Memo

To: Mr. Harry Taylor, Chief Financial Officer WestJet

From: Senior Financial Analyst, WestJet

Date: 12-04-2019

Subject: Summarizing the Analysis on Boeing 767-300ERs and Boeing 787-9 aircraft

Financial performance of both Boeing 767-300ERs and Boeing 787-9 aircraft is depicted in the appendix 1, which can help in identifying the most significant investment option for WestJet. The recommendation conducted on the basis of CASM values, which needs to be lower in value. The investment options can help in generating high level of income from operations, which reducing the total risk involved in investment. There is relevant assumption made for detecting the calculations, which can help in generating high level of income from operations. The relevant assumptions have been made regarding the discounting rate and fuel prices, which is used for analysing the financial performance of Boeing 767-300ERs and Boeing 787-9 aircraft. The data has been collected from ‘The Airline Monitor’, where the information like Gallons/Block hour, Block hours/year, Maintenance/Block hour, Number of seats, and Block hour speed (Airlinemonitor.com, 2019). These values collected from the website has helped in detecting the accurate valuation for Boeing 767-300ERs and Boeing 787-9 aircraft.

The above table states about the sensitivity analysis that is conducted for both Boeing 767-300ERs and Boeing 787-9 aircraft under different cost of capital and fuel prices. The analysis indicates about the fluctuations in CASM value, which will change with the fluctuations in the cost of capital and fuel prices. This evaluation has indicated that the current financial performance of WestJet is depended on the fluctuations in price and cost of capital of airlines. The sensitivity analysis directly indicates that the current CASM value of Boeing 787-9 aircraft is much lower under all the circumstances, as identified from the above table. Hence, selection of Boeing 787-9 aircraft can allow WestJet to improve its financial performance in the long run.

The above table highlights the changes in values of both Boeing 767-300ERs and Boeing 787-9 aircraft, where certain changes in their maintenance and seating is conducted. The analysis indicates that with the inclusion of higher maintenance cost and seatings in both Boeing 767-300ERs and Boeing 787-9 aircraft, it can be detected that investments in Boeing 787-9 aircraft is a viable investment option for WestJet.

Therefore, being a senior financial analyst, it is recommended for WestJet to use Boeing 787-9 for their operations, as it has low CASM value under different scenarios and situations.

Regards

Senior Financial Analyst

Reference and Bibliography:

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Airlinemonitor.com. (2019). Airlinemonitor.com.ezproxy.libproxy.db.erau.edu. Retrieved 11 April 2019, from http://www.airlinemonitor.com.ezproxy.libproxy.db.erau.edu/pdf/August%202018%20pdf.pdf

Airlines.org. (2019). Airlines.org. Retrieved 11 April 2019, from http://airlines.org/argus-us-jet-fuel-index/

Belobaba, P., Odoni, A., & Barnhart, C. (Eds.). (2015). The global airline industry. John Wiley & Sons. 

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