Mr. Gregg Saretsky reports
WESTJET REPORTS RECORD NET EARNINGS OF $91 MILLION, UP 33 PER CENT; AIRLINE ANNOUNCES IT HAS ENTERED INTO AGREEMENTS TO MODERNIZE ITS BOEING
737 FLEET
WestJet Airlines Ltd. has released its
first-quarter results for 2013. The airline reported record net
earnings of $91.1-million, or 68 cents per diluted share, up from the net
earnings of $68.3-million, or 49 cents per diluted share reported in the
first quarter of 2012. These results mark WestJet's 32nd consecutive quarter of profitability. Based on the trailing 12 months, the airline achieved a return on invested capital of 14.3 per
cent, up from the 13.7 per cent reported in the previous quarter.
"We are very pleased to report our best ever quarterly earnings and for
the third consecutive quarter we exceeded our 12-per-cent ROIC target
by achieving 14.3 per cent," said WestJet president and chief executive officer Gregg
Saretsky. "The excitement is building as we move closer to the launch
of WestJet Encore. I want to thank WestJetters for their dedication and
tremendous efforts in providing our guests a caring and friendly
experience each and every day."
OPERATING HIGHLIGHTS
Q1 2013 Q1 2012
Net earnings (millions) $91.1 $68.3
Diluted earnings per share $0.68 $0.49
Total revenues (millions) $967.2 $891.0
Operating margin 13.7% 11.9%
ASMs (available seat miles) (billions) 6.032 5.690
RPMs (revenue passenger miles) (billions) 5.088 4.721
Load factor 84.3% 83.0%
Segment guests 4,493,324 4,230,415
Yield (revenue per revenue passenger mile) (cents) 19.01 18.87
RASM (revenue per available seat mile) (cents) 16.03 15.66
CASM (cost per available seat mile) (cents) 13.84 13.80
CASM, excluding fuel and employee profit share (cents) 8.94 8.95
WestJet announced in February the first two new communities WestJet
Encore will be servicing. Beginning on June 24, 2013, WestJet Encore
will begin daily service from Calgary and Vancouver to Fort St. John,
B.C., and from Calgary to Nanaimo, B.C.
In January, 2013, WestJet launched a three-year companywide business
transformation initiative with a goal to reduce annual costs by $100-million by the end of 2015 and to undertake a longer-term initiative to
ensure WestJet's unit costs are competitive with low-cost North
American airlines. This initiative will focus on aircraft and asset
utilization, distribution, productivity and all non-operational
expenses.
For the second quarter of 2013, WestJet expects strong traffic growth
and earnings among its best ever for a second quarter, notwithstanding
an expected moderate decline in its second-quarter RASM which will be
impacted by the timing of Easter and Passover, the elimination of
Thomas Cook capacity purchase commitments, the loss of the one-time
benefit from Air Canada's labour uncertainty in the second quarter of
2012, and accelerating capacity growth fuelled by higher utilization and
the launch of WestJet Encore.
For the second quarter of 2013, WestJet expects CASM, excluding fuel and
employee profit share, to be flat to up 1 per cent year over year.
The airline expects fuel costs to range between 84 and 86 cents
per litre for the second quarter of 2013, representing a year-over-year
decrease of 6 to 9 per cent.
For the full year 2013, the airline now expects CASM, excluding fuel and
employee profit share, to be flat to up 1 per cent year over year
primarily as a result of cost reductions achieved and anticipated
through its business transformation initiative, but excluding any
benefit from the exemption it received yesterday from Transport Canada,
to the requirement for one flight attendant for every 40 passengers
on board.
WestJet announced today it has entered into an agreement with a third
party under which WestJet will sell 10 of its oldest Boeing
next-generation 737-700 aircraft to that party in 2014 and 2015, and
concurrently entered an agreement with Boeing to purchase 10 Boeing
next-generation 737-800 aircraft in 2014 and 2015, effectively reducing
the average age of WestJet's fleet by approximately one year. WestJet
has deferred the delivery of five Boeing next-generation 737-700
aircraft from 2014 and 2015 to 2016 and 2017. "These agreements are
part of our strategy to optimize and modernize our fleet mix, which
will improve CASM, while maintaining fleet flexibility going forward,"
added Mr. Saretsky.
Dividend declaration
On May 6, 2013, WestJet's board of directors declared a cash dividend of
10 cents per common voting share and variable voting share for the second
quarter of 2013, to be paid on June 28, 2013, to shareholders of record
on June 12, 2013. All dividends paid by WestJet are, pursuant to
subsection 89(14) of the Income Tax Act, designated as eligible
dividends, unless indicated otherwise. An eligible dividend paid to a
Canadian resident is entitled to the enhanced dividend tax credit.
Analyst conference call
WestJet will hold its quarterly analysts conference call today, May 7, 2013, at 8 a.m. MDT (10 a.m. EDT). Mr. Saretsky and executive vice-president of finance and chief financial officer Vito Culmone will discuss WestJet's first-quarter 2013 results, and answer questions from financial analysts and members of the media. The conference call will be available in Toronto by calling 416-915-3239, in Vancouver by calling 604-638-5340, and across Canada and the United States through the toll-free telephone number 1-800-319-4610. The call can also be heard live through an Internet webcast accessible via the media and investor relations section of the WestJet website.
Annual general meeting
WestJet will also hold its AGM today, May 7, 2013, at 2 p.m. MDT (4 p.m. EDT), at WestJet's Calgary Campus at 22 Aerial Pl. NE. The AGM webcast will be available live in the media and investor relations section of the WestJet website.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(stated in thousands of dollars, except per share amounts)
Three months ended March 31,
2013 2012
Revenue
Guest $ 879,394 $ 802,286
Other 87,848 88,664
---------- ----------
967,242 890,950
Expenses
Aircraft fuel 271,048 262,072
Airport operations 115,091 105,181
Flight operations and navigational charges 102,059 94,377
Sales and distribution 91,310 93,127
Marketing, general and administration 49,515 46,914
Depreciation and amortization 48,019 45,144
Aircraft leasing 47,509 46,327
In-flight 46,319 40,289
Maintenance 39,697 37,727
Employee profit share 24,311 14,134
---------- ----------
834,878 785,292
---------- ----------
Earnings from operations 132,364 105,658
Non-operating income (expense)
Finance income 4,744 4,340
Finance costs (10,698) (12,737)
Gain on foreign exchange 79 1,286
Gain (loss) on disposal of property and equipment (1,018) 19
(Loss) on fuel derivatives - (3,450)
---------- ----------
(6,893) (10,542)
---------- ----------
Earnings before income tax 125,471 95,116
Income tax expense (recovery)
Current 46,653 28,999
Deferred (12,255) (2,204)
---------- ----------
34,398 26,795
---------- ----------
Net earnings $ 91,073 $ 68,321
========== ==========
Earnings per share
Basic $ 0.69 $ 0.50
Diluted 0.68 0.49
We seek Safe Harbor.
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