faces mounting cost pressures, WestJet continues to post solid financial results.

Between 2008 and 2012 WestJet's unit costs excluding fuel and profit sharing increased 10%, and from 2011 to 2012 those cost increased 3%. The year-over-year rise from 2011 to 2012 was in line with WestJet's projections of a 3% to 3.5% increase, and was largely due to rising airport costs, and increases in marketing and general and administration expenses; however, unit cost increases were recorded across all expense line items.