WestJet reports record second quarter 2013 net earnings

CALGARY, July 30, 2013 /CNW/ – WestJet (TSX: WJA) today announced its 33rd consecutive quarter of profitability, with record second quarter net earnings of $44.7 million, or $0.34 per diluted share. This compares with the net earnings of $42.5 million, or $0.31 per diluted share reported in the second quarter of 2012. These results include $8.4 million of one-time pre-tax transition costs associated with WestJet’s business transformation initiative. Based on the trailing twelve months, the airline achieved a return on invested capital of 14.4 per cent, up from the 14.3 per cent reported in the previous quarter.

“We are pleased with another quarter of record earnings and achieving an ROIC of 14.4 per cent, which for the fourth consecutive quarter surpassed our 12 per cent target,” said WestJet President and CEO Gregg Saretsky. “We continue to make good progress with our company-wide business transformation initiative and I want to thank WestJetters for their tremendous dedication to the continued success of our airline.”

In the second quarter, WestJet successfully launched WestJet Encore, Canada’s newest regional airline with its first two new Bombardier Q400 NextGen aircraft. WestJet’s new regional airline will provide more Canadians with access to WestJet’s low fares and caring guest experience, while enhancing the airline’s value to the business market. “We are pleased with initial results in both the local market and the significant connecting traffic flows from the new regional service,” said Gregg Saretsky.

WestJet expects to continue its strong traffic and revenue growth in the third quarter of 2013. The airline anticipates its 2013 third quarter RASM, as compared to the same period in the prior year, to experience a similar level of year-over-year percentage decline as the second quarter of 2013, primarily as a result of increased capacity associated with higher utilization, the reconfiguration of WestJet’s Boeing 737-800 fleet, and the ramping up of WestJet Encore. June and July traffic experienced some booking weakness due to the impact of flooding in Calgary and the surrounding communities.

The airline expects jet fuel costs to range between 90 and 92 cents per litre for the third quarter of 2013, representing a flat to up two per cent year-over-year increase. In terms of CASM, excluding fuel and employee profit share, WestJet expects it to be down 0.5 to down 1.5 per cent in the third quarter of 2013.

For the full year 2013, the airline now expects CASM, excluding fuel and employee profit share, to be down 0.5 to down 1.0 per cent year-over-year primarily as a result of cost reductions achieved and anticipated through its previously announced company-wide business transformation initiative.

For the full-year 2014, the airline anticipates system-wide capacity growth between four and six per cent. “The flexibility we have built into our fleet plan through lease renewal options and our ability to deploy a mix of Boeing 737 and Bombardier Q400 aircraft allows us to tailor capacity and continue our profitable growth while aligning with market conditions,” noted Gregg Saretsky.

Dividend declaration

On July 29, 2013, WestJet’s Board of Directors declared a cash dividend of $0.10 per common voting share and variable voting share for the third quarter of 2013, to be paid on September 30, 2013, to shareholders of record on September 18, 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.

Caution regarding forward-looking information

Certain information set forth in this news release, including, without limitation, information regarding WestJet’s business transformation initiative, WestJet Encore and the benefits it will provide, expected traffic, revenue growth and RASM for the third quarter of 2013, jet fuel costs in the third quarter of 2013, CASM, excluding fuel and employee profit share for the third quarter of 2013 and full-year 2013, and full-year 2014 system wide capacity is forward-looking information within the meaning of applicable Canadian securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond WestJet’s control. The forward-looking information contained in this news release is based on WestJet’s current forecasts and strategy for WestJet and WestJet Encore, the expected demand environment, anticipated capacity increases, the utilization of our fleet, the forward-curve for jet fuel price, the expected exchange rate of the Canadian dollar to the U.S. dollar, future aircraft deliveries, WestJet’s business transformation initiative along with available implementation plans, agreements and bookings, but may vary due to factors including, but not limited to, changes in guest demand, changes in fuel prices, delays in aircraft delivery, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems and other factors and risks described in WestJet’s public reports and filings which are available under WestJet’s profile at www.sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking information as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.

Non-GAAP measures

This news release contains disclosure respecting non-GAAP performance measures including, without limitation, CASM, excluding fuel and employee profit share and return on invested capital. These measures are included to enhance the overall understanding of WestJet’s current financial performance and to provide an alternative method for assessing WestJet’s operating results in a manner that is focused on the performance of WestJet’s ongoing operations, and to provide a more consistent basis for comparison between reporting periods. These measures are not calculated in accordance with, or an alternative to, GAAP and do not have standardized meanings. Therefore, they may not be comparable to similar measures provided by other entities. Readers are urged to review the section entitled “Reconciliation of non-GAAP and additional GAAP measures” in WestJet’s management’s discussion and analysis of financial results for the three and six months ended June 30, 2013, which is available under WestJet’s profile on SEDAR at www.sedar.com, for a further discussion of such non-GAAP measures and a reconciliation of such measures to GAAP. The financial information accompanying this news release was prepared in accordance with International Financial Reporting Standards unless otherwise noted.

Management’s discussion and analysis of financial results and condensed consolidated financial statements and notes for the three and six months ended June 30, 2013, are available through the Internet in the Media and Investor Relations section of www.westjet.com or under WestJet’s SEDAR profile at www.sedar.com.

Analyst conference call

WestJet will hold its quarterly analysts’ conference call today, July 30, 2013, at 8 a.m. MDT (10 a.m. EDT). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Vito Culmone will discuss WestJet’s second 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 www.westjet.com.