WestJet profit slips to $39.3 million in Q3
Nov. 9, 2011, Calgary - Air carrier WestJet's third-quarter earnings declined by 10 per cent as "stubbornly high" fuel prices ate into its bottom line despite a healthy 13 per cent increase in revenue.
November 9, 2011 By The Canadian Press
The Calgary-based airline said Wednesday its third-quarter net earnings were $39.3 million, or 28 cents per share, down from $43.8 million or 30 cents per share in the same period a year earlier. Revenue rose to $775.3 million from $684.1 million.
"The broader economy continues to experience a great deal of volatility and consumer confidence measures echo that uncertainty, however, we are not seeing this impact reflected in our forward bookings in any significant manner," president and CEO Gregg
Saretsky said in a statement.
"We are optimistic that demand for air travel will remain healthy and are confident that with our high-value travel proposition and low-cost business model we will continue to deliver profitable results moving forward."
WestJet said fuel costs during the period increased about 27 per cent over the previous year to an average of 89 cents per litre. That helped pushed the airline's overall costs — measured per available seat mile — up 9.1 per cent.
It projected that its fuel costs will increase to a range of 90 to 93 cents per litre during the fourth quarter.
Excluding the expense of fuel and its employee profit sharing program, the airline said it expects costs per available seat mile to increase by about one per cent.
Analysts polled by Thomson Reuters were on average expecting WestJet to report earnings of 33 cents per share and revenue of $782 million.
WestJet's chief rival, Air Canada, has been mired in labour disputes this year, first with its customer service agents, and then with its flight attendants.
Earlier this week, an arbitrator backed Air Canada's position that provisions of a tentative agreement union members rejected a month ago be imposed without changes. The union representing flight attendants was outraged, but the company said the decision ends a period of uncertainty for its customers.
In an effort to compete more effectively with Air Canada, the country's biggest airline, WestJet has been looking to draw more international traffic into its network.
WestJet's fleet consists only of Boeing 737 aircraft, which are not capable of making long-haul journeys to Asia or Europe. So the Calgary-based company has been seeking partnerships with other carriers to expand its global reach.
In the United States, WestJet is working with American Airlines and Delta. On the international front, WestJet has announced partnerships with British Airways, Cathay Pacific, China Airlines, Air France and KLM.
WestJet is also looking to beef up its presence in the ultra-competitive Toronto-Ottawa-Montreal circuit by offering various perks to business travellers. It's an effort to take market share away from regional carrier Porter Airlines as well as Air Canada.