WestJet predicts lower revenue, Air Canada reports drop in loads

CALGARY — WestJet Airlines Ltd. (TSX:WJA) expects the transition to a new reservation system will have a negative impact on its fourth-quarter passenger revenue, which is expected to be at least 11 per cent below last year.

CALGARY — WestJet Airlines Ltd. (TSX:WJA) expects the transition to a new reservation system will have a negative impact on its fourth-quarter passenger revenue, which is expected to be at least 11 per cent below last year.

The Calgary-based airline made the statement Thursday morning while releasing November traffic results, which showed a load factor down slightly from record highs last year as growth in capacity outpaced growth in traffic.

The new reservation system, which WestJet launched in mid-October after several delays, had affected the airline’s levels of service with implementation issues dragging on longer than expected.

“Currently, our revenue per available seat mile for the fourth quarter of 2009 is tracking to an anticipated year-over-year decline of 11 to 13 per cent,” said Sean Durfy, WestJet’s president and chief executive officer

Available seat miles, or ASMs, are a measure of an airline’s fleet capacity while load factor refers to how much of the capacity is used for carrying passengers.

WestJet’s November load factor of 75.9 per cent, was down slightly from last year’s 76.1 per cent.

Revenue passenger miles, a measure of passenger traffic, increased 3.1 per cent over November 2008 while capacity grew 3.4 per cent over the period.

Meanwhile, Air Canada (TSX:AC.B) reported a November load factor of 74.7 per cent, down from 77.6 per cent a year ago in consolidated results for Canada’s largest airline and Jazz (TSX:JAZ.UN), its regional partner.

The deterioration came as the airline increased available seat miles by 2.7 per cent, but reported a 1.2 per cent drop in traffic.

“This result produced in the traditionally slower off-peak travel season is also a reflection of the on-going effects of the weak economy on the industry,” Air Canada president and chief executive Calin Rovinescu said in a statement.

“As we have previously stated, we do not expect an economic recovery for 12 to 18 months.”

November is a weak period for airlines, since it comes between the end of summer vacation travel and before end-of-year holidays. November 2008 was especially difficult, coming as a global recession reduced corporate and consumer spending.

Durfy said the last month’s results “indicate another solid performance during these tough times.”

“We remain committed to our future growth initiatives and are confident that our increasing capabilities and brand strength will enable us to successfully launch new programs and destinations,” Durfy said.

WestJet said it will be launching a new frequent flyer and credit card program after the holiday travel season is over to boost its service levels back to its previous highs.

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