Overcapacity in the increasingly competitive Canadian domestic market has led WestJet to defer four Boeing 737 MAX 8s scheduled for delivery next year. However, the Calgary-based carrier continues to see opportunities internationally and announced it would redeploy one of its Boeing 767s on a new transatlantic route after taking its first 787s.

“It is clear, we were long on domestic capacity,” WestJet president Ed Sims said. “I think the industry is long on domestic capacity across the length and breadth of Canada. We’ve looked at our domestic footprint; we’ve taken that opportunity to really concentrate our capacity into our hubs and our most profitable feeders and spokes of that hub.”

The 737-8 deliveries will now be split between 2020 and 2021, WestJet revealed Oct. 30. The carrier also extended leases on two 737-700s and two 737-800s set to expire next year and agreed to lease two 737-8s that will arrive next year.

“The [deferral] decision was based on our assessment of both the economic and competitive environment for next year,” CFO Harry Taylor said. “Obviously, this year has not turned out the way we expected or wanted it to, and we wanted to be proactive to support unit revenues and margin expansion and reduce our capacity growth to much lower levels in order to improve unit revenues and margin.”

WestJet is aggressive about mixing leased and owned aircraft to maintain capacity flexibility. The airline ended the third quarter with 174 aircraft, and is set up to have between 193 and 223 at the end of 2027, depending on what it does with expiring leases.

WestJet, which saw earnings from operations fall 70% year-over-year through the first three quarters, is slowing growth and aggressively cutting costs. The carrier pulled about 6% out of its planned fourth-quarter growth and will end the year with a 5.5%-6.5% increase in available seat miles, including 4%-5% domestically.

Next year’s growth will be 6.5%-8.5%, but almost all of this is its new international flying on three new 787-9s and the ramp-up of ULCC subsidiary Swoop. WestJet will launch international 787 services on April 28 with a fleet of three aircraft. ULCC Swoop, which operates six aircraft, will be up to 10 by year-end. Domestic capacity is projected to be up only 1%-3% next year.

Canada’s domestic market has benefited from the ramp-up of several carriers. Swoop, fast-growing ULCC Flair Airlines, and to a lesser extent, Air Canada’s leisure-market-focused rouge subsidiary have all added domestic routes.

While the domestic market is getting crowded, the carriers still see opportunities abroad. WestJet will launch service between Toronto and Barcelona on May 24 using one of the 767s that the new 787s—which will fly a mix of both new routes and existing 767 routes—will free up. The route is flown by rouge, which also uses 767s.

“We’ve been regularly reminded that we have not had the benefit of international revenue streams, which our competition has taken advantage [of],” Sims said. “If I look at a multi-layered strategy of a full-network carrier underpinned by a carrier like rouge, I think it is fair to say that the 767 is a very effective competitive weapon against that rouge product.”

WestJet said use of the 767s beyond the summer schedule remains up in the air. It will likely use some as long-haul spares, but may deploy others on winter routes. At the moment, there are no plans to retire them, Sims said.

Sean Broderick, sean.broderick@aviationweek.com