Westjet 2014 Annual Report Download - page 38

WestJet Annual Report 2014│36
We are dependent on single aircraft and engine suppliers for our Boeing 737 NG aircraft and separate single
aircraft and engine suppliers for our Bombardier Q400 aircraft. Any interruption in the provision of goods and
services from these suppliers, or other significant third party suppliers, as well as mechanical or regulatory
issues associated with their equipment, could have a material adverse effect on our business, operating results
and financial condition.
We secure goods and services from a number of third party suppliers. Any significant interruption in the provision of goods
and services from such suppliers, some of which would be beyond our control, could have a material adverse effect on our
business.
We are dependent on Boeing as supplier for our Boeing 737 NG aircraft, we are dependent on Bombardier as supplier for our
Bombardier Q400 aircraft and we will be dependent on Boeing as supplier for our Boeing 767 aircraft. If we were unable to
acquire additional aircraft from these suppliers, or if they were unable or unwilling to provide adequate support for their
products, our operations would be materially adversely affected. If either of the suppliers was unable to adhere to its
contractual obligations in meeting scheduled delivery dates for our aircraft, we would be required to find another supplier of
aircraft to fulfill our growth plans. Acquiring aircraft from another supplier would require significant transition costs and,
additionally, aircraft may not be available at similar prices or received during the same scheduled delivery dates, which could
adversely affect our business, operating results and financial condition. In addition, we would be materially adversely affected
in the event of a mechanical or regulatory issue associated with the aircraft type, including negative perceptions from the
travelling community.
We are also dependent on General Electric as supplier of aircraft engines on our Boeing 737 NG aircraft, and are dependent
on Pratt & Whitney Canada as supplier of aircraft engines for our Bombardier Q400 aircraft and would therefore be materially
adversely affected in the event of a mechanical or regulatory issue associated with our engines or if either supplier was unable
or unwilling to provide adequate support for their products.
Our ability to obtain parts, materials, inventory, consumables and services from third party vendors and outside service
providers on commercially reasonable terms will also impact our low cost operating structure and the loss of any such
suppliers or service providers may negatively impact our business.
Loss of contracts, changes to our pricing agreements or access to travel suppliers’ products and services could
have an adverse impact on WestJet Vacations.
We depend on third parties to supply us with certain components of the travel packages sold through WestJet Vacations. We
are dependent, for example, on a large number of hotels in our transborder and international destinations in the US, Mexico,
Central America, the Caribbean and Europe. In general, these suppliers can terminate or modify existing agreements with us
on relatively short notice. The potential inability to replace these agreements, to find similar suppliers or to renegotiate
agreements at competitive rates could have an adverse effect on the results of WestJet Vacations. Furthermore, any decline in
the quality of products or services provided by these suppliers, or any perception by travelers of such a decline, could
adversely affect our reputation or the demand for the products and services of WestJet Vacations.
A significant change in our unique corporate culture, guest experience or brand could have adverse operational
and financial consequences.
Our corporate culture and brand recognition are key competitive advantages for us, especially in the Canadian market. We
strive to maintain an innovative corporate culture that results in a unique, safe and caring guest experience that sets our
company and our brand apart from our competitors. Failure to maintain our unique corporate culture that results in a safe and
caring guest experience could adversely affect our strong brand, our operating results and our financial condition.
We have a significant amount of fixed obligations and expect to incur significantly more fixed obligations,
which could harm our ability to service our fixed obligations, obtain future sources of financing and meet our
growth strategy.
Our significant fixed obligations include our working capital requirements, long-term debt, aircraft maintenance provisions,
future tax liabilities and certain contractual lease payments for aircraft and other operating assets and services to maintain
and expand our operations. We also have significant future firm commitments for new aircraft, engines and other operating
assets and services to support our growth strategy. Our existing fixed obligations require significant funds to service interest,