Chief executive Gregg Saretsky’s sudden departure from WestJet, followed by the airline’s silence on the matter, raises many questions and answers none.
Saretsky, whose exit was announced before sunrise Thursday, has been replaced by Ed Sims, a 30-year industry veteran who joined the company last May as executive vice-president, commercial.Gregg is busy with transition work, wrapping up final details and is unavailable for comment,” was the airline’s response to an interview request.Ed (Sims) won’t be providing media statements today either, as he is meeting and speaking with multiple stakeholders, with WestJetters as his first priority. Once he has had an opportunity to accomplish this and review the priorities with the executive team, he will be able to speak with media.”
WestJet has prided itself on its transparency with all stakeholders — employees, investors and the Calgary community. Its past CEOs — Clive Beddoe, Sean Durfy and now Saretsky — have been seen making announcements on flights, helping the cabin crew with beverage service and even cleaning the aircraft upon arrival.Thursday’s response was entirely counter to WestJet’s outward-facing philosophy.
It should have held a conference call, if not before markets opened, then immediately after they closed to offer more clarity.
The lack of communication only leaves outsiders to speculate.
From a public relations perspective, that Saretsky’s last day of work coincided with the related news release — rather than laying out a planned time frame for his departure — suggests a high level of discord.In the world of governance, the most important task of any corporate board of directors is to hire and fire the CEO.
In the absence of any clarity Thursday, the immediate conclusion drawn is that Saretsky was shown the door.
Such decisions are not taken lightly and most often involve discussions over several months. Any decision to remove a CEO is also done at considerable expense. The last thing a company wants is to find itself in court over disputed compensation.The announcement really didn’t set the successor up for success … such as providing a description of Ed’s credibility or his background.”
Saretsky certainly faced some challenges at WestJet as the company grew, which inevitably caused a change to the company’s folksy corporate culture. For example, no longer was it possible to have crews located only in Calgary and bases were established in key markets across the country.
But there is no disputing the fact Saretsky took the airline to new heights. He leaves as it’s transitioning from a low-cost carrier to one that is a network carrier with a global reach.Not only did WestJet reach code share agreements with 16 different airlines, it also established 27 interline agreements — all aimed at being able to fly passengers well beyond Canada.
The company’s overseas expansion plan began with some turbulence due to reliability challenges with the Boeing 767 aircraft it purchased from Australia’s Quantas Airlines. Next year, it will start taking delivery of 20 Boeing 787 Dreamliners, which will allow WestJet to offer flights to Europe, Asia and South America.Saretsky also oversaw the establishment of WestJet Encore, a regionally focused subsidiary flying into smaller airports across the country, and the soon to be launched Swoop, which will take a page out of the ultralow-cost carrier models of Ryanair and easyJet.
Pilots on the main line and Encore have unionized, and just this week the airline had its wrists slapped by the Canadian Industrial Relations Board over its hiring practices for Swoop. There were also ongoing issues regarding a lawsuit launched by a former flight attendant alleging the company failed to provide a harassment-free workplace for its female employees. In January, the Supreme Court of British Columbia refused to throw out a class-action lawsuit that accuses the company of fostering a culture that tolerates harassment.
It’s no secret labour issues have been a challenge and it’s fair to ask the question whether this was a factor in Saretsky’s departure.
WestJet shares, which have risen 85 per cent since Saretsky took over from Durfy in 2010, sold off on Thursday. The stock closed down $1.15 or 4.6 per cent at $24.15.Some of that decline was likely due to the lack of clarity around Saretsky’s sudden retirement, which was not hinted at during the company’s most recent investor day in late 2017.
One need only refer to the announcement at the Cenovus investor day last June, when its CEO, Brian Ferguson, announced he would leave the company in October as to how things could have unfolded.
The immediacy of Saretsky’s departure, coupled with WestJet’s lack of communication, leaves many questions.
In today’s world, it means WestJet does not have control of the narrative over a change at the top, which is not good for its brand.