Airline Leader Interview - Westjet, EVP & CCO John Weatherill

Transcript

John Weatherill:Thanks, thanks. Nice to be here and nice to welcome everyone to Calgary. This is our hometown. We're very proud of Calgary, more proud this week than we were last week. I had 6 inches of snow in my backyard last week, so it's— whoever organized the dates for the conference picked them very well.

Michael Bell:Well, it is a beautiful city and hopefully everyone will get a chance to enjoy it here.

John Weatherill:Yes, indeed.

Michael Bell:Hopefully they came on WestJet, right?

John Weatherill:Hopefully, yes.

Michael Bell:Yeah, I didn't, which is why I'm still wearing the clothes that I came on last night. Yeah, and my girlfriend too. It was a major carrier based in the US, and I won't mention names, just hubbed in Dallas-Fort Worth.

John Weatherill:You can mention names, it's fine.

Michael Bell:Yeah, hopefully they're coming today. All right, let's start big picture and work our way down and talk about strategy. Onex bought the company, took it private, has driven a number, I think, of important changes. Alexis and yourself as well. But for those who haven't followed or are maybe a little confused, define the strategy of WestJet for us. What's in the portfolio and where are you guys focused today?

John Weatherill:Yeah, yeah, that's a great, a great question and a good opportunity to just kind of clarify our strategy going forward. So we were taken private by Onex, as you mentioned, 2019, the end of 2019. That happened. It was the largest airline privatization in history globally, and it's been very— it's been a very good experience for us. We've had a lot of growth under Onex, and we have refined our strategy, as you said, in part with Onex, in part with Alexis, our new CEO, who— well, not so new anymore. He's been with us for just over 2 years. And when Alexis came in, what he observed was we had had a period of declining profitability leading into COVID. So even before COVID hit, It wasn't just COVID. It wasn't just COVID. Of course, COVID was catastrophic, but we had a period of declining profitability and we had to look at how we were going to build the airline coming out of COVID and what changes and tweaks to the strategy we wanted to make in that regard. And ultimately, we refined our strategy. We didn't do a 180, but we did a pretty substantial refinement. And I think the strategy really involves— revolves around the network and the network that we're choosing to serve, the geographies that we're choosing to serve. And then the market segments and the product that we're going to have in the market. And so there's 3 parts of the strategy. The first part of the strategy is really— and I would characterize the overall strategy as growing where we can win, growing where we have a sustainable advantage, and there's a few places where that is the case. The first is in Western Canada. So we are the—

Michael Bell:Which is like a coming home for WestJet anyway.

John Weatherill:It's coming home, yeah. We were founded here in Calgary 28 years ago, and so we are very familiar with Western Canada. It's always been a great and strong part of the country for us to operate in, and we're going to continue to grow in Western Canada. We are already the largest airline in 7 of the 8 largest cities in Western Canada. That gives us a position of strength and the ability to serve all segments of the market in Western Canada, from ultra-price sensitive to high-frequency business travelers. We have product and a network and schedule to be able to do that. So that's the Western Canada piece. We're growing significantly here in the West. We're also going to lead in the leisure segment. in Canada, and WestJet has always been successful in the leisure segment. We're talking mainly about taking Canadians south in the wintertime, but also other opportunistic leisure opportunities that we see happening. And across the country, not just in Western Canada, but across the country, WestJet and WestJet Vacations has always been quite successful in doing that. We have a good brand, and we're known by many Canadians as being their preferred leisure carrier. So, we're going to continue to grow that. Part of our strategy there is the acquisition of Sunwing Airlines and Sunwing Vacations.

Michael Bell:Which was leisure-oriented.

John Weatherill:Oh, entirely leisure-oriented, exactly right. So that's the second kind of part of the strategy. And then the third part of the strategy is around cost, and we have a growing and sustainable cost advantage against our primary and largest competitor. We want to continue to grow that cost advantage, and we also want to make sure that we keep our costs under control so that we can continue to offer affordable fares for Canadians into the future. So those are the 3 kind of pillars of the strategy going forward.

Michael Bell:So let's just take each one of those and chat a little bit about them. Western Canadian focus, if you will, around the core business and Calgary at the center of that, right? Talk about the role of Calgary in building your intercontinental hub here.

John Weatherill:Yeah, so Calgary is, I mean, it's the largest operation in our network. We have about 160 departures every day out of Calgary Airport. It is our hometown, as I mentioned, and the place where we were founded. So we've been here for a long time. We've grown very quickly. Pre-pandemic, we were operating 2019, I think we're around 11 million seats in and out of Calgary every year. This year we're going to be 14 million seats. Within 5 years we'll be at 20 million seats, and this is on a population base, a local population base of 1.5 million people.

Michael Bell:So this is music to Chris Dinsdale's ears.

John Weatherill:I hope so, and we have— part of the reason that we have— there was a reference made to the fact that in 2022 we declared that Calgary would be our single global hub airport. Prior to that, we operated long-haul international service from a bunch of different cities in Canada, and we've made the decision that as far as our wide-body, intercontinental wide-body service will—

Michael Bell:And why is that? Is that to sort of double up on your strength in Western Canada?

John Weatherill:Yeah, there's a lot of reasons. I mean, first of all, we've achieved critical mass in the hub here, so we have connectivity, and as you have critical mass in a connecting hub, everything you add to the hub seems to be able to benefit from the other spokes that you have. So it gets easier to add as you grow, and we're going to continue to do We have an exceptional partnership both with the Calgary Airport Authority and with the Government of Alberta, and that was a significant part of our decision to invest in the city and in the airport. The Airport Authority has given us the confidence that we'll have both the commercial structure and the operational conditions to be able to succeed and grow the hub in the years to come, and so that's a really significant part, and we're very grateful for the partnership that we have with the Airport Authority and with the government. And also, it is a It's an incredible city. It's a growing city. Alberta has the fastest growing population in the country. We have the highest GDP per capita in the country. We have the fastest economic growth in the country here in Alberta, and all of those things contribute to a good environment for growing a hub.

Michael Bell:Intercontinental hub, so that means that your long-haul flying to Europe, for example, is out of here, right?

John Weatherill:That's right. Well, on the 787s, yeah. So what we've done is we've consolidated. wide-body aircraft, and we made the decision to consolidate all of those here in Calgary for a number of reasons, and in large part because we have the connecting network here to be able to support and fill those long-haul aircraft. So out of Calgary, we now fly to 6 destinations in Europe. We fly to 2— we will, as of next week, fly to 2 destinations in Asia. We started service to Tokyo last year. We have Seoul, Incheon starting on Friday.

Michael Bell:So it's east and west, basically? Hubs tend to be concentrated on cities with large origin-destination bases. Calgary is a growing city, but not a huge one. How will that work for you? Is that a concern that it's not a Toronto or even a Vancouver, let's say?

John Weatherill:It's not a concern for us. We've done the math. We think there's a lot of growth opportunity here, and part of that is connecting flows. So we don't, of course, we don't rely entirely on the local market. About half of our traffic that we carry through Calgary is local traffic, the other half is connecting traffic, and geographically it's well situated between Eastern and Western Canada, between the Western US and Europe, between all of the US and Asia. So we have a, you know, a nice geographic position. It's a very strong corporate and business market here in Calgary. We have the highest number of corporate head offices per capita in the country, and I mentioned how the economy is growing, population is growing.

Michael Bell:Highest number of corporate head offices, more than Toronto?

John Weatherill:Per capita.

Michael Bell:Per capita.

John Weatherill:Asterisks per capita.

Michael Bell:Yeah. You need to keep the population down to drive the number up. That's right. Yeah. So inherent in what you guys did is sort of the focus that you've described, if you will, leisure, let's say, across the country, the core network focus on the West, intercontinental hub out of here. But what's also part of that is what you've chosen not to do. take Swoop and shut it down and put it into the mainline. We understand similar plans with Sunwing as an airline, as an operating certificate. So talk about why that and how the Swoop experiment helped or hurt and what do we read into that?

John Weatherill:Yeah, no, that's a great question. What not to do is, and that's an important part of any strategy, right, is to define what you're not going to do. And there's a couple of things that we decided in developing the new strategy that go along with that. So the first is prior to COVID, we were, we had developed a pretty substantial intra-Eastern Canada network. So we were flying Toronto-Montréal 14 times a day, Toronto-Ottawa 12 times a day, Toronto-New York 8 times a day. And we were trying to compete for the high-frequency corporate traveller in Eastern Canada. We made a huge investment in aircraft and personnel and so forth over about a decade. And even with the investment that we made, and it was substantial, we had such a capacity and network disadvantage relative to our primary competitor, we just couldn't crack that segment of the market.

Michael Bell:Right.

John Weatherill:We could get some spill, some price-sensitive spill, but we just couldn't get into the segment of the market that we thought we needed to get into to be successful. It makes sense because we didn't have the network to support it despite the investment. What we decided to do was that we weren't going to continue to compete for a segment of the market that we didn't think we had a path to win. We made the decision to pull that flying down. We now fly— I think we've pulled our intra— I mean, we have our scheduling team here who will correct me afterwards, I'm sure.

Michael Bell:Yeah.

John Weatherill:We pulled our intra-Eastern flying down by something like 95%. We don't fly Toronto-Ottawa anymore. We don't fly Toronto-Montreal, the 2 largest cities in the country, anymore. And we've moved that capacity to the West where it's performing much, much better for us. And so, that's what we're not doing is that intra-Eastern flying. We continue to serve Eastern Canada. It's still a hugely important part of our network. We just do it in a different way. I think one of the previous speakers said, We have a nuanced approach to how we serve Eastern Canada, which—

Michael Bell:And now you're starting to build back some service, not within the region, but to the region.

John Weatherill:Yeah, so that's exactly right. So that's the nuance. So the nuance is that we will continue to connect Eastern and Western Canada. Even today, we fly 35 nonstop routes between Western Canada and Eastern Canada, and we're going to continue to grow that and connect Eastern Canadians to the West. We're going to connect Eastern Canadians to the South and to leisure destinations. And we will continue to look for opportunistic plays like the narrow-body flying that we're doing from Halifax and St. John's and Toronto across the Atlantic this summer. Seasonal service very much geared towards the leisure market.

Michael Bell:How feasible is it to be the national leisure carrier without having a strong eastern presence, if you will, within the stuff you tore down, if you will? Is that an uphill battle?

John Weatherill:Well, we think it's very feasible, and a lot of The benefit is going to come from the acquisition of Sunwing that you made reference to. So Sunwing, we acquired in 2023, Sunwing Airlines and Sunwing Vacations. Sunwing Vacations is the largest tour operator in the country, and it's kind of a unique feature of the Canadian airline industry that almost every airline has a tour operator attached to it. So Sunwing Airlines and Sunwing Vacations we acquired, they were the largest. Air Canada, Transat, WestJet Vacations actually is the 4th largest tour operator in the country. Very complementary, a complementary bringing together of 2 companies because although the majority of WestJet's operations are here in Western Canada, Sunwing has about 90% of their operations in Eastern Canada. Toronto, Montreal, and Ontario and Quebec in general are very large operations for them. So as we incorporate that operation into our business, our footprint in the East for leisure travel—

Michael Bell:The tour operator presence is there.

John Weatherill:Exactly, exactly right. And so we feel like we have a very good position in the tour operator space. Right now, about 50%, 1 in 2 vacation packages that are sold in Canada are sold through the WestJet Group today, whether that's Sunwing Vacations or WestJet Vacations. And just as we have the largest presence in 7 of the 8 biggest cities in Western Canada, we also have the largest presence amongst any Canadian airline in 7 of the 8 largest destinations in Mexico and the Caribbean. So, we feel like we have a very, you know, good platform to build from there.

Michael Bell:So, Swoop, let's talk about that decision, and we heard the comments earlier about Lynx coming in and out, Flair, there's rumours that they're on the ropes. Jetlines, it's proven difficult, right? The ULCC, I always laugh when people say like, you know, the white spaces on the ULCC map globally, and Canada was always one of them. It's like, people are looking at it, yeah, there's a big white space, maybe there's a reason. So obviously you guys included—

John Weatherill:Snow is part of the reason.

Michael Bell:But why has that model not reached Yeah, and you often hear that.

John Weatherill:You often hear, well, why don't Canadians deserve a ULCC? And it's not about what the market deserves, it's about what the market can support and what the market can sustain. And we did a lot of analysis on this when we were going through our strategic review a few years ago, and we looked very carefully at, you know, is that the path to growth? Should we simplify our operations? Should we remove connectivity and remove our business class cabin and get rid of our widebodies and our regional aircraft and just stay focused on the core business?

Michael Bell:Yeah.

John Weatherill:simplify to essentially a ULCC type of an operation. And when we did the math, we recognized pretty quickly that the market is simply not large enough to sustain— the Canadian market— not large enough to sustain a pure-play ULCC of any sort of scale. And there's a lot of reasons for that. There's reasons around market size and population density. There's reasons around the market characteristics. There's reasons around the cost, the infrastructure cost or the overhead cost burden.

Michael Bell:So, Seasonality is—

John Weatherill:Seasonality, yes, seasonality is an issue. We've addressed seasonality pretty well in our business. Used to be that Canadian airlines made money only in Q3 and lost money for the rest of the year. For us, and this goes back to even pre-COVID, our most profitable quarter is now Q1. So we have a good, we have a pretty good balance of seasonality. But essentially the conclusion that we came to was, you know, we were trying to serve the ultra-low-cost, low-price-sensitive segment of the market by having a second brand. Which was Swoop, and Swoop was completely separate from the rest of our operations. So, separate workforce, separate leadership team, separate head office, separate AOC, everything was standalone, and it was designed from the very beginning to be an ultra-low-cost operator. Actually, the cost structure that Swoop had was very, very low. It was by far the lowest-cost operator in the country. But what we recognized with Swoop was that even with very low costs, they weren't able— the market just wasn't big enough to to be able to stimulate the type of traffic that they needed to be successful. So, Swoop, despite the ULCC model requiring very high load factors and selling ancillaries and so forth, Swoop would operate with load factors that were 10 or 15 points below mainline WestJet. And that, for us, was a bit confusing, because this is kind of counter to the model that should be stimulating the traffic, and there just wasn't enough traffic if you focus on that one segment of the market here in Canada. And maybe to put the market size into context, just to give you a sense of how small the Canadian market is. 40 million population across 10 million square kilometres. I was in Italy last summer with my family, and my son, who's 11 years old, said to me, Dad, what's the population of Italy? Of course, I didn't know, so I had to look it up, and it was 60 million. 60 million people live in Italy. And he said, well, what's the population of Alberta, the province that we're in right now?

Michael Bell:5 million.

John Weatherill:And the population of Alberta is about 4 million people. So you've got 2 cities of substantial size in Alberta, Calgary and Edmonton, both about 1.5 million people, not a lot of people outside of Calgary and Edmonton. So 4 million versus 60. And he said, well, Dad, how big is Italy? Of course, I didn't know that either, so I had to look that up. And Italy is half the size of Alberta. So if it's 15 times the population and half the geographic space, that means It's 30 times the population density. And so, you know, if we had here in Alberta, if we had Italy's population density, instead of having 2 cities the size of Calgary and Edmonton, we would have 60 cities the size of Calgary and Edmonton. And I think if that was the case, the prospects for ULCC would be quite different, but it's not the reality.

Michael Bell:So, probably in 500 years when—

John Weatherill:Something like that, yeah, something like that.

Michael Bell:Alright, let's talk about partnerships, alliances. You know, no man or woman is an island, and no Airline is an island either, so what is the posture of WestJet relative to that? You have some partnerships, tell us about those. What's the plan? Is alliance participation part of it?

John Weatherill:Yeah, we've had a partnership strategy since about 2019, so 15 years we've been codesharing with other airlines, and we have a mixture of partners. We have interline partners kind of spanning across the globe and across all major alliances, but from a codeshare perspective, we partner with a number of both SkyTeam and Oneworld airlines. Our largest partner from a partnership perspective is Delta, and that's our primary partner. It's our only codeshare partner in the United States, and we have a very good and close relationship with them. We do, besides the codesharing, we have reciprocal frequent flyer, top-tier benefits, joint corporate sales, co-location in airports, and so forth. So we're working on making that a very seamless travel experience between WestJet and Delta. Delta, and then, you know, in other geographies we partner with the airlines that make the most sense. So for example, we fly to Tokyo, we have a codeshare relationship with JAL both on the transpacific segment and also beyond Tokyo into Asia. When we start our service to Incheon next week, we will have codeshare with Korean beyond Seoul into Asia.

Michael Bell:And so it's a bilateral approach?

John Weatherill:All bilateral approaches, yeah. And you asked about alliances. I think for us we don't have a huge motivation to join a global airline alliance. I think being a small carrier in a big alliance is maybe not the best place to be, and we'd prefer to be able to just work bilaterally with the airlines that we think are making the most sense for us as partners.

Michael Bell:And that approach is working for WestJet?

John Weatherill:It's working very well for us, yeah.

Michael Bell:Talk about commercial innovation. We've seen some things you've come up with, Extended Comfort and other, but what's the pipeline look like of Things you guys are doing to better please the customer?

John Weatherill:Yeah, that's a good question, and some of it I will answer and some of it I will not because some of it's kind of commercially sensitive. But we're working— I mean, we've got innovation happening across our commercial—

Michael Bell:It's private here.

John Weatherill:Okay, yeah, perfect. Across our commercial business. So we talked a lot already about kind of the network changes that we're making. We are also doing quite a bit of work around our schedule philosophy, how we build the network, how we build the structure of the schedule to do drive better utilization or efficiency, crew productivity, etc. So there's a lot of work happening on the network and scheduling side of the business. Pricing and revenue management, I think probably many of the airlines in the room here would agree, we're gonna see more evolution in airline pricing and revenue management over the next 5 years than we probably saw in the last 40 years. And so WestJet's no exception to that. We think about things like offer management, dynamic pricing, NDC, and everything that unlocks. So we're So, we're working feverishly in that part of the business, and there will be some things that we can announce there pretty quickly. A lot on the guest service side of the business, self-serve technology in particular, disruption management technology, so a lot of it on the guest service side will be technology-driven. We have innovation happening with our loyalty program, so we're in the midst of a major transformation of the loyalty program that we have, which is called WestJet Rewards. We made some significant investments into the structure of WestJet Rewards about I don't know, 6 or 7 years ago, and we haven't done since, and so it's overdue, and we have some pretty exciting things coming with WestJet loyalty.

Michael Bell:It's a huge moneymaker for most airlines.

John Weatherill:It is loyalty. I mean, I think we're seeing a lot of airlines and even non-airlines are beginning to understand that there's a lot of benefit and value in loyalty programs and loyalty partnerships, and so it's one of the big things.

Michael Bell:Given the comment we heard about where US people are putting their alliances, or their allegiances rather.

John Weatherill:Exactly, yeah, exactly right.

Michael Bell:We do the Airline Strategy Awards every year with another organization, and I was just writing up the nominations last night about digital leadership. So what does the digital strategy look like? And you talked about disruption management. That seems to be an area ripe for digital application, but what's the digital approach at WestJet?

John Weatherill:Yeah, I mean, I think we're probably like many airlines. We're moving as quickly as we can and not as quickly as we'd like into digitalization of And so that covers a lot of things, you know, data, how do we better utilize and leverage the data that we have? How do we make sure that data doesn't live in silos across the organization? We're bringing it together, we have access to do the deep learning that we need to do to be able to drive insights and improvements across our business, whether they're commercial or guest experience or operational. There's a lot of opportunity around data and advanced analytics that we're investing in. I mentioned our kind of move towards self-serve, so we're investing in Investing very heavily in self-serve capabilities. We had an absolutely kind of horrific weather situation here in Canada, and it actually was across the country in the Christmas of 2022, so about a year and a quarter ago, and caused a lot of disruption leading up to Christmas. And at that time, if you were disrupted on a WestJet, if you were a guest that was disrupted on a WestJet flight, and we would re-accommodate you, of course, but if you didn't like the re-accommodation option that you that you had and you wanted to make a change to that, you had no option but to call our contact center or to line up at the airport and talk to an agent to get that resolved. So we went from 0% a year and a half ago to about 70% of the use cases now. When that occurs, the guests can self-serve digitally and not have to kind of go through the hassle of waiting on hold to talk to an agent for a change.

Michael Bell:To lovely music.

John Weatherill:Yeah, exactly right. And a lot of things behind the scenes that are going to be less obvious. So for example, just today as I was sitting Sitting at the table over there, I received an email from our project team. We just went live with payment through live chat. So we have a live chat channel that guests can interact with. We are the very first Sabre PSS airline on the planet to automate payment through live chat. That just went live today, and it's one of the—

Michael Bell:Congratulations.

John Weatherill:Yeah, thank you. So there's a lot going on in this space, and one of the things that keeps me up is just our ability and the pace of our ability to execute.

Michael Bell:Talking about payment and finances, etc., you mentioned it was the largest take-private transaction in airline history, I think. So what's it been like to be under Onex and private equity ownership? How's that different than what the public stance you had earlier?

John Weatherill:Yeah, well, it's, I mean, it's quite different because we're not doing quarterly earnings calls and you're not managing quarter to quarter, you're managing for a much longer time horizon. I think it's been very, very positive for us through COVID. I mean, Onex didn't put money into the airline in COVID. We had to We had to stand on our own 2 feet, and we did that. We emerged from COVID we took no government aid, we issued no new equity, we issued no new debt through COVID, and so we're very proud of our ability to get through. Now, it's made the rebuild that much more difficult, but we're very proud of that. But what Onyx did provide to us during COVID was long-term thinking and strategic thinking at a time when, as a leadership team, you're in crisis management mode, right? You're trying to figure out what you're going to do tomorrow or next week, And you're not thinking about what does 2 years or 3 years look like, and Onex continues to bring that perspective to the table.

Michael Bell:Including this group structure with the leisure carriers.

John Weatherill:Absolutely, yeah, absolutely right. And so that's been very, very positive.

Michael Bell:It's interesting, most private equity mindsets are not that, right? They're usually get in, 3 or 4 years, sell it, but maybe COVID forced a long-term view on the investment.

John Weatherill:Yeah, it could be, and I don't know from coming in what their intention was in terms of the timeframe to hold these kind of hold the position, but, you know, we see with Onex typically 5 to 10 years they hold a position in a company, and I wouldn't be surprised if that's the same with us.

Michael Bell:We want to leave a little time for questions, so just one more from me before we open it up to the audience, and that is, so sounds great, but what's keeping you up at night?

John Weatherill:What's keeping me up at night? Well, we've got this Drake-Kendrick Lamar feud going on. That's That's bothering me. You know, I talked a little bit about our pace of execution, right? Our ability internally, that's the number one thing for me. I think we have a very, very robust strategy. We have a very clear strategy, and if we can execute on that strategy, we will be successful. I have no doubt. So it's just about our own internal pace of execution, and that's one of the things that probably keeps me up at night. Externally, it's probably 2 categories. One is supplier risk, and we've already had some conversation today about what's happening with aircraft production and so forth. And so that's our ability to secure the supply of capacity that we need to achieve our growth ambitions. And we have some flexibility in how we do that, but just like every other airline, we're being impacted by delivery delays. And so that's a big challenge for us. And then I guess the other thing that kind of, I would, it doesn't keep me up at night, but I would consider a challenge is the regulatory environment here in Canada. We have a very high regulatory cost burden. government fees and taxes, despite the fact that we have very low population density. Our population density in Canada is 1/20th the size of Europe, 1/10th the size of the US, and that means that air travel is effectively an essential service in this country. Despite that, it's not treated as an essential service. It's treated as actually a source of income for the federal government, and that's a problem because it means that—

Michael Bell:That's just to lower your taxes.

John Weatherill:Well, it's very— I mean, there's a lot that gets piled on, and it's It's a challenge. It's a challenge for the industry, it's a challenge for affordability, and we want to make sure that we have an affordable industry.

Michael Bell:Probably another reason why there aren't ULCCs in the country, right?

John Weatherill:Yeah, it is. I mean, the overhead cost burden— Not too many. Yeah, and the overhead cost burden, I mean, we pay more in third-party fees and taxes on our average ticket price than an airline like Ryanair would generate. Their entire revenue per passenger would be less than the amount that we pay in overhead fees and taxes. And so it's a challenge, and there's additional regulations that are either being imposed or being considered that Although they're well-intentioned, they're very misguided and ultimately will result in a decline in profitability and a decline in connectivity across the country. So I'm very concerned about that. Let's open it up.

Michael Bell:Who has some questions for John? You have silenced the crowd. I think we have one here. I think we're just going to get the mic over to you here so everyone can hear your question, please.

John Weatherill:Like a lot of people here, I'm a points nerd and geek, and I love the loyalty programs.

Michael Bell:Can you share a little bit more about your strategy on your loyalty program and your differentiators and USPs and that sort of thing?

John Weatherill:Sure, yeah.

Michael Bell:Are you talking about ours at Korn Ferry or yours?

John Weatherill:So the— good question, clarify. Yeah, great question. So, WestJet Rewards, when it was founded about a decade ago, was pretty revolutionary in the industry, or at least in the Canadian industry. It was, from the outset, it was a spend-based program, so it wasn't based on how many miles you flew or segments or anything like that. It was based on the spend with the company. It was a currency-based program, so not points-based, but currency-based. No blackouts, partial redemption permitted, all of the things that were kind of frustration points with other programs, we addressed from the outset. Because of that, we saw incredible growth in the program through the first half decade, or 7 or 8 years, but the reality is we haven't invested substantially in the program since that time. We've made some tweaks, we've added tiers to the program, and those sorts of things, but we haven't invested substantially in the program, and what we've seen is the competition has invested in their loyalty program, and to be fair, we have to catch up now. I won't get into detail about what we're planning, but I will say a lot of it revolves around the fact that To interact with WestJet Rewards, there's really only 2 ways to do that today. You either do it because you're a member in the program and you fly a flight, or because you have the Co-brand credit card in your wallet, and when you purchase, make purchases, you accumulate some rewards. But that's it. And so what we recognize is, you know, what we bring to the table is an aspirational redemption opportunity, but we don't have a lot of day-to-day engagement, and that's one of the things that we want to work on for our programs, make sure that our members can engage in the program on a more regular basis.

Michael Bell:Right.

John Weatherill:regular basis, that'll provide more value to the members and ultimately provide more value to us as well.

Michael Bell:Let's take one off the Slido deck here. What is your labor strategy in this tight market?

John Weatherill:Yeah, that's a great question. Labor is just what we talk about, supplier risk. Labor risk is probably another one as well. It's been a— it has been a challenge to rebuild because we didn't receive government funding through the pandemic. We did lay off, at one point we had laid off about 70% of our workforce, and to have to rebuild that in pretty short order because the recovery happened pretty quickly, has been very, very difficult. So it started with pilots. We now have our kind of mainline pilot situation stable, and we have the mainline pilots that we need. We still have a challenge with our regional pilots, WestJet Encore. We don't have enough there, so we're underutilizing our assets there, and we're doing a lot of work to improve on that. We just reached an agreement with our tech ops union, which was this past weekend, which is very, very important because We need to be able to attract and retain AMEs, and so it is a— what we've seen is the labor environment across airlines has just increased, and we have, thankfully, we have the structure and the business model that allows us to compete with that higher cost base and be successful.

Michael Bell:You talked about the regulatory burden. There's a big expectation in Canada that all leading Canadian companies be very environmentally conscious as well, so how are you guys doing? Relative to meeting your own climate goals?

John Weatherill:Yeah, I mean, I think we are— well, of course we treat it very seriously, as every company should. We are taking the steps that are within our control, so when it comes to things like technology, winglets, aircraft technology, our investment in newer and more fuel-efficient aircraft, those are the things that we control, and we're continuing to do that, obviously subject to our ability to take delivery of new aircraft, but we take it very seriously. Over the past In the last 5 years, we've seen our emissions intensity drop by about 11%, so we are seeing good success there, but ultimately, you know, for the industry to decarbonize, our view at this point, based on the technology that's out there, is it's going to require significant development of SAF, sustainable aviation fuel. That's going to require government intervention, because the supply of SAF and the cost of SAF is just not feasible for what the industry needs to be able to decarbonize at scale, and so we're big proponents of that. We want to see the government get involved and help to ensure that there is a supply of affordable sustainable aviation fuel here in Canada. That hasn't happened yet, but we hope that it will in the coming years.

Michael Bell:Well, we are beyond time. Incredibly clear and specific and interesting. I believe you are indicative of the immense talent that resides within WestJet, and so the future looks very good. So with that, I'll just ask you to join me in thanking John for his time today. John, thank you.

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