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WestJet to shut down Sunwing Airlines, merge it with mainline business

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WestJet is planning to wind down Sunwing Airlines, integrating the low-cost carrier into its mainline business within two years as part of a plan to streamline operations.

In an internal memo obtained by The Canadian Press, Sunwing Airlines president Len Corrado said the change will open up markets for the 18-year-old company as well as its workers. CBC has not independently verified that memo.

In a statement sent to CBC News, the Calgary-based carrier verified the move.

“While we can confirm the eventual integration of Sunwing Airlines into WestJet, the anticipated timeline to do so has not been determined at this time,” Julia Kaiser, spokesperson for WestJet, said in an email.

“Our immediate focus remains on the integration of Swoop’s highly successful business model across WestJet’s operations.”

The decision comes the week after WestJet opted to fold budget subsidiary Swoop’s operations under its flagship banner.

“WestJet will eventually move to a one jet aircraft operating certificate (AOC) model and Sunwing Airlines will be integrated into WestJet,” Corrado said in the memo, dated Wednesday.

He said he expects that the integration could take up to a couple of years.

A Swoop airlines jet is shown
A Swoop airplane is seen in this undated handout photo. Swoop Airlines hosts a media day before the launch of its ultra low-cost service on Tuesday at Hamilton International Airport. (WestJet/The Canadian Press)

Both moves magnify the major consolidation of the Canadian aviation market that followed WestJet’s acquisition of Sunwing’s main airline and vacation divisions last month.

The memo gave no indication that Sunwing Vacations would also shut down, suggesting that WestJet planes could be flying Sunwing tour package customers to their sun-soaked getaways.

“The WestJet Group remains committed to growing sun flying in the East alongside expansion plans in Western Canada, and this strategy will only be strengthened as we ultimately transition to a one jet AOC,” Corrado wrote.

Sunwing did not immediately respond to requests for comment on Saturday.

In the statement, Kaiser confirmed that Sunwing Vacations will continue to operate as part of the WestJet Group and will not be impacted by the airline integration.

WestJet announced on June 9 it would merge Swoop with its main business by late October as the country’s second-biggest airline recalibrates amid a fiercely competitive market.

The shift came five years after Swoop first surfaced as a response to discount rival Flair Airlines’ launch in 2017.

It also landed after pilots with WestJet and Swoop ratified a new collective agreement that brings them onto a level pay scale, giving them a 24 per cent pay bump over four years.

In an interview last week, WestJet CEO Alexis von Hoensbroech said he mulled keeping Swoop separate, but concluded higher wages for its flight crews made the option less feasible.

In March, the federal government approved WestJet’s takeover of Sunwing Vacations and Sunwing Airlines, despite a warning from the Competition Bureau that the purchase would likely result in higher prices and decreased services, especially around package deals.

A man looks at the camera.
WestJet CEO Alexis von Hoensbroech pauses for a portrait at the airline’s headquarters in Calgary, Alta., Thursday, June 30, 2022. The CEO of WestJet Airlines says his company is asking the federal government to allow airlines to recover passenger compensation costs from other industry partners, if they played a role in causing flight delays or disruptions. (Jeff McIntosh/The Canadian Press)

In signing off on the deal, Ottawa attached conditions that include extending Sunwing packages to five new cities, maintaining capacity on the most affected routes and keeping both a vacations business head office in Toronto and a regional one in Montreal for at least five years.

The agreement added some 2,000 employees and 18 Boeing 737s to WestJet’s 130-aircraft fleet, made up entirely of Boeing planes, according to the federal aircraft registry.

This includes Swoop’s planes but not those of regional service WestJet Encore.

 

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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