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WestJet, the Canadian low-cost airline, had been showing strong financial and operational performance for years. The company managed to grow and achieve its targets for 13 consecutive years, showing the world that WestJet knew what they were doing. However, the company’s evolution took a wrong turn with a number of new strategies put in place recently and although these may be positive in the long run, the company’s is currently in a difficult financial position and is struggling to maintain its competitiveness.

WestJet’s Struggles

WestJet’s profits, just like most airlines around the world, were influenced negatively by the rise in oil prices. On top of that, new entrants into the aviation market with a low-cost model pushed WestJet to drop its fare prices in order to stay competitive and avoid losing its customers to the new airlines. However, dropping prices was not ideal for WestJet as each litre of jet fuel increased by 31 percent. This, along with the threat of industrial action and strike resulted in WestJet’s loss for the first time in 13 years. Apart from the external factors, which affected the company’s results, a number of internal changes were also factors for WestJet’s slowdown.

The company went through an internal change of Chief Executives, with Ed Sims officially taking the role of the new Chief Executive Officer of the company, taking over from Gregg Saretsky in March 2018. A change of strategy has been noticed, as the money-making model was said to not be enough for the new goals of the company. According to industry experts, the addition of turboprops and wide-body aircraft, along with WestJet’s entry into Europe, are all factors, which brought the company’s profits down for the time being.

Overall, looking at the company’s 2018 Q2 report, WestJet revenues remained high despite the challenging period.

WestJet’s Second Quarter in Detail

Result for the second quarter of the year released by the company show that there is a lot to recover from. The carrier reported a net loss of $20.8 million and diluted earnings per share of negative $0.18. Operating margin was negative 2.5 percent, resulting from rises in expenses. The total recorded revenue of WestJet during the second quarter of 2018 was estimated at $1,087.6 million, showing a rise of 2.8 percent in comparison to 2017’s second quarter.

The company managed to increase its capacity, measured in available seat miles, by 4.7 percent. Traffic also rose as demand continued to increase, leading to a 6.2 percent rise in traffic, measured in revenue passenger miles. The company’s realized yield decreased by 3.2 percent, reaching 16.36 cents during the time period.

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The outlook for the remained of 2018 remains difficult and it is unclear when WestJet will be able to fully get back on its feet and fully recover financially.