Wed, Nov 12, 2008
Delayed Deliveries Aid In Capacity Cuts
All things considered, the recent machinists strike at Boeing
couldn't have come at a better time for Canadian low-cost carrier
WestJet.
The Vancouver Sun reports WestJet is slated to take delivery of
10 Boeing 737-700s in 2009... but due to the recently-resolved
labor action, at least three of those planes won't be delivered in
2009.
Though WestJet executives publicly expressed some
disappointment, in truth those delayed deliveries help the airline
more than they hurt.
Like its US counterparts, WestJet -- which reported a 28 percent
falloff in its third-quarter earnings on Monday -- has worked to
reduce capacity in the face of a slumping economy. The airline
still expects to add seats in 2009... but with the delays, WestJet
has cut its growth plans from eight percent to five.
Analysts see that as a positive... noting WestJet had already
spoken of such a reduction, and would have incurred penalties from
Boeing had it opted to defer those deliveries anyway.
"We would have been very happy to take our planes. But I think
the investment community is seeing it as a potential relief," said
WestJet CFO Vito Culmone in an interview Monday.
While it's unlikely the carrier will see any compensation from
Boeing -- as delays stemming from labor actions are often exempt
from any reimbursement on purchase contracts -- the fact WestJet
won't need to write checks for those three planes in 2009 should
also help the carrier's bottom line.
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