WestJet reports record fourth quarter net earnings

CALGARY, Feb. 9 /CNW/ – WestJet (TSX:WJA) today announced its fourth quarter and full-year results for 2010. The airline reported fourth quarter net earnings of $47.9 million, or $0.33 cents per diluted share. Excluding special items, this represents record fourth quarter net earnings and an increase of 217 per cent compared to the fourth quarter of 2009. WestJet reported full-year net earnings of $136.7 million, or $0.94 cents per diluted share.

“To finish 2010 with our 23rd consecutive profitable quarter, one in which we saw our net earnings increase 217 per cent, is an accomplishment we are all very proud of,” commented WestJet President and CEO Gregg Saretsky. “These strong results would not have been possible without the dedication of the more than 8,000 WestJetters who are committed to the continued growth and success of our airline.”

WestJet reported a fourth quarter operating margin of 11.4 per cent, compared to 6.3 per cent in the fourth quarter of 2009. For the full year, WestJet achieved an operating margin of 9.5 per cent compared to a 2009 margin of 9.2 per cent, among the best performances of North American airlines.

“The launch of our Frequent Guest and Credit Card programs and the ongoing additions to our airline partnerships are examples of how we are now capitalizing on the significant investment in our reservations systems,” said Gregg Saretsky. “Revenue momentum is building and we will continue to exploit the opportunities that the new systems afford us, positioning us well for continued profitable growth.”

WestJet grew throughout 2010; the airline increased capacity by 13.8 per cent in the fourth quarter and ended the year with an 11.1 per cent capacity increase. Traffic expansion was in line with the capacity increase in the fourth quarter and revenue per available seat mile (RASM) was up 6.8 per cent primarily due to the strengthening yield. Operational performance was equally strong with an 11.6 point increase in on-time performance and a 30.7 per cent improvement in baggage handling for the fourth quarter.

WestJet is expecting fuel costs, excluding hedging, to range between $0.82 and $0.84 per litre for the first quarter of 2011. “Our controllable costs remain in check and we feel our low-cost structure and fuel efficient fleet have us well equipped to withstand fuel price volatility,” said Gregg Saretsky. “We also expect the positive RASM trend to continue into the first quarter of 2011 and estimate that year-over-year improvements will be roughly in line with those reported in the fourth quarter.”

WestJet announced, as part of its ongoing fleet planning review, the deferral of six aircraft deliveries from 2012 (2), 2013 (1), 2014 (2) and 2015 (1) out to 2017 (3) and 2018 (3). “The decision to defer these aircraft deliveries increases the flexibility in our fleet plan and creates some additional pricing power for us at a time of rising fuel costs and global economic uncertainty, all without deviating from our long-term growth strategy. The entirety of our order with Boeing remains intact,” commented Gregg Saretsky. “This revised delivery schedule allows us to better match the timing of those deliveries with the dates for potential lease returns which permits us to accelerate or decelerate capacity growth dependent on economic and market conditions.”

WestJet’s board of directors declared a cash dividend of $0.05 per common voting share and variable voting share for the first quarter of 2011, to be paid on March 31, 2011, to shareholders of record on March 16, 2011. 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 statements

Certain information set forth in this news release, including information regarding airline partnerships, revenue momentum, exploitation of opportunities from new systems, continued profitable growth, fuel costs for the first quarter of 2011, impact of our low-cost structure, anticipated increases in RASM in the first quarter of 2011, capacity to withstand fuel price volatility, aircraft delivery schedule and growth strategy and corporate vision, contain forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond WestJet’s control. These forward-looking statements are based on currently available implementation plans, agreements and bookings, but may vary due to factors including, but not limited to, changes in consumer demand, changes in fuel prices, delays in aircraft delivery, changes in guest demand, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems and other factors described in WestJet’s public reports and filings, which are available on WestJet’s profile at www.sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking statements as actual results may vary materially from the forward-looking statements. WestJet does not undertake to update, correct or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by applicable law.

Management’s Discussion & Analysis and the Consolidated Financial Statements and Notes for the three and twelve months ended December 31, 2010, are available on www.westjet.com or WestJet’s SEDAR profile at www.sedar.com.

Conference call

WestJet will hold its quarterly analysts’ conference call today, February 9, 2011, at 7 a.m. MST (9 a.m. EST). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Vito Culmone will discuss WestJet’s 2010 fourth quarter and year-end results and answer questions from financial analysts and members of the media. The conference call is available in Toronto by calling 647-427-7450 and outside Toronto through the toll-free telephone number 1-888-231-8191. The call can also be heard through an Internet webcast in the Media and Investor section of www.westjet.com.

About WestJet

WestJet is Canada’s favourite airline, offering scheduled service throughout its 71-city North American and Caribbean network. Inducted into Canada’s Most Admired Corporate Cultures Hall of Fame and named one of Canada’s best employers, WestJet pioneered low-cost flying in Canada. WestJet offers increased legroom, leather seats and live seatback television provided by Bell TV on its modern fleet of 93 Boeing Next-Generation 737 aircraft. With future confirmed deliveries for an additional 42 aircraft through 2018, WestJet strives to be one of the five most successful international airlines in the world.