WestJet posts 17th straight profitable quarter
WestJet posts 17th
straight profitable quarter
WestJet has announced second quarter results for 2009. The airline reported net earnings of $ 9.2 million, or seven cents per diluted share.
Aug. 6, 2009, Calgary – WestJet has announced second quarter results for 2009. The airline reported net earnings of $9.2 million, or seven cents per diluted share. Compared to the second quarter of 2008, these results were negatively impacted by the weak economy driving lower yields in the marketplace.
Sean Durfy, WestJet President and CEO, commented, "Similar to the first quarter, the weakened economy and aggressive pricing continue to have an unfavorable impact on RASM. However, lower fuel prices resulted in a significant decline in CASM from last year and lessened the profitability erosion."
"In the face of these daunting times, our WestJetters continue to show how much they care about our guests and our company. Our on-time performance, completion and baggage rates were exceptional this quarter, which along with our caring WestJetter-driven service, continues to build guest loyalty. For that, I'm truly appreciative," acknowledged Sean Durfy. "Once again, we demonstrated the strength and sustainability of our business strategy, even in this difficult climate. In the face of poor demand conditions, we were able to produce a solid operating margin of 6.9 per cent, while expanding our network into new destinations."
Operating highlights (stated in CN $)
||Year to date
|Year to date
|CASM (cost per
The 2008 comparatives have been restated due to a change in accounting policy.
"The flexibility of our fleet deployment strategy allows us to quickly react to demand changes by adjusting our schedule for more profitable flying," stated Sean Durfy. "For the remainder of 2009, we will lower our aircraft utilization rates through more efficient scheduling of domestic frequencies.
This will lower our previously planned third quarter capacity growth to a decline of between one and two per cent. It will also drop our full-year capacity growth to between two and three per cent. For our winter schedule, we are introducing 11 new destinations and three new countries, plus adding many new route pairings between Canada and Mexico. We believe this will allow us to capture additional market share as we keep expanding WestJet and WestJet Vacations into the domestic, transborder and international markets."
"In the second quarter we introduced an internal program, 'All Eyes on Cost,' focused on cost containment for the remainder of 2009 and 2010. We have already identified a number of sustainable savings, cost deferrals and cost avoidances that will be implemented this year and next," added Sean Durfy.
"When we asked our WestJetter's to help in this effort, they did so brilliantly – coming up with millions of dollars in savings ideas. The Executive team and I are truly inspired by WestJetters as together we tackle difficult decisions to enable us to come through this deep recession as a stronger and more competitive airline. Despite these conditions, we remain committed to our long-term strategic initiatives and vision – to be one of the five most successful international airlines."
WestJet plans to take delivery of two new aircraft in August, which will bring its fleet size to 81. For the balance of the year, WestJet plans to receive an additional five aircraft in the fourth quarter, which will bring its fleet to 86.
The airline completed the quarter with a cash balance of $739.6 million. The decrease primarily results from the purchase of one leased aircraft, providing WestJet with an unencumbered aircraft for financial flexibility if required, and a reduction in working capital. An $85 million credit facility secured against the new Calgary Campus was finalized, providing additional liquidity if necessary.
"In times of economic turmoil, a strong balance sheet is paramount for continuation of our strategic initiatives. In comparison to our peers, we have maintained a healthy cash position relative to our sales, created a solid working capital position, and introduced additional financial flexibility with limited costs, all while keeping our debt ratios low. We are maintaining a healthy level of cash while focusing on improving revenues and reducing costs," explained Sean Durfy.
"We are making excellent progress on our strategic initiatives, as evidenced by accelerating our interline relationship with Air France and KLM, announcing RBC and MasterCard as our credit card partners for our rewards program and having our reservation system continue on track for a fourth quarter implementation," added Sean Durfy. "These initiatives will allow us to provide an even greater guest experience and valued benefits that our guests have been asking for."
Sean Durfy further said, "With the continued weak outlook for the economy for the remainder of 2009, we are not expecting any real improvement in our
RASM numbers for the balance of the year. For the third quarter 2009, we are seeing RASM declines continuing at similar declines from the second quarter year-over-year results. Although there have been some early indications that the economy may be improving, the airline industry typically lags economic improvement by six or more months."
WestJet had strong second quarter operational performance. WestJet calculates its on-time performance and completion rate based on the U.S. Department of Transportation's standards. WestJet's baggage ratio represents the number of delayed or lost baggage claims made per 1,000 guests. The airline strives to be one of the top North American airlines for these three operational performance metrics.
|Q2 2009||Q2 2008||Change||Year to date
|Year to date
|On-time performance||89.5%||84.3%||(5.2 pts.)||80.7%||77.2%||(3.5%)|
|Completion Rate||99.4%||99.0%||(.4 pts.)||98.5%||98.6%||(.1 pts.)|
Caution regarding forward-looking statements
Certain information set forth in this press release, including but not limited to information regarding WestJet's operational plans for the remainder of 2009, capacity projections, new winter schedule, anticipated aircraft delivery schedule, implementation of strategic programs, and projections as to
RASM in the third quarter of 2009, 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, delay in aircraft delivery, change in customer demand, general economic conditions and availability of personnel and outside consultants.
These and additional risk factors are discussed in WestJet's most recent
Annual Information Form (AIF) and in other documents WestJet files from time to time with securities regulatory authorities, which are available through the Internet on WestJet's SEDAR 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 any forward-looking statements, except as is required by law.
The Management's Discussion and Analysis and Consolidated Financial
Statements and Notes for the three and six months ended June 30, 2009, are available through the Internet on westjet.com or WestJet's SEDAR profile at www.sedar.com .