WestJet to weigh possible joint venture with U.S. carrier: CEO

(Reuters) - Canadian carrier WestJet Airlines Ltd WJA.TO said on Tuesday it would weigh the possibility of a revenue-sharing arrangement or joint-venture with a U.S. carrier, after reporting better-than-expected profits on an increase in passengers in the third quarter.

WestJet Chief Executive Gregg Saretsky told analysts the carrier could "look at" the possibility of coordinating items like scheduling and pricing on certain routes with U.S. partners American Airlines AAL.O and Delta Air Lines DAL.N.

“Is there a point in time where favoring one partner over the other becomes something that we want to pursue?” Saretsky asked. “Those are all things that are in the hopper for discussion.”

Earlier, Canada’s second-largest airline said it would add capacity in 2018, because of rising demand, while launching its new ultra-low-cost-carrier, Swoop.

Low and ultra low-cost flights are a hot market for airlines as passengers look for cheaper air travel.

“We expect 2018 to be a year of margin expansion,” WestJet chief financial officer Harry Taylor told analysts.

Calgary-based WestJet said it is also expecting a 1 to 2 percent rise in 2018 costs per available seat mile, excluding fuel and employee profit sharing, largely because of higher salaries and benefits.

WestJet’s stock was down 0.8 percent in midday trading.

The airline expects total capacity for its fleet to rise between 6.5 percent and 8.5 percent for 2018, up from the 6 percent increase it sees for 2017.

That growth will be driven by its new Boeing 737 MAX aircraft, along with Swoop's new flights starting in June 2018.(

“Swoop will fly mostly different markets than WestJet,” Saretsky said.

Revenue per available seat mile, a key indicator of an airline’s efficiency, is expected to rise between 2 and 4 percent during the fourth quarter. Costs, excluding fuel and employee profit sharing, are expected to rise by 3 to 3.5 percent.

During the third quarter, WestJet flew 6.5 million passengers, up from 5.9 million a year earlier, boosting revenue 8.1 percent to C$1.22 billion ($949.6 million). [nL8N1N63MS]

Reporting by Taenaz Shakir in Bengaluru and Allison Lampert in Montreal; Editing by Bernard Orr and Dan Grebler