TORONTO (Reuters) - WestJet Airlines Ltd (WJA.TO), Canada’s No. 2 carrier, said on Monday it planned to fly its own wide-body planes as early as the autumn of 2015 and was in advanced stages of sourcing the long-haul aircraft, a move that may heat up competition with larger rival Air Canada ACb.TO.
WestJet, which launched its first trans-Atlantic service to Ireland this summer with its existing fleet of narrow-body planes, said international expansion was the natural next step in its evolution.
Attempting to boost revenue and push beyond its no-frill origins, WestJet has for several years toyed with the idea of expanding into the long-haul market with a new fleet, but focused first on domestic growth.
The Calgary, Alberta-based airline did not say how many wide-body planes it plans to buy or lease over the long term, but it will initially operate four of the aircraft.
The first planes will service routes between Alberta and Hawaii in late 2015, following expiry of a contract with Thomas Cook, which provides two Boeing 757s.
While WestJet’s plan promises growth, it also carries risk, analysts said.
“They are also moving away from the simplified operations that made them so successful over the past decade,” RBC Capital Markets analyst Walter Spracklin said in a note. “Accordingly, maintaining a cost advantage, as well as successfully executing, will be tantamount.”
AltaCorp Capital Research analyst Chris Murray said the shift “brings a lot more risk to the overall operation of the airline” but he expects a cautious roll-out.
WestJet will likely select Boeing 787s, to keep a common manufacturer for its fleet, and initially lease planes as it ramps up service, he said in an interview.
In December, Chief Executive Gregg Saretsky said WestJet had already held talks with Boeing Co (BA.N) and Airbus (AIR.PA) about buying wide-body planes and in May the airline said it was talking to plane makers and lessors. [ID:nL2N0JW1GQ] [ID:nL3N0NS21Y]
It currently flies Boeing 737-600, 737-700, 737-7800 and Bombardier Q400 aircraft.
WestJet said it would announce its wide-body schedule for the 2016 summer season at a later date.
The carrier likely wants to capitalize on strong international demand before rivals dominate the most profitable routes with newer aircraft, Spracklin wrote. He expects WestJet will use two wide-body planes for Hawaii routes and deploy two others for trans-Atlantic destinations.
That modest roll-out is not expected to immediately intensify competition with Air Canada, but that could change.
Air Canada launched a discount vacation carrier, Rouge, last summer to serve high-volume leisure flights to the Caribbean, United States and other international markets.
WestJet launched a regional subsidiary in 2012, Encore, to expand into smaller markets in Canada and the United States, and last year introduced new tiered ticket fares, including premium service aimed at business travelers.
Reporting by Susan Taylor; Editing by James Dalgleish