Westjet to be North America`s most profitable airline in `09

[ZanderRobertson]

I just watched an interview on BNN with an airline industry analyst based in the US. His firm has just completed a study on 23 airlines across North America. Some of the findings paraphrased:

-Air Canada is not a viable stand alone airline
-Air Canada spun off their most profitable businesses
-Air Canada is crippled by high labour costs
-Westjet will be the most profitable airline in NA in 2009
-Westjet benefits from low labour costs
-The average Westjet employee works for the company for 4 years
-Air Canada bet wrong and hedged on oil futures
-Westjet didn`t hedge and will benefit from the drop in oil prices

LESSONS/INSIGHTS:

- Keep my business lean
- Don`t ever believe that prices will rise indefinitely
- The NA auto industry suffers from the same thing as Air Canada (bloated rather than lean); how can they last?
- I hate Air Canada and their arrogant staff (not personally, just as a customer)
- I love Westjet`s commitment to service and their inspiring success story
- Westjet is a great example of remaining profitable in an up or down market.

 

[KimFranz]

Excellent post! I personally love WestJet, they certainly are a cut above every other airline (AirCanada).

Kim

 

[Sherilynn]

My husband, Ken, is a pilot who has friends at both Air Canada and Westjet all saying, "come and work with us!"

Our thoughts for the past several years have been that Air Canada is not as stable as Westjet (for the reasons listed above plus a few others). We have seen friends at AC laid off and rehired and transferred and laid off again.

Is it lack of focus, arrogance, or something worse that leads to such predicaments? All I know for certain is that AC is not on Ken`s list of places to work.

Sherilynn

 

[wealthyboomer]

QUOTE (Sherilynn @ Dec 17 2008, 09:35 PM) My husband, Ken, is a pilot who has friends at both Air Canada and Westjet all saying, "come and work with us!"
Our thoughts for the past several years have been that Air Canada is not as stable as Westjet (for the reasons listed above plus a few others). We have seen friends at AC laid off and rehired and transferred and laid off again.

Is it lack of focus, arrogance, or something worse that leads to such predicaments? All I know for certain is that AC is not on Ken`s list of places to work.

Sherilynn
It`s called `UNIONS`.

 

[invst4profit]

Companies get the union they deserve and deserve to union they get.

History has shown that a company that treats it`s employees poorly creates a workforce that has little choice but to rely on a union to protect there rights. This action forces smart companies to re thing there relationship with those employees and begin to treat them with respect. When that happens the union membership becomes less militant and the union drifts into the background.

The cause is the company the result is the employees saying NO MORE.

 

[ZanderRobertson]

so, what`s the lesson here? Westjet will have union problems? Or Air Canada treated it`s employees poorly in the past? Or what?




QUOTE (invst4profit @ Dec 18 2008, 06:54 AM) Companies get the union they deserve and deserve to union they get.

History has shown that a company that treats it`s employees poorly creates a workforce that has little choice but to rely on a union to protect there rights. This action forces smart companies to re thing there relationship with those employees and begin to treat them with respect. When that happens the union membership becomes less militant and the union drifts into the background.

The cause is the company the result is the employees saying NO MORE.

 

[invst4profit]

Air Canada treated it`s employees badly causing the problems that now exist between employee/management.
West Jet will need to continue treating there employees very well or they will suffer the same fate.

 

[Sherilynn]

WestJet is poised to maintain good employee relations by taking positive action such as rewarding employees with shares in the company. As we all know, when you have an ownership interest in a business, you are bound to care more about every aspect of its operations.

As for unions, I learned long ago not to mention that word in mixed company. (It`s a great issue to debate, but - as with politics and religion - I prefer to meet my opponents face-to-face rather than in an open forum.)

Regards,
Sherilynn

 

[Jack]

QUOTE History has shown that a company that treats it`s employees poorly creates a workforce that has little choice but to rely on a union to protect there rights. This action forces smart companies to re thing there relationship with those employees and begin to treat them with respect.

The formation of unions has nothing to do with "relationships" between employer and employee - they`re formed to protect the workers. The workers have chosen a highly-specialized career (aircraft maintenance, whatever) that essentially ties them to that employer. Without a union, Air Canada would hold all bargaining power in labour negotiations, because the employees have very limited options.

Whether or not the balance of power has shifted too far on the unions` side is another topic in itself, but, point being, unions do have a place in society.

 

[Jack]

QUOTE WestJet is poised to maintain good employee relations by taking positive action such as rewarding employees with shares in the company. As we all know, when you have an ownership interest in a business, you are bound to care more about every aspect of its operations.

Ugh, come on. Those are the worst commercials. Especially that one where that daughter is having dinner with her family and subsequently introducing her new boyfriend. He`s asked what he does for a living. Well, I`m an owner of WestJet. And the family looks at eachother all wide-eyed and impressed, automatically revealing that they know zilch about finance and likely have a combined IQ of about 75. So the jackass goes on to continue eating his meal with glee after successfully misleading what could be his future in-laws. Excellent first impression, pal. If I were the father at that table, I would`ve taken a big soup label full of mashed potatoes and thrown them right at his face.

First of all, almost all public companies offer share purchase plans for their employees. So, just like that, you`re an "owner" of that company. Woooow!

But anyone who owns any RRSP`s or mutual funds are also very likely already "owners" of WestJet, CNRL, Suncor, Shaw, C.P. Rail, TELUS, whatever.

Besides the horrific commercials, I do certainly support the airline and will be using it on Christmas Eve, in fact.

 

[invst4profit]

The formation of unions has nothing to do with "relationships" between employer and employee - they`re formed to protect the workers. The workers have chosen a highly-specialized career (aircraft maintenance, whatever) that essentially ties them to that employer. Without a union, Air Canada would hold all bargaining power in labour negotiations, because the employees have very limited options.

Whether or not the balance of power has shifted too far on the unions` side is another topic in itself, but, point being, unions do have a place in society.



AGREED 99%

Without a union employees have two basic choices regarding there work environment - stay or go.
I can not count the number of times in my lifetime I have heard "if you don`t like it here quit"

 

[ZanderRobertson]

As much as the employees options are limited, aren`t employers options limited to who is knowledgeable enough and willing to do the work just like every other industry? In the case of specialized work, doesn`t their specialization give them even more clout unless there was an oversupply of this type of labour? In which case presumably the wages would go down and the bad employees would get shaken out.

Wow, imagine a world where the market dictates salaries and working conditions rather than unions. Scary. Then again, maybe air canada would have remained a viable stand alone airline if that were the case.


QUOTE (Jack @ Dec 18 2008, 02:59 PM) The formation of unions has nothing to do with "relationships" between employer and employee - they`re formed to protect the workers. The workers have chosen a highly-specialized career (aircraft maintenance, whatever) that essentially ties them to that employer. Without a union, Air Canada would hold all bargaining power in labour negotiations, because the employees have very limited options.

Whether or not the balance of power has shifted too far on the unions` side is another topic in itself, but, point being, unions do have a place in society.

 

[Jack]

QUOTE Wow, imagine a world where the market dictates salaries and working conditions rather than unions. Scary. Then again, maybe air canada would have remained a viable stand alone airline if that were the case.

Uh, we do live in a world like that.

Unless you`re in highly-specialized jobs/lines of work where you don`t have many other courses of action if something`s to do wrong. Professional athletes are all in unions. Where`s a guy like Pacman Jones going to find work if the NFL didn`t exist? Unions usually work just fine, so long as there`s good relations between the union and the company.

 

[Jack]

And by the way, "the union" isn`t the only reason that Air Canada`s a crappy company - the whole airline business stinks. It`s extremely competitive, the margins are very low, you`re badly exposed to commodity price risk, and there`s lost revenue on every single flight in the form of unsold seats.

WestJet`s found some nice ancillary revenue centers, like the headphones, the on-demand movie sales, the snacks, etc., but just remember that a couple years ago they themselves were in some pretty serious trouble, too. It`s not necessarily that one company`s much better than the other, it`s that it`s a bow-wow industry in general.

 

[ZanderRobertson]

it is a very tough industry to make it, all the more reason why Westjet is to be commended. You`re right Air Canada has a lot more problems than just the union, hence it`s a bad company in a tough industry.

just as the "big 3" are bad companies in a tough industry, yet here there are winners too. it`s really more about what the management does than the industry. if the management is able to have excellent customer service with happy employees, wow.

but then again, it could just be luck. if i had to guess though i`d say it`s due to vigilant management that cuts costs and takes a proactive stance.

strong market, weak market, there are stars and there are dogs




QUOTE (Jack @ Dec 18 2008, 08:19 PM) And by the way, "the union" isn`t the only reason that Air Canada`s a crappy company - the whole airline business stinks. It`s extremely competitive, the margins are very low, you`re badly exposed to commodity price risk, and there`s lost revenue on every single flight in the form of unsold seats.

WestJet`s found some nice ancillary revenue centers, like the headphones, the on-demand movie sales, the snacks, etc., but just remember that a couple years ago they themselves were in some pretty serious trouble, too. It`s not necessarily that one company`s much better than the other, it`s that it`s a bow-wow industry in general.

 

[JohnS]

QUOTE (ZanderRobertson @ Dec 18 2008, 07:41 PM) As much as the employees options are limited, aren`t employers options limited to who is knowledgeable enough and willing to do the work just like every other industry? In the case of specialized work, doesn`t their specialization give them even more clout unless there was an oversupply of this type of labour? In which case presumably the wages would go down and the bad employees would get shaken out.

Wow, imagine a world where the market dictates salaries and working conditions rather than unions. Scary.

I`m totally with you on this one, Zander. I think unions have their time and place, and 21st century Canada is neither the time nor the place.

My biggest problem with unions is that they often protect the lazy and incompetent while penalizing those who are motivated and good at their jobs.

Hmmm....guess I`m not such a whacked-out commie pinko after all!

Have a good one, all!

JohnS

 

[invst4profit]

[Wow, imagine a world where the market dictates salaries and working conditions rather than unions. Scary. Then again, maybe air canada would have remained a viable stand alone airline if that were the case.]



Only owners of companies have the power to set wages and working conditions and they do so based on the markets at the time..
As far as wages are concerned they are where they are now because during the high profit taking period of the late 70s and 80s greedy employers used high wage offers to buy off the employees in an attempt to reducing benefits and working conditions.



[My biggest problem with unions is that they often protect the lazy and incompetent while penalizing those who are motivated and good at their jobs.]


Unions do not have the ability to protect any employee that is not meeting job requirements or violating company rules and guidelines. The reason employers are not successful in terminating poor employees is not because of the union it is because those employers are incompenant in preparing for and carrying out those terminations.
Lazy and incompetent employees in my experience have always been protected by lazy and incompetent managers/supervisors/employers.
Adjudicators do not rule in favour of employees when employers have adequately prepared a case with proper and accurate evidence to support a termination..
It is no different than a court of law. If the prosecution does not do there job it is not the fault of the defence lawyer that a guilty party is freed. Judges and juries make that decision.

 

[klewlis]

I worked for WestJet for a short time (just three months), and had to leave due to personal/financial issues. I would have stayed indefinitely, if I could have. They are definitely a great company to work for. Just to clear up a couple of things I saw in this thread:

- there is no union at WJ. Their philosophy is to treat the staff well enough that a union is not needed. For problems that do arise, there are procedures and advocates in place to help deal with them.
- the ownership, as was said, is not uncommon with publicly traded companies; however, very few are as generous as WJ is--the share purchase plan is a 100% matching agreement. That is, if I buy $100 worth of shares, I get $100 matched for free. This is an amazing deal and has helped many westjetters become wealthy.
- shares are not given as bonuses, to my knowledge
- there is profit-sharing, where every staff gets a proportional share of profits twice a year
- WJ has made a profit in every quarter except two--and for both of those two, they chose to take a loss (for example, retiring old planes, etc.)

They have a very smart team at the head... if anyone can survive the airline industry in these tough times, it`ll be them.

 

[invst4profit]

Does anyone know where WJs wages stand. Are they comparable with industry standards or are they lower as a result of there profit sharing arrangement.

 

[Sherilynn]

QUOTE (invst4profit @ Dec 30 2008, 06:43 AM) Does anyone know where WJs wages stand. Are they comparable with industry standards or are they lower as a result of there profit sharing arrangement.

Here is a site used by pilots researching employers. http://www.airlinepilotcentral.com/airlines/canadian.html

Westjest`s first year wages for an FO (first officer) are slightly higher than AC`s ($41.67/hr vs 37.3) NOT including profit sharing. Then year two boasts a jump to $52.08/hr for WJ while AC rises to $42.4. The minimum guaranteed hours are also higher with WJ. (And, first year Captains are much better off with WJ.)

The long term wages can be a lot higher for AC because their fleet consists of many larger planes that fly internationally, but that`s not a fair comparison. If you look at similar planes, then the longterm wages are similar but WJ comes out on top with the added profit sharing.

Happy New Year!
Sherilynn