WestJet says weak Alberta economy weighing on demand

Tue Feb 2, 2016 1:34pm EST
 
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By Anet Josline Pinto

(Reuters) - WestJet Airlines Ltd's (WJA.TO: Quote) quarterly revenue per available seat mile, a key measure of profitability, is poised for its steepest decline since 2009, as Alberta's weakening economy weighs on leisure and business travel from the western Canadian province.

The company's shares fell as much as 11.5 percent to a more than three-year low of C$16.55.

Alberta, known for its oil-rich resources, has been hit by a near 70 percent plunge in oil prices since June 2014.

Airlines in western Canada that were once blooming in the oil-rich region have been recording a significant decline in passenger traffic to and from and within Alberta.

The company said it expects its revenue per available seat miles to decline as much as 12 percent in the current quarter.

Unlike in 2009, when Canada was hit by a recession and a swine flu outbreak, the current weakness in demand is restricted to Alberta, the company said, adding that it expects demand to improve after the first quarter.

" ... We are moving capacity around, with other regions being very healthy," Bob Cummings, executive vice-president of sales and marketing, said on a post-earnings call.

WestJet, which has shifted its focus to eastern Canada, suspended nearly a dozen daily flights from Alberta's largest airports, Calgary and Edmonton, last month.   Continued...

 
A Westjet Boeing 737-700 takes off at the International Airport in Calgary, Alberta, May 3, 2011.   REUTERS/Todd Korol