WestJet reports a record net profit in the second quarter

WestJet (Calgary) announced its 33rd consecutive quarter of profitability, with record second quarter net earnings of $44.7 million (all figures in CA dollars) , 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.

Operating highlights (stated in Canadian dollars)

Q2 2013 Q2 2012 Change Year-to-
date 2013
Year-to-
date 2012
Change
Net earnings (millions) $44.7 $42.5 5.2% $135.8 $110.8 22.6%
Diluted earnings per share $0.34 $0.31 9.7% $1.02 $0.81 25.9%
Total revenues (millions) $843.7 $809.3 4.3% $1,810.9 $1,700.2 6.5%
Operating margin 7.9% 8.7% (0.8 pts) 11.0% 10.4% 0.6 pts
ASMs (available seat miles) (billions) 5.888 5.389 9.3% 11.920 11.079 7.6%
RPMs (revenue passenger miles) (billions) 4.675 4.395 6.4% 9.763 9.116 7.1%
Load factor 79.4% 81.6% (2.2 pts) 81.9% 82.3% (0.4 pts)
Segment guests 4,493,271 4,267,598 5.3% 8,986,595 8,498,013 5.7%
Yield (revenue per revenue passenger mile) (cents) 18.05 18.41 (2.0%) 18.55 18.65 (0.5%)
RASM (revenue per available seat mile) (cents) 14.33 15.02 (4.6%) 15.19 15.35 (1.0%)
CASM (cost per available seat mile) (cents) 13.20 13.71 (3.7%) 13.52 13.76 (1.7%)
CASM, excluding fuel and employee profit share (cents)* 9.06 9.12 (0.7%) 9.00 9.03 (0.3%)

*Refer to reconciliations in the accompanying tables for further information regarding calculations.

In the second quarter, WestJet successfully launched WestJet Encore, Canada’s newest regional airline with its first two new Bombardier DHC-8-402 (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.

Copyright Photo: Bruce Drum/AirlinersGallery.com. WestJet is reconfiguring its Boeing 737-800 fleet. Boeing 737-8CT C-GKWJ (msn 34151) taxies to the runway at Los Angeles International Airport.

WestJet: AG Slide Show