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Friday,  May 24, 2024 4:11 AM 

WestJet addresses possible aircraft delivery delays, refinances loan

  • Air
  •   02-13-2024  9:29 am
  •   Pax Global Media

WestJet addresses possible aircraft delivery delays, refinances loan
(WestJet)
Pax Global Media

Production delays at Boeing could impact dozens of aircraft orders made by WestJet as the U.S. plane manufacturer continues to deal with the fallout of a door panel flying off one of its 737 Max planes operated by Alaska Airlines. 

As reported by The Canadian Press, WestJet purchased 42 Boeing 737 Max 10 jetliners in 2022, with options for 22 more – on top of nearly two dozen earlier Max orders.

The multibillion-dollar deals were set to bolster WestJet's fleet by at least 65 planes (50 of them Max 10s) by 2029 as the Calgary-based airline moved to enhance its fleet and reduce fuel costs.

But the Max 10 has not yet receive final certification and, after last month’s safety issue, U.S. regulators said they would halt production at Boeing until safety issues were addressed.

READ MORE: Bolts were missing from Alaska Airlines door: U.S. investigators

WestJet told CP yesterday that it's able to handle any production delays that may occur.

"We continue to work closely with Boeing on all aspects of aircraft delivery and timelines. We believe our order book and fleet planning have the built-in flexibility to support WestJet's growth plans," spokeswoman Madison Kruger told the outlet in an email.

The Jan. 5 Alaska Airlines blowout left a gaping hole in Boeing’s jet shortly after takeoff, forcing pilots to make an emergency landing in Portland, where all 177 passengers and crew safely disembarked.

Safety & reputation 

Boeing, its safety record, and its reputation, have since been front and centre.

The U.S. National Transportation Safety Board revealed earlier this month that four key bolts were missing from Boeing’s impacted 737 MAX 9 aircraft. 

“An event like this must not happen on an airplane that leaves our factory. We simply must do better for our customers and their passengers,” said Boeing President and CEO Dave Calhoun in a statement on Feb. 6.

The disclosures have heightened concerns about Boeing’s production process of its MAX 9s.

After the Alaska Airlines incident, the U.S. Federal Aviation Administration (FAA) grounded 171 Boeing 737 MAX 9 planes – most of which were operated by United Airlines and Alaska Airlines – for inspections.

Those aircraft were allowed to return to the skies in late January and nearly all are flying again.

WestJet refinances majority of term loan facility  

Meanwhile, The WestJet Group on Tuesday (Feb. 13) announced that it has extended the maturity of the substantial majority of its term loan borrowings to 2031.

WestJet did so, citing a strong financial performance that exceeds its pre-COVID earnings.

"We are very pleased with this innovative structure, secured by our loyalty program and brand," said WestJet Group Chief Financial Officer Mike Scott in a statement. "This opportunistic refinancing transaction enhances our financial flexibility and was oversubscribed, which is reflective of the strength of the WestJet Rewards Loyalty program and the WestJet brand."

WestJet's liquidity is in excess of $2 billion and its pro forma adjusted net leverage ratio at year-end 2023 was approximately three times adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

"We are the only airline of scale in North America that did not require any sector-specific government aid, incur any third-party debt, or issue any equity during the pandemic. Instead, we focused on keeping our balance sheet clean to capitalize on our ambitious growth plan, fuelled by the largest narrowbody orderbook of any airline in Canada," stated Scott.

The closing of the new facility is subject to customary conditions and is expected to occur on Feb. 14, 2024.


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