Newspaper article The Canadian Press

WestJet Orders Longer-Range Boeings as Part of Wider Expansion Plans

Newspaper article The Canadian Press

WestJet Orders Longer-Range Boeings as Part of Wider Expansion Plans

Article excerpt

WestJet orders longer-range Boeings


CALGARY - WestJet Airlines Ltd. (TSX:WJA) has set out a plan to expand both internationally and into ultra-low cost offerings that has raised concerns from some analysts about being overly ambitious.

The company said Tuesday it has ordered 10 Boeing Dreamliners with the option for 10 more, that will allow it to serve new destinations in Asia, South America and Europe with higher-end offerings like lie-flat seating.

The move comes as WestJet is also moving ahead with a plan to launch a separate ultra-low cost brand that will start with 10 planes and offer a bare-bones service.

Combined, the new avenues of thrift and luxury set the company up for a new era of growth, said chief executive Gregg Saretsky at WestJet's annual meeting Tuesday.

"The opportunity to expand both in the low cost space, while at the same time growing our long-haul business, is something that creates a platform for future growth that has been unprecedented in our 21-year history," he said.

National Bank analyst Cameron Doerksen responded to the plan by lowering his rating of WestJet to underperform, citing in part the company's overall ultra-low cost strategy, the significant money that will be needed to expand abroad and the complications of doing both at the same time.

"We are concerned WestJet has too many new strategic initiatives underway simultaneously, which could impair successful execution," wrote Doerksen in an analyst note.

WestJet shares have fallen to their lowest levels in nearly a month. They were at $22.03 in mid-afternoon trading, down 81 cents or about 3.6 per cent.

Saretsky said at the annual meeting that WestJet's recent experience of starting its Encore regional brand sets it up well for the task.

"It's a lot of work, but only three years ago we started a brand-new airline, which has grown from nothing to 45 aircraft, so I believe we have all the foundations to make starting two new initiatives really quite doable," he said. …

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