News

Varcoe: Q&A with Harry Taylor, WestJet’s interim CEO


WestJet interim CEO Harry Taylor talked with Herald business columnist Chris Varcoe about the outlook for the new year

Article content

The head of WestJet expects 2022 will see the Calgary-based airline bring back all of its furloughed staff and return to profitability as more Canadians decide to fly.

Advertisement

Article content

In a year-end interview, WestJet interim CEO Harry Taylor talked with Herald business columnist Chris Varcoe about the outlook for the new year and how the company is seeing a faster recovery in Alberta than in other parts of Canada.

He also spoke about how WestJet is dealing with unvaccinated employees, the effect of increased competition from discount carriers and why the company ended talks with Ottawa over a federal aid package for airlines.

Here is an abbreviated, edited transcript of their conversation, which occurred just before Christmas. (On Thursday, WestJet announced it has consolidated 15 per cent of its flights until the end of January due to the effect of the Omicron variant.)

Varcoe: After the tumult of last year, how would you characterize 2021 for WestJet?

Advertisement

Article content

Taylor: The way I’d characterize 2021 is almost a year of two halves. The first half of the year, we were in the depths of the pandemic . . . Our volumes were down, at the lowest level, our revenue was down 92 per cent. Our lowest day was 40 flights in one day, when pre-pandemic we were averaging over 700 flights a day.

So we had really come to the bottom in the first half of the year and then recovery started. It started in May.

And for us, the second half was a much better half for the year. We were adding back flights, we were recalling WestJetters, we were planning for growth, certainly coming off the bottom. And there was a greater sense of optimism. It’s not over and (the pandemic) is still not over, as we well know. But at least we had bottomed out and were beginning, in the early innings, of recovery.

Advertisement

Article content

Obviously, we are finishing the year with a bit of a setback, in that yet another variant has come . . . and while that’s a very real concern, we are in a much different place, both as a country, as a people and as a company.

Q: How much has WestJet recovered from the damage of 2020?

A: In the fourth quarter of the year, our capacity that we will operate or will have operated is only down 34 per cent, whereas we were down in the highs 80s in the first half of the year. So that is a pretty significant increase, if you will. We are not all the way back and don’t expect to get all the way back until well into next year.

A WestJet Q400 takes off from the Calgary International Airport on Thursday, November 18, 2021.
A WestJet Q400 takes off from the Calgary International Airport on Thursday, November 18, 2021. Gavin Young/Postmedia

Q: In August, WestJet had a roundtable with local tourism leaders and laid out a plan to recoup 11 years of lost growth in six months, getting back to 2013 booking levels by the end of December. Were you able to achieve that?

Advertisement

Article content

A: Yes. To be clear, that . . . was to get us from the capacity that we were operating at in 2002, up to the level we were operating in 2013. And yes, that is exactly where we are operating today.

Q: How long will it take to get back to pre-pandemic levels on passenger traffic?

A: It’s differential by region . . . Domestic, we think should be fully recovered to pre-pandemic levels by next summer. Trans-border, meaning Canada to the U.S., will not be until the fall. And trans-Atlantic, since we don’t fly trans-Pacific, will not be until 2023. We think that’s the longest recovery path for us.

Q: WestJet had dropped below 4,900 employees from more than 14,000 pre-pandemic. What is your hiring plan through the end of 2021?

A: On Dec. 31, we should have 9,000 people active and on payroll.

Advertisement

Article content

Q: You have about 2,400 inactive staff right now. How long will it take to bring them all back?

A: I would expect by the summer we should have everybody recalled, if not earlier.

Q: I want to ask you about mandatory vaccinations for staff. Obviously, it is a federally regulated situation. At the beginning of November, you had 290 people who were suspended because they weren’t vaccinated. Where does that stand right now?

A: I believe we have 160 who were unable to — or unwilling, but mostly unable — to certify they were fully vaccinated. So we are at various stages of reviewing their employment. In some cases, we have already terminated their employment. In other cases, there have been applications for medical dispensation, religious dispensation, etc.

Advertisement

Article content

We are working through it, but we support — I want to make it clear — we support the mandate for full vaccination of not only WestJetters, but air travellers.

Q: You have a new CEO, Alexis von Hoensbroech, coming on board next year. The news release announcing his hiring said he lowered the cost base at Austrian Airlines to address rising competition from ultra-low-cost carriers (ULCCs). WestJet is facing increased competition from Flair Airlines, and now Lynx Air is starting up. How serious of a threat do you see the ULCCs being, or how intense is the competition?

A: This industry is remarkably, intensively competitive . . . I don’t for a minute diminish any startup in terms of looking to take share, because we were that (company) 26 years ago. We were someone who came in and said we’re going to come in with a lower cost base and lower fares and we are going to take share.

Advertisement

Article content

We were one of the few who survived and prospered by staying true to our roots and we intend to do that . . . and we are going to be aggressive, not just with Swoop, our own ultra-low-cost carrier, but with WestJet.

Alexis von Hoensbroech has been announced as the new CEO of WestJet Group.
Alexis von Hoensbroech has been announced as the new CEO of WestJet Group. Photo by Supplied /WestJet

Q: The federal government was slow in bringing forward an aid package for airlines. At the end of the day, WestJet decided not to continue with the talks, but also said you were open to resuming financial support discussions in the future. Has anything changed on that front?

A: It hasn’t. When we terminated those negotiations, it truly was mutual because we knew we didn’t need financial support from the government to survive. At the same time, we recognized the pandemic could always have yet another hand to deal us, and so we didn’t storm out in a huff and say this is terrible. And neither did the government.

Advertisement

Article content

We both agreed, you know what, the time has passed for this . . . But if, God forbid, we end up back in the tunnel that we were in, we want to keep the lines of communication open so that we could return (to) the traditional facilities that were offered to all airlines and all businesses.

Q: How has air travel in Alberta rebounded compared to pre-pandemic levels?

A: Alberta travel, I know it has been our strongest region across the country. I attribute that to two things: One is the strength of our business and our franchise with Albertans and people coming to or travelling out of Alberta.

And the second is the provincial restrictions have been less severe in Alberta than say Ontario or in B.C. As a result, we have seen the fastest rebound in Alberta compared to the other provinces or regions in the country.

Q: What is your sense of what 2022 will look like?

A: The first half of next year will continue to be challenging, not just because of Omicron, but more just as the recovery continues it will be the back half of the year where we really feel like we’re back to close to normal.

Q: I know WestJet is not a public company, but are you a profitable company this year? Will you be a profitable company next year?

A: We are not a profitable company this year. We expect to be profitable next year.

cvarcoe@postmedia.com

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



Source link

Leave a Reply

Your email address will not be published.