Airline achieves EPS of 34 cents, up from 2 cents in the first quarter of 2010
WestJet reports 24th consecutive quarter of profitability
CALGARY, May 3 /PRNewswire-FirstCall/ - WestJet (TSX:WJA) today reported first quarter 2011 net earnings of $48.2 million, or 34 cents per share, a significant improvement from $2.4 million or 2 cents per share reported in the first quarter of 2010. The airline achieved an operating margin of 10.3 per cent which represents an increase of 6.4 points compared to the first quarter of 2010.
"To start 2011 with strong earnings in an environment of elevated fuel costs is another testament to the resiliency of WestJet, the effectiveness of our business model, and the hard work of every WestJetter," commented WestJet President and CEO Gregg Saretsky.
Operating highlights (stated in Canadian dollars)
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Q1 2011 Q1 2010* Change
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Net earnings (millions) $48.2 $2.4 1,940.1%
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Earnings per share (cents) $0.34 $0.02 1,600.0%
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Total revenue (millions) $772.4 $619.3 24.7%
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Operating margin 10.3% 3.9% 6.4 pts.
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ASMs (available seat miles) (billions) 5.230 4.700 11.3%
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RPMs (revenue passenger miles) (billions) 4.290 3.840 11.7%
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Load factor 82.0% 81.7% 0.3 pts.
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Yield (revenue per revenue passenger
mile) (cents) 18.00 16.13 11.6%
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RASM (revenue per available seat mile)
(cents) 14.77 13.18 12.1%
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CASM (cost per available seat mile)
(cents) 13.24 12.67 4.5%
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CASM, excluding fuel and employee
profit share (cents)** 8.91 9.21 (3.3%)
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Segment guests 3,899,108 3,688,490 5.7%
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Average stage length (miles) 1,021 963 6.0%
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* Financial information has been restated in accordance with
International Financial Reporting Standards (IFRS).
** Refer to reconciliations in the accompanying tables for further
information regarding adjustments.
Revenue per available seat mile (RASM) was up 12.1 per cent year over year which was mostly attributable to significant yield improvement and slight load factor growth. "We are pleased that the market has absorbed the fare increases put in place to offset rising fuel costs. These strong first quarter results represent net earnings per guest of roughly twelve dollars which highlights the competitive nature of the airline industry," said Gregg Saretsky. For the second quarter of 2011, WestJet is projecting fuel costs, excluding hedging, to range between $0.95 and $0.98 per litre, and is anticipating continued strong year-over-year RASM growth.
For the first half of 2011, WestJet is expecting cost per available seat mile (CASM), excluding fuel and employee profit share, to be relatively flat on a year-over-year basis compared to the first half of 2010. "WestJetters are well known for providing a great guest experience, as recognized by the recent J.D. Power 2011 Customer Service award, but they are also very cost-conscious and I thank them for their ongoing efforts in keeping our controllable costs in check," concluded Gregg Saretsky.
WestJet's board of directors declared a cash dividend of $0.05 per common voting share and variable voting share for the second quarter of 2011, to be paid on June 30, 2011, to shareholders of record on June 15, 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, without limitation, the information regarding second quarter fuel costs, RASM growth in the second quarter of 2011, and CASM growth in the first half of 2011, 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 press release is based on WestJet's current budget and forecasts, realized jet fuel prices for April 2011 and forward curve prices for 2011, the expected exchange rate of the Canadian dollar to the U.S. dollar, along with 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 and risks described in WestJet's public reports and filings including WestJet's management's discussion and analysis and annual information form for the year ended December 31, 2010, 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 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.
This press release contains disclosure respecting non-IFRS performance measures including, without limitation, net earnings and diluted earnings per share, excluding special items, net earnings per guest, and CASM, excluding fuel and employee profit share. These measures are included to enhance 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 quarters. These measures are not in accordance with, or an alternative to, IFRS and do not have standardized meanings. Therefore, they are not likely to be comparable to similar measures provided by other entities. Readers are urged to review the section entitled "Non-IRFS Measures" in WestJet's management's discussion and analysis of financial results for the three months ended March 31, 2011, which is available under WestJet's profile on SEDAR at www.sedar.com, for a further discussion of such non-IFRS measures and a reconciliation of such measures to IFRS.
Management's discussion & analysis and the consolidated interim financial statements and notes for the three months ended March 31, 2011, are available through the Internet on www.westjet.com or WestJet's SEDAR profile at www.sedar.com.
Analyst conference call
WestJet will hold its quarterly analysts' conference call today, May 3, 2011, 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 first quarter 2011 results and answer questions from financial analysts and members of the media. The conference call is available in Toronto by calling 1-647-427-7450 and outside Toronto through the toll-free telephone number 1-888-231-8191. The call can also be listened to through an Internet webcast in the Media and Investor Relations section of www.westjet.com.
Annual general and special meeting (AGM)
WestJet will hold its AGM at 2 p.m. MDT (4 p.m. EDT) today on May 3, 2011 at WestJet's Calgary Campus at 22 Aerial Place NE. The AGM webcast will be available live in the Media and Investor Relations 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 95 Boeing Next-Generation 737 aircraft. With future confirmed deliveries for an additional 40 aircraft through 2018, WestJet strives to be one of the five most successful international airlines in the world.
Connect with WestJet on Facebook at www.facebook.com/westjet
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Consolidated Statement of Earnings
(Stated in thousands of Canadian dollars, except share and per share
data)
(Unaudited)
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Three months ended March 31 2011 2010
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Revenues:
Guest 688,588 559,725
Other 83,834 59,567
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772,422 619,292
Expenses:
Aircraft fuel 218,963 160,054
Airport operations 109,151 101,039
Flight operations and navigational charges 84,097 79,052
Sales and distribution 76,822 66,439
Marketing, general and administration 47,816 49,819
Depreciation and amortization 43,307 42,621
Aircraft leasing 40,713 34,258
Inflight 33,499 30,330
Maintenance 30,622 29,272
Employee profit share 7,592 2,315
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692,582 595,199
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Earnings from operations 79,840 24,093
Non-operating income (expense):
Finance income 3,931 1,707
Finance costs (16,198) (18,461)
Gain (loss) on foreign exchange 1,499 (2,119)
Loss on disposal of property and equipment (7) (6)
Gain (loss) on derivatives (2,257) 632
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(13,032) (18,247)
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Earnings before income tax 66,808 5,846
Income tax expense:
Current 581 362
Deferred 17,978 3,119
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18,559 3,481
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Net earnings 48,249 2,365
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Earnings per share:
Basic 0.34 0.02
Diluted 0.34 0.02
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Weighted average number of shares
outstanding - basic 142,308,050 144,630,179
Weighted average number of shares
outstanding - diluted 143,141,454 144,960,449
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Consolidated Statement of Financial Position
(Stated in thousands of Canadian dollars)
(Unaudited)
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March 31 December 31 January 1
2011 2010 2010
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Assets
Current assets:
Cash and cash equivalents 1,252,416 1,187,899 1,005,181
Accounts receivable 27,230 17,518 27,654
Prepaid expenses, deposits and
other 70,164 53,761 64,868
Inventory 25,090 26,095 31,505
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1,374,900 1,285,273 1,129,208
Non-current assets:
Property and equipment 1,997,262 1,989,522 2,108,351
Intangible assets 12,134 13,018 14,087
Other assets 93,193 96,167 98,451
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Total assets 3,477,489 3,383,980 3,350,097
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued
liabilities 350,866 287,710 228,911
Advance ticket sales 371,254 336,926 297,720
Non-refundable guest credits 35,054 36,381 63,164
Current portion of long-term debt 178,060 178,337 165,111
Current portion of obligations
under finance leases 73 108 744
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935,307 839,462 755,650
Non-current liabilities:
Maintenance provisions 106,793 106,711 91,227
Long-term debt 806,833 848,465 1,028,165
Obligations under finance leases 3,231 3,249 3,358
Other liabilities 9,678 8,958 9,517
Deferred income tax 287,057 268,069 225,170
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Total liabilities 2,148,899 2,074,914 2,113,087
Shareholders' equity:
Share capital 639,717 647,637 633,075
Equity reserves 69,674 66,726 75,866
Hedge reserves (7,211) (10,470) (14,852)
Retained earnings 626,410 605,173 542,921
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Total shareholders' equity 1,328,590 1,309,066 1,237,010
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Total liabilities and
shareholders' equity 3,477,489 3,383,980 3,350,097
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Consolidated Statement of Cash Flows
(Stated in thousands of Canadian dollars)
(Unaudited)
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Three months ended March 31 2011 2010
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Operating activities:
Net earnings 48,249 2,365
Items not involving cash:
Depreciation and amortization 43,307 42,621
Change in long-term maintenance provisions 6,698 6,750
Change in other liabilities (209) (190)
Amortization of hedge settlements 350 349
Gain (loss) on derivative instruments 2,257 (632)
Gain (loss) on disposal of property and equipment 7 (23)
Share-based payment expense 3,369 5,601
Income tax credit - (1,816)
Deferred income tax expense 17,978 3,119
Unrealized foreign exchange loss 432 2,565
Change in non-cash working capital 76,494 64,353
Change in other assets (1,627) (1,450)
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197,305 123,612
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Investing activities:
Aircraft additions (43,140) (4,795)
Other property and equipment and intangible
additions (9,380) (2,748)
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(52,520) (7,543)
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Financing activities:
Repayment of long-term debt (41,283) (41,167)
Decrease in obligations under finance leases (54) (119)
Shares repurchased (28,297) -
Dividends paid (14,205) -
Change in other assets (672) (4,471)
Change in non-cash working capital 6,153 2,529
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(78,358) (43,228)
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Cash flow from operating, investing and
financing activities 66,427 72,841
Effect of foreign exchange on cash and cash
equivalents (1,910) (1,383)
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Net change in cash and cash equivalents 64,517 71,458
Cash and cash equivalents, beginning of period 1,187,899 1,005,181
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Cash and cash equivalents, end of period 1,252,416 1,076,639
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Cash taxes paid (371) (723)
Cash interest received 2,908 1,168
Cash interest paid (14,024) (16,239)
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Operating Highlights
(Unaudited)
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Three months ended March 31
2011 2010 Change
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ASMs 5,230,276,750 4,699,519,345 11.3%
RPMs 4,290,347,966 3,839,947,560 11.7%
Load factor 82.0% 81.7% 0.3 pts.
Yield (cents) 18.00 16.13 11.6%
RASM (cents) 14.77 13.18 12.1%
CASM (cents) 13.24 12.67 4.5%
CASM, excluding fuel and
employee profit share (cents) 8.91 9.21 (3.3%)
Fuel consumption (litres) 257,692,812 230,468,379 11.8%
Fuel costs per litre (dollars) 0.85 0.69 23.2%
Segment guests 3,899,108 3,688,490 5.7%
Average stage length (miles) 1,021 963 6.0%
Utilization (hours) 12.15 11.70 3.8%
Number of full-time equivalent
employees at period end 6,908 6,259 10.4%
Fleet size at period end 94 88 6.8%
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Reconciliation of non-IFRS measures to IFRS
To supplement the consolidated interim financial statements presented in accordance with IFRS, WestJet uses various non-IFRS performance measures. These measures are provided to enhance the reader's overall understanding of WestJet's current financial performance. They are included to provide investors and management with an alternative method for assessing the operating results in a manner that is focused on the performance of ongoing operations and to provide a more consistent basis for comparison between quarters. These measures are not in accordance with, or an alternative to, IFRS and do not have standardized meanings. Therefore, they are not likely to be comparable to similar measures presented by other entities.
Net earnings and diluted earnings per share, excluding special items
(Stated in thousands of Canadian dollars, except per share data)
(Unaudited)
WestJet believes excluding special items is useful for investors to
evaluate its recurring operational performance.
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Three months ended March 31
2011 2010
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Net earnings 48,249 2,365
Adjusted for:
CEO departure (net of tax) - 3,700
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Net earnings, excluding special items 48,249 6,065
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Weighted average number of shares
outstanding - diluted 143,141,454 144,960,449
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Diluted earnings per share, excluding
special items 0.34 0.04
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CASM, excluding fuel and employee profit share
(Stated in thousands of Canadian dollars, except per unit data)
(Unaudited)
WestJet excludes the effects of aircraft fuel expense and employee profit
share expense to assess the operating performance of the business. Fuel
expense is excluded from operating results due to the fact that fuel
prices are impacted by a host of factors outside WestJet's control, such
as significant weather events, geopolitical tensions, refinery capacity
and global demand and supply. Excluding this expense allows WestJet to
analyze its operating results on a comparable basis. Employee profit
share expense is excluded from operating results due to its variable
nature and excluding this expense allows greater comparability.
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Three months ended March 31
2011 2010
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Operating expenses 692,582 595,199
Adjusted for:
Aircraft fuel expense (218,963) (160,054)
Employee profit share expense (7,592) (2,315)
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Operating expenses, excluding above items 466,027 432,830
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ASMs (in thousands) 5,230,277 4,699,519
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CASM, excluding above items (cents) 8.91 9.21
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Net earnings per guest
(Stated in thousands of Canadian dollars, except per unit data)
(Unaudited)
WestJet believes that the measure of net earnings per guest provides
useful information to investors about unit profit.
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Three months ended March 31
2011 2010
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Net earnings 48,249 2,365
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Segment guests 3,899,108 3,688,490
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Net earnings per guest 12.37 0.64
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SOURCE WestJet
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