Southwest delays code-share tie-up with WestJet

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http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSBNG49=
051220090525

UPDATE 2-Southwest delays code-share tie-up with WestJet

Mon May 25, 2009 12:46pm EDT

By Nicole Mordant

VANCOUVER, British Columbia, May 25 (Reuters) - A planned code-share
partnership between low-cost carriers WestJet Airlines Ltd and
Southwest Airlines Co will be delayed because of a sharp slowdown in
air travel, WestJet, Canada's No. 2 airline, said in a surprise
announcement on Monday.

WestJet said U.S.-based Southwest has decided to put the funds
earmarked for the code-share program to other, unnamed, uses in the
current slow sales environment.

The code-share program, which was announced in July last year and was
expected to be operating by the end of 2009, would have seen the two
airlines selling seats on each other's flights. This would have meant
cheaper and easier access to new customers for each carrier.

Shares in both airlines were slightly weaker at midday on Monday.
WestJet's stock was down 30 Canadian cents at C$12.18 on the Toronto
Stock Exchange. In New York, Southwest's stock was 6 cents lower at
$6.70.

"We are kind of disappointed but it's not a big deal," said Research
Capital analyst Jacques Kavafian, who researches WestJet's stock.

"The revenue potential from this was not great and so it is not a big
loss," he told Reuters.

He noted that the tie-up was delayed, not canceled.

Bob Jordan, Southwest's executive vice-president of strategy and
planning, said in the statement that Southwest remained "absolutely
committed" to its partnership with WestJet and to code-sharing in
general.

The two airlines have already implemented a distribution agreement and
are close to starting a cargo program.

The codeshare agreement with Southwest was WestJet's first such deal.
In February, it said it had agreed to study a code-sharing alliance
with Air France-KLM.

WestJet also said on Monday that implementation of its Sabre
reservation system, which is key to code-sharing, is continuing on
track. It will be ready for launch in the fourth quarter, the company
said.

Earlier this month, WestJet posted a smaller than expected drop in
first quarter earnings and said it expects to emerge stronger from the
global slowdown in air travel. It is one of only a few profitable
airlines in North America.

($1=3D$1.12 Canadian) (Additional reporting by Isheeta Sanghi in
Bangalore; editing by Peter Galloway)

=A9 Thomson Reuters 2009 All rights reserved

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