Southwest, WestJet Ink Code-Share Pact

Southwest(LUV Quote - Cramer on LUV - Stock Picks) and Canadian carrier WestJet say they have reached an initial agreement on a code-share deal that would create a cross-border low-fare partnership.

The two carriers have "completed the first step in creating a relationship [that] puts the two airlines on a path toward bringing more low fares and a better customer experience across the U.S./Canadian border," Southwest said in a statement Tuesday.

Details were scant, but the carriers intend to announce flight schedules and additional features by late 2009. Certain aspects of the agreement require approval by regulators in both countries.

Founded in 1996, WestJet is Canada's principal low-fare airline, serving 49 destinations in Canada, the U.S., Mexico and the Caribbean. Like Southwest, its fleet consists entirely of Boeing 737 jets. It has 75 jets now, and 46 more are expected by 2013.

"This is a defining moment for WestJet," said CEO Sean Durfy, in a prepared statement. "When you examine our network in Canada and Southwest's network in the United States, and the potential to significantly improve both organizations' market access, this is indeed a great day."

The deal is not surprising. Southwest has been saying for months that it is seeking an international partner, and aviation consultant George Hamlin says WestJet resembles Southwest in so many ways, "it is an obvious first place to look."

Hamlin says the ability to offer frequent service in its markets has been key to Southwest and is likely to be a part of the new code-share. In any market, "they would like to be in the top two or three" carriers, he says.

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