WestJet Airlines picks Bombardier Q400 planes for new regional service

The Calgary-based airline announced Tuesday that it will take delivery of up to 45 of the Bombardier Q400 turboprop planes over the next six years. They will be used for a new regional service that WestJet expects to launch next year.

Until now the Calgary-based airline has exclusively used Boeing jets in its fleet.

There had been some speculation the order could go to a European rival of Bombardier (TSX:BBD.B), which is Canada’s largest aerospace company and the world’s third-largest aircraft maker after Boeing
and Airbus.

Gregg Saretsky, WestJet’s president and chief executive, told analysts and reporters on a conference call that they would have to wait to learn how much the planes will cost and how WestJet will finance the purchases.

The company’s current 2012 budget for capital expenditures excludes the cost of starting up the regional service.

“At this time, we’re not in a position to give any of the specifics on delivery dates, projected capex spending or expected financing structures. Those details will be worked out in the next couple of months as we move toward finalizing and signing the purchase agreement,” Saretsky said in the call.

Saretsky acknowledged that WestJet had looked closely at planes by the European manufacturer ATR but ultimately chose the Bombardier planes due to their combination of seating, speed and range given
the distance the planes will need to fly to reach some of the smaller communities to be served.

WestJet has placed firm orders for 20 Bombardier Q400s and taken options on 25 others.

The announcement was made as WestJet released its latest financial report, which included a record first-quarter profit.

Its net income was $68.3 million, or 49 cents, per diluted share; up from $48.2 million, or 34 cents per diluted share in the first quarter of 2011. Revenue was nearly $891 million, up from $772.4 million a year earlier.

“We are very encouraged with these very strong Q1 results and the margin expansion we were able to achieve as our revenue growth fully recovered the increased fuel costs, while we held our controllable costs relatively flat year over year, proving we’re not just another airline,” Saretsky said.

The company’s operating margin improved to 11.9 per cent, which was 1.6 percentage points better than a year earlier.

“These strong margins are once again among the top in the North American airline industry,” he added.