WestJet reports record second quarter net earnings

CALGARY, Aug. 1, 2012 /CNW/ – WestJet (TSX: WJA) today announced a second quarter net earnings record of $42.5 million, or $0.31 per diluted share; up from the net earnings of $25.6 million, or $0.18 per diluted share, reported in the second quarter of 2011. These financial results mark WestJet’s 29th consecutive quarter of profitability. Based on the trailing twelve months, the airline achieved a return on invested capital of 11.4 per cent, up from the 10.8 per cent reported last quarter.

“It was another record quarter as we set new second quarter highs for both net earnings and load factor,” said WestJet President and CEO Gregg Saretsky. “Momentum continues at WestJet and we are very pleased with the operating margin expansion achieved again this quarter as we progress towards our return on invested capital target.”

Today, WestJet also announced that it will be introducing a premium economy product on its entire Boeing 737 fleet featuring extra legroom, convenience and other amenities. Modifications to the aircraft will begin in August and the airline expects to have the fleet fully reconfigured by the end of 2012. “We believe that both business and leisure guests will appreciate the added value a premium economy product will offer and look forward to providing further details as we roll it out early next year,” noted Gregg Saretsky.

WestJet expects RASM growth in the third quarter to be moderately stronger than the first half growth and anticipates ongoing operating margin expansion in the second half of 2012. “Demand remains strong as guests continue to choose our airline in record numbers thanks in large part to our amazing WestJetters who make the travel experience so enjoyable,” commented Gregg Saretsky. “We continue to invest in our capabilities and products as we strive to offer our guests more convenience, comfort and flexibility.”

WestJet now projects its full-year CASM, excluding fuel and employee profit share to increase between three to 3.5 per cent year over year from its previous expectation of up 1.5 to 2.5 per cent. This revision is primarily due to higher flight operations and inflight recruitment and training expenses in the fourth quarter in anticipation of our expanded winter schedule which was only recently finalized, increased maintenance expense and a slight reduction in capacity associated with the aircraft reconfiguration project. The airline anticipates that its fuel costs will range between $0.90 and $0.92 per litre for the third quarter of 2012.

The airline also declared an increase to its quarterly dividend from $0.06 to $0.08. “Our decision to increase the quarterly dividend demonstrates the robustness of our business model, inclusive of our new regional airline, and its ability to deliver continued profitable growth. We are committed to not only creating value for our shareholders, but also returning value to them,” added Gregg Saretsky

WestJet and Bombardier signed a definitive purchase agreement on July 31, 2012. The purchase agreement includes a firm order of 20 Q400 NextGen turboprop aircraft with purchase options for an additional 25 Q400 aircraft. Of the firm orders, seven turboprops are scheduled to be delivered in 2013. This will be followed by seven more of the confirmed orders in 2014, four in 2015 and two in 2016. The scheduled delivery slots for the 25 optional aircraft range between 2014 and 2018.

“The planned launch of our new low-cost regional airline remains on track for the second half of 2013. We have now met with representatives from over 30 airports across Canada who are all hoping to have WestJet service and hiring has commenced on the first of up to 1,800 new jobs the regional airline will create. The excitement is growing both internally here at WestJet and externally across the country as we gear up to bring our remarkable guest experience to many new communities,” added Gregg Saretsky.

Dividend declaration
On July 31, 2012 WestJet’s Board of Directors declared a cash dividend of $0.08 per common voting share and variable voting share for the third quarter of 2012, to be paid on September 28, 2012, to shareholders of record on September 12, 2012. 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.