WestJet scales back 2019 capacity growth, beats on profit

WestJet will scale back capacity growth this year to focus on more profitable routes, as it looks to cut costs and lure higher-paying customers to turn it around after a turbulent 2018, CE Ed Sims said Tuesday. Shares surged more than 3% in late morning trading in Toronto, after it beat analyst estimates for profit in Q4 by containing costs and said it anticipates strong 2019 bookings. WestJet aims to broaden its share of higher-paying passengers by introducing fees for perks like priority boarding and added legroom, along with its new Dreamliner business class service. The airline will take a “prudent approach” to capacity as it grows its budget carrier Swoop and Dreamliner business class service this year, said CFO Harry Taylor. WestJet will boost capacity by 6 to 8% in 2019, down from its previous forecast of 6.5 to 8.5%. Investors have been concerned the airline has been overly ambitious as it introduces the Dreamliners, grows Swoop and negotiates with a unionized workforce in 2019. Competition, higher costs and the threat of a strike by WestJet’s pilots last year helped drag down the stock by 32% over the past 12 months. “We know we have to earn the right to grow, particularly in our premium cabins,” Sims said.<br/>