Chapter 5 Blog- Canada's airlines struggle to fill their planes

http://www.canada.com/business/fp/Canada+airlines+
struggle+fill+their+planes/1469384/story.html

Summary

The article reports that Canada’s largest airlines are struggling to fill their planes with passengers. Air Canada and WestJet Airlines are seeing a decrease in passengers compared to last year. The declines in demand for air travel have caused the load percentage of Air Canada to drop by a whooping 13.5 percent, and WestJet Airlines to drop by 8.6 percent. The weak economy and the low consumer confidence are definitely the major causes for the decline in passengers. In order to cope with the decline in passengers, Air Canada is reducing capacity in 65 percent of their airplanes. However, WestJet Airlines has not taken any measures to deal with their slump in passengers.

Connection

Chapter five stresses that the cash flow of a company must be healthy in order for the company to continue operating. The decline in passengers has definitely caused the cash flow in Air Canada and WestJet Airlines to decrease. If things continue to run downhill, Air Canada and WestJet Airlines will have trouble covering their everyday expenses. This will ultimately lead to major problems in the future for both companies if they do not find a solution. Air Canada is trying to solve their problem by reducing the capacity in their airplanes to fill them up, but only time will tell if it will work.

Personal Reflection

I feel that Air Canada and WestJet Airlines need to desperately find a way to increase their cash flow. With the weak economy, they cannot depend solely on their ticket sales to keep them operating. They must keep their expense levels at a minimum in order to survive. The future is critical for these companies and every decision they make is very important. Air Canada is reducing capacity in their airplanes, but WestJet Airlines has not decided to do anything yet. In order for WestJet Airlines to continue operating, I feel that they must make a quick and intelligent move.