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Air Canada vs. WestJet: A Financial Comaprison

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by

Jordan Doe

on 20 May 2010

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Transcript of Air Canada vs. WestJet: A Financial Comaprison

WestJet History Air Canada's History And the Winner is... Air Canada vs WestJet A Financial
Comparison

By: Jordan, Nikita,
and Michael
after WWII, air travel really opened up
changed name to Air Canada in 1965, to reflect new freedom
during the 1970s, lots of competition between Air Canada and Canadian Pacific Air
in 1970s, and act was passed that put Air Canada, which was highly government regulated, in a much more equal playing field
in 1988, Air Canada started to privatise, and by 1989 they were completely privatised
1980s were tough times
by 1992, Air Canada and CP Air were competing heavily
in response, they hired Hollis L. Haris as CEO, and by '94 they were profitable again
in 1997, Air Canada became one of the founding members of the Star Alliance group
in 1999, Air Canada and CP Air finally merged Early Days
created on April 11, 1936, originally intended as a government controlled airline
originally called Trans-Canada Air
created by C.D. Howe
first flight on July 30, 1937, started in Montreal and ended in Vancouver
in 1942, the government regulated it so that Air Canada would be the only Canadian Airline, this would last for 40 years 60's to 90's Current Years did not completely help, as there was a big drop in air travel because of Sept. 11 and cheapter airlines
in 2003, Air Canada filed for bankruptcy
since late 2000's, Air Canada has had financial difficulties
new CEO Montie Brewer came in on April 1, 2009 founded in 1996 by Clive Beddoe, Mark Hill, Tim Morgan, and Donald Bell
originally only operated in Western Canada
headquarters in Calgary
was able to raise its original capital in 30 days
bought 3 Boeing 737's then approached other potential investors
started with 220 employees, and 3 planes
offered 2.5 million publich shares in 1999
raised enough captial from shares that it expanded to Eastern Canada, with Hamilton as its Eastern headquarters
in 2003, WestJet offered 3 million shares worth $78.9 million dollars
expanded to the United States in 2004
'The Ernst and Young Entrepreneur of the Year: Canada' in 2000
'International Entrepreneurship award for Outstanding Teamwork' in 2001
'One of Canada's Top 100 Employers' in 2002
annual survey stated 'Canada's second most respected corporation' in 2003 Because were also WestJet owners.. It is ture, that more than 87 % of the employees at WestJet are also shareholders. They take advantage of an employee share purchase plan which allows them to buy up to 20 % of their salary each year in company stock, an amount that the company matches dollar for dollar. Vertical Analysis Air Canada had negative operating income, WestJet had a positive income
Air Canada has greater expenses than WestJet
Air Canada is pulling almost double the common size percent of WestJet's grross profit
Air Canada has had net losses, while WestJet has experienced incomes Income Statement Balance Sheet WestJet, though they experienced a decrease in total equity, they are still higher than Air Canada
WestJet also experienced a drop in total assets, but is also still higher than Air Canada
WestJet has a slighly lower debt compared to Air Canada Horizontal Analysis Income Statement Air Canada has shown a greater drop in revenue, but both companies have lost money
both companies have dropped in gross profit, but Air Canada's drop accounts for approximately $500 million
Air Canada had a net income this year, but just barely
WestJet dropped in net income, but they are still pulling in more money than Air Canada Balance Sheet both companies have shown great increases in cash
WestJet has shown an increase in total assets, while Air Canada has shown as loss. Even though they have a loss, they still have greater total assets
WestJet has shown an increase in current debt, while Air Canada has shown a decrease
Air Canada shows a greater increase in their common stock Ratio Analysis WestJet has higher current ratio, acid-test ratio, and Price Earnings Ratio
also has a lower Day's Sales Uncollected, and has better Debt Ratio and Equity Ratio
and WestJet also hase beter profitability overall Air Canada has a better Accounts Receivable Turnover and Total Asset Turnover WestJet Why? WestJet showed better financials in the income statement. Though it had lower assets, this can be contributed to the fact that WestJet hasn't been around as long. WestJet is also not in bankruptcy, and its workers aren't in a union, so it doesn't pay as much out in wages. Air Canada's Stock Price: 1.76 WestJet's Stock Price: 12.57 The End. Financials
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