Air Canada, WestJet see few woes from U.S. economy

Tue Mar 18, 2008 2:00pm EDT
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By Scott Haggett

CALGARY, Alberta (Reuters) - Canada's two major airlines said on Tuesday they have yet to see domestic demand for air travel slacken because of the slumping U.S. economy, though fuel costs are a rising concern.

Speaking at a Toronto investment conference, the chief executives of Air Canada ACa.TO and WestJet Airlines Ltd (WJA.TO: Quote) said domestic demand for air travel remains robust and there has been little sign so far of the turbulence that has roiled U.S. carriers.

"With fuel the price it is and fares that are going up to cover that ... we've been watching very closely to see how that's impacting demand," Montie Brewer, Air Canada's chief executive, said on the Webcast of his presentation. "Thus far, we've not seen any dramatic change in our booking levels even though the fare increases have gone in."

U.S. airlines have been hit hard by the economic downturn, which has cut travel demand at the same time that costs climb due to record fuel prices.

The trouble in the U.S. market, spurred by the fallout from the subprime mortgage crisis, was highlighted on Tuesday when Delta Air Lines Inc (DAL.N: Quote) said it would cut 2,000 jobs, or 3 percent of its staff, and cut flights.

Brewer said Air Canada, the country's biggest carrier, had no change to its bookings for the next three months and expects a busy summer travel season.

"I've been waiting for the Canadian economy and the Canadian traffic to slow down," he said. "But as you've seen ... even when it does slow down it is still at a very healthy pace relative to the U.S. guys, who've seen contracting domestic revenues."

Calgary, Alberta-based WestJet, which has reported record monthly capacity results for better than a year, said it too has not seen its advance bookings decline because of the economy.   Continued...

<p>Sean Durfy, president of West Jet, addresses shareholders at the company's annual general meeting in Calgary, Alberta, May 1, 2007. REUTERS/Todd Korol</p>