WestJet Slams Canada’s Loan Offer to Airlines Hit by Fuel Costs

WestJet Airlines Ltd. criticized the Canadian government's loan offer designed to assist airlines grappling with elevated jet fuel expenses following the closure of the Strait of Hormuz. The airline's president, John Gibson, stated on March 12, 2024, that the proposed loan terms were "unacceptable" and would "further disadvantage" Canadian carriers compared to international competitors. Gibson argued that the loans, which carry a 7% interest rate and require immediate repayment, do not adequately address the severity of the fuel cost crisis. He highlighted that WestJet has seen its fuel costs increase by 45% in the last quarter, impacting its operational budget by an additional $150 million. The airline proposed a direct subsidy program, similar to one implemented in 2008, to offset the volatile fuel prices. WestJet also pointed out that the government's offer does not include provisions for hedging fuel costs, a common practice among major airlines to mitigate price fluctuations. The company indicated that without more substantial government support or a change in the loan conditions, it may be forced to implement significant fare hikes or service reductions on less profitable routes, potentially affecting 15% of its domestic network by the end of 2024. The Canadian government has stated that the loan program is intended as a "temporary measure" to ensure the stability of the air transport sector.