WestJet CEO Resigns Unexpectedly Amid Pilot Negotiations

(Bloomberg) -- WestJet Airlines Ltd. Chief Executive Officer Gregg Saretsky resigned unexpectedly as the Canadian carrier grapples with testy labor negotiations and attempts to create a new discount operation.

He will be replaced by Ed Sims, who joined the company about nine months ago.

“Having found his successor,” Saretsky, 58, agreed to retire immediately, Calgary-based WestJet said in a statement Thursday. 

Sims joined the company as executive vice president in May after a career of more than 30 years in the tourism and aviation industries. Before joining WestJet he was CEO of Airways, New Zealand’s air-navigation service provider.

The 54-year-old steps in as WestJet is attempting to start the Swoop ultra-low-cost unit this year and to expand international long-distance service with the Boeing Co. 787 Dreamliner wide-body jets. The carrier is mired in tough labor negotiations with its pilots, who are seeking their first bargaining agreement -– a development that could pare WestJet’s cost advantage over larger rival Air Canada.

“News of Mr. Saretsky’s retirement comes as a surprise to us,’’ Walter Spracklin, an analyst at RBC Capital Markets, said in a note to clients. “Nonetheless, the change appears to be amicable and well-planned, with Mr. Sims being hand-picked and groomed for the job.’’

The shares dropped 4.8 percent to C$24.08 at 10 a.m. in Toronto. Since Saretsky became CEO in 2010, WestJet gained 85 percent through Wednesday, outpacing the S&P/TSX Composite Index but well behind the 12-fold advance of Air Canada.

Saretsky joined WestJet in June 2009 as vice-president of WestJet Vacations. He became CEO about eight years ago and in that time, the carrier’s fleet almost doubled in size. WestJet also started service to Europe, began flying wide-body aircraft and created the Encore short-haul unit while he was CEO.

“Gregg has taken WestJet to new heights during his tenure, and the airline would not be in the strong position it is without Gregg’s business knowledge, drive and work ethic, and his focus on low costs,’’ Chairman Clive Beddoe said in the statement. “We sincerely thank Gregg for all of his contributions.’’ Sims and Saretsky were unavailable for interviews Thursday.

Union Negotiations

WestJet and its pilots have been in negotiations since September. The Air Line Pilots Association has entered a conciliation process with the carrier that is expected to conclude at the end of April, the union said.

The Canada Industrial Relations Board on Tuesday issued a cease-and-desist warning regarding WestJet’s hiring practices for Swoop. ALPA had complained that the airline was negotiating employment terms and conditions with pilots directly instead of through the union.

WestJet “remains committed to engaging in constructive dialogue with ALPA and we are optimistic we will come to a fair and reasonable agreement,” airline spokeswoman Lauren Stewart said Thursday by email.

As the labor talks drag on, WestJet continues to target a June start for Swoop. The company plans to start operating the ultra-low-cost unit with three planes, rising to six by September and 10 by the spring of 2019, Sims said last month.

WestJet also reported Thursday that revenue for each seat flown a mile will rise as much as 3.5 percent this quarter, well shy of the 5.5 percent that the company had forecast previously. WestJet cited “significant weather events across the country,’’ saying it experienced 25 days of “irregular operations’’ in January and February.

©2018 Bloomberg L.P.

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