Westjet Case Analysis

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Table of Contents

Executive Summaryi
Table of Contents1
About WestJet1
Market Share2
Domestic2
International3
Market Position and SWOT Analysis5
WestJet Key Financial Ratios7
Accounting, Finance, Legal and Environmental Issues8
Shareholders and Company Ownership8
Accounting Policy and Internal Control9
Legal9
Environmental 11
Investor Recommendations12
Bibliography13

THE COMPANY AND ITS POSITION IN THE MARKET
Competitive Landscape

Markets where WestJet competes:
Airlines
Consumer Services
Travel Agencies & Services
Transportation Services
Air Cargo Services

Direct competitors
Air Canada
Air Transat
Porter Air
Central Mountain Air

Key Financial Data
201020092008
Profit margin5.24%9.23%11.48%
Return on Equity8.59%15.16%27.21%
Debt/Total Assets0.580.600.67
Book value$ 10.54$ 10.01$ 8.28

About WestJet

WestJet is a Canadian low-cost airline, publicly traded on the Toronto Stock Exchange – (TSX: WJA). Founded in 1996, it currently is the second largest carrier in Canada, next to Air Canada. WestJet operates in 70 cities across North America, Mexico and the Caribbean and employs over 8000 employees and is non-unionized. The WestJet head office and main hub is located in Calgary, the other main hub being Toronto Pearson Airport. The airline operates an average of 420 flights and carries 40000 passengers per day. WestJet's fleet consists exclusively of Boeing 737s, following the single operating type model pioneered by Southwest Airlines. In 2010 the carrier’s fleet consisted of 91 aircraft. WestJet has maintained a constant focus on customer service, providing low fares, and always-on-time service, allowing them to take a leading position in the Canadian airline industry.

Market Share
Domestic

FIGURE 1 SOURCE: DATA FROM BRENT JANG, WESTJET CLOSING THE GAP WITH AIR CANADA, THE GLOBE AND MAIL REPORT ON BUSINESS, FEBRUARY 18,2010, HTTP://WWW.THEGLOBEANDMAIL.COM/REPORT-ON-BUSINESS/WESTJET-CLOSING-GAP-WITH-AIR-CANADA/ARTICLE1472230/ WestJet’s 2009 domestic market share is 38% which they plan to increase to 45% by 2014. Their current strategy is to increase market share each year steadily by 1%-2%, to which they have been very successful – from 2000 to 2010 WestJet’s market share grew from 7% to 38%.

International

FIGURE 2 SOURCE: DATA FROM BRENT JANG, WESTJET CLOSING THE GAP WITH AIR CANADA, THE GLOBE AND MAIL REPORT ON BUSINESS, HTTP://WWW.THEGLOBEANDMAIL.COM/REPORT-ON-BUSINESS/WESTJET-CLOSING-GAP-WITH-AIR-CANADA/ARTICLE1472230/

As of December 2010, WestJet had a 15% market share in the Mexico/ Caribbean market and 13% in the trans-border market.

International cont’d

FIGURE 3 SOURCE: DATA FROM BRENT JANG, WESTJET CLOSING THE GAP WITH AIR CANADA, THE GLOBE AND MAIL REPORT ON BUSINESS, HTTP://WWW.THEGLOBEANDMAIL.COM/REPORT-ON-BUSINESS/WESTJET-CLOSING-GAP-WITH-AIR-CANADA/ARTICLE1472230/


Market Position and SWOT Analysis
WestJet has positioned itself as no frills airline company offering which offers lower rates and better service than its competitors. When WestJet started operations their plan was to target families who travelled by car. Once WestJet had established its target market, it worked on enhancing customer service to these customers without increasing fares. WestJet markets itself as being different than its competitors. Using its unique slogans such as “Owners Care” and “I Care-Antee it”, Westjet enhances the positive image of its corporate culture. WestJet actively markets its staff as “WestJetters”, with 84% of the WestJet’s eligible employees owning shares in the company . WestJet has also been the awarded the title “Canada’s Most Admired Corporate Culture” by Waterstone Human Capital for four years . WestJet Vacations, started in 2004, is now a leader in the vacation package industry. It is #1 hotel room provider in Las Vegas, and is continuously growing in the US,...
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