Hot Air (2): WestJet’s Eastern Expansion & Bombardier’s 2017 Forecast

046As the snow starts to melt any lingering stagnation from the bleak winter months are shaken off as companies turn their eyes towards summer operations. Moving away from the West Coast, the headlines for this month’s “Hot Air” comes from Canada’s aviation core: Quebec. After a fairly quiet winter, Bombardier and WestJet recently awoke from hibernation to make major announcements in Montreal.

Beginning with the Calgary based carrier, as covered in its February 13th press release, WestJet Airlines (WJA) is set to add over 100 weekly flights through Quebec’s two main airports: Montreal (YUL) & Quebec City (YQB). The carrier is hoping to generate new traffic in Canada’s business corridor, a region, it feels it has historically neglected.

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WestJet’s planned expansion in Quebec highlights the carrier’s commitment to increasing competition in Canada’s eastern business corridor. (Photo: 08/01/2015, YVR, John Jamieson)

According to WestJet’s Executive VP Commercial Bob Cummings, “The people in Quebec have historically been served by a legacy carrier” (i.e. Air Canada). The feeling at WestJet is that there is a market to be exploited by expanding services in the region. They believe this can be achieved by adding new markets and increasing existing frequencies to/and from Western Canada. WestJet Encore (WestJet’s regional subsidiary) will operate the new “Seaboard Segments” using its 78 Seat Bombardier Q-400’s, while cross-country flights to Western Canada will continue to be operated by WJA’s mainline Boeing 737NG fleet.

The new services are as follows:

Montreal <–> Halifax: 2 x Daily

Montreal <–> Quebec City: (Starting June 13th) 4 x Daily

Montreal <–>Boston: 2 x Daily

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Air Canada Express and Porter Airlines have an established history in this region and it can be expected that both carriers will respond to WestJet’s advances into their turf.

Depending on the carrier’s success, it’s likely WestJet will look at other markets in the region for growth. The significance of achieving market share may be crucially important for the carrier when one considers the uncertainty surrounding Encore’s declining operations in Western Canada (for more on Encore’s decline in Western Canada click here)

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Photo Credit: Bombardier Inc. 03/07/2016

Switching to Canada’s largest aircraft manufacturer, Bombardier Inc (Montreal based) recently announced their Financial results from 2016 and spoke about their targets for 2018 and 2020. Over the course of the Financial year, Bombardier saw a marked improvement in its commercial sector, largely through successes in the C-Series program. In 2016 the company celebrated successful entries into service by its highly-rated C-Series 100 and 300 in Switzerland (Swiss) and Latvia (Air Baltic). While the aircraft has been mostly used on route proving flights and medium-haul operations, the C-Series has been touted as a breakthrough aircraft with the potential to unlock new destinations for its carriers.

While the successes of the C-Series are something for Bombardier to rally around, the company is not out of the fire yet. The financial picture, while helped by C-Series orders from Air Canada and Delta Airlines, remains murky. While the company recently received financial backing from the Canadian government, Bombardier will need to effectively manage its finances and eliminate damaging setbacks. Production hiccups, delivery delays, and component failures during testing hampered the C-Series’ reputation. The company needs to ensure that these superfluous expenses don’t pile up, they can seriously harm a company’s bottom line.

Bombardier continues to roll out new products. They know that eventually, they’ll need to sell their products at market value and earn orders through successful operations instead of through heavy discounts. The company needs to rally around the early successes of the C-Series and hope that they generate future orders. It will not be easy. The company faces strong competition from Embraer and probing questions about the amount of money it received from the Canadian Government.

In the meantime, as focus shifts to Bombardier’s new long-range business jet the Global 7000, Bombardier hopes that faith placed in a tried and tested formula can pay long-term dividends.

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