Canadian low-cost airline WestJet has no plans to pare back its Boeing 737 deliveries in the next six years despite a plan to acquire 40 turboprops to launch a short-haul regional carrier.
The airline operates 97 737s currently and will take delivery of 38 more through 2018. Carrier CFO Vito Culmone said during an investors' presentation today that the airline remains committed to that plan and does not plan to change it.
WestJet, however, expects leases to expire on about 35 aircraft during the same period and has the flexibility to not renew those if market dynamics call for it, said Culmone.
The airline announced recently that it is looking at launching a regional carrier with turboprops as early as 2013, and is in the process of obtaining input from employees.
WestJet has not said which aircraft type it plans to acquire. RBC Capital Markets analyst Walter Spracklin said that if the airline goes with the Bombardier Q400, 40 of the type would incur capital costs of approximately $1 billion.
Noting that the airline has more than $1.3 billion in cash and equivalents and that it has little debt, Spracklin said the regional carrier could largely be financed through the balance sheet.
In addition, the airline also has "substantial fleet flexibility" with its current 737 fleet and future deliveries, in which it can "flex down as many as 20 aircraft through leaseback options", he added.