WestJet eyes C$100 million a year in code-share revenues

Wed Nov 9, 2011 3:15pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Nicole Mordant

(Reuters) - WestJet Airlines (WJA.TO: Quote) is targeting annual revenue of C$100 million from code-share agreements with other airlines within the next few years, a figure that suggests such tie-ups will have a minimal impact on the carrier's overall growth.

For the past two years, WestJet, Canada's second biggest airline, has strongly promoted the idea of code-share pacts with partner airlines as a way to expand its business as it bumps up against a mature airline market at home.

But the C$100 million figure, mentioned publicly by the airline for the first time on Wednesday, will represent only a small increase on its revenue, which analysts expect will top C$3 billion this year.

If C$100 million is the target, "then code shares and interlines are not going to change WestJet in a meaningful way," said Canaccord-Genuity analyst David Tyerman.

"The bigger things will just be their normal growth and things like the future decisions on do they bring into the fleet a larger or smaller aircraft," Tyerman said.

WestJet Chief Executive Gregg Saretsky said the carrier is targeting about C$100 million annually in extra revenue "when the full network of code-share partners are filled out and when each of them has reached maturity". He said that usually takes about five years.

The 15-year-old airline, which is modeled on U.S. low-cost carrier Southwest Airlines Co (LUV.N: Quote), has signed code-share agreements with three carriers: Cathay Pacific (0293.HK: Quote), American Airlines AMR.N and Air France-KLM (AIRF.PA: Quote).

It expects to ink another in December and another three or four in 2012, Saretsky said on a conference call to discuss WestJet's third-quarter results. Earnings fell 10 percent and were weaker than the market had expected.   Continued...