Load Factor Spread Widens Between Air Canada & WestJet

Open Jaw

Despite a system-wide capacity increase of 10.5%, AC posted a load factor of 85.4% in June, down just slightly from a record performance the year before on a traffic increase of 10.1%. At rival WS things weren’t quite as sunny, with a June load factor of 76.9% reflecting a drop of 0.5% on a capacity increase of 7.6%.

"These strong results underscore the effectiveness of our commercial strategy focusing on international growth and the strategic deployment of Air Canada rouge to compete more effectively in leisure markets,” said Air Canada CEO Calin Rovinescu.

AC said its increase in traffic was led by significant growth in the U.S. transborder, Atlantic and Pacific markets.

Meanwhile, WS says they are satisfied with the results.

"We are pleased with our traffic growth in the 2nd quarter and are committed to keeping our costs low in order to provide affordable air travel for our guests," said WestJet President & CEO Gregg Saretsky.

WS has to be quite pleased with at least one statistic: it achieved an on-time performance rate of 89.4% in June, an improvement of 3.7 percentage points year over year. In Q2 the airline achieved a load factor of 78.1%, a decrease of 1.5 percentage points year over year, and flew a record 5 million pax, a year-over-year increase of 3.9% or approximately 184,000 additional guests.

WS also provided an update to its outlook for the 2nd quarter of 2015. It is now predicting revenue per available seat mile to be down approximately 5.7% year-over-year, as compared to its previous guidance of a moderate year-over-year decline, with the difference primarily driven by a more aggressive mix of lower fares during the quarter and slightly higher than expected costs per available seat mile (CASM).

The airline will now pay higher taxes too, due to an increase in the Alberta provincial corporate income tax rate from 10 to 12%.

The airline says it still expects to achieve year-over-year margin expansion and record net earnings for a second quarter.

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