October 20, 2010 / 3:38 PM / 8 years ago

WestJet shares jump on American Airlines pact

* Analysts say pact is low-risk way to add travelers

* Offers promise of future co-operation opportunities

VANCOUVER, Oct 20 (Reuters) - Shares in WestJet Airlines Ltd (WJA.TO) leapt more than 5 percent on Wednesday after Canada’s No. 2 airline struck its first alliance with a U.S. carrier, a deal that should boost its passenger numbers.

WestJet and American Airlines, which is owned by AMR Corp AMR.N, said after the market close on Tuesday that they had signed a so-called interline agreement that will allow American passengers to travel more seamlessly into Canada and connect to WestJet flights on a single ticket.

“This is a relatively low-risk method of adding traffic to WestJet’s domestic network through a marketing agreement, while opening the door to future opportunities,” PI Financial analyst Chris Murray said.

The agreement does not initially make it easier for WestJet passengers originating in Canada to connect to American Airlines’ network in the United States but analysts expect this feature will be added in future.

WestJet stock rose as high as C$12.50 on the Toronto Stock Exchange on Wednesday morning, up 38 Canadian cents, or 5 percent.

WestJet, which has strayed somewhat from its low-budget airline roots as it looks for avenues to boost revenue, is increasingly targeting the business travel segment, until now dominated by its bigger domestic rival Air Canada ACa.TO.

Interline agreements, or closer co-operation code-sharing deals, are seen as key for attracting business travelers who demand easy connections to many destinations.

$1=$1.03 Canadian Reporting by Nicole Mordant; editing by Rob Wilson

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