WestJet reports 130 per cent jump in net earnings
August 5, 2010, Calgary - WestJet today reported second quarter 2010 net earnings of $21 million, or 14 cents per diluted share, which marks its 21st consecutive quarter of profitability and a 130 per cent increase in net earnings, year-over-year.
Excluding the impact of a one-time special item related to revised
estimates for provincial income tax allocation calculations in the
second quarter of 2010, WestJet's adjusted second quarter net earnings
for 2010 were$23.4 million or 16 cents per diluted share.
WestJet reported an operating margin of 6.6 per cent, compared to 6.9 per cent in the second quarter of 2009. WestJet's second quarter 2010 pre-tax margin was 5.4 per cent, compared to 2.6 per cent in the same 2009 period.
Operating highlights (stated in Canadian dollars)
Q2 2010 Q2 2009 Change 2010 2009 Change
(millions) $21.0 $9.2 129.7% $34.8 $46.6 (25.2%)
(millions) $23.4 $9.2 155.7% $40.9 $44.3 (7.7%)
per share $0.14 $0.07 100.0% $0.24 $0.36 (33.3%)
items* $0.16 $0.07 128.6% $0.28 $0.35 (20.0%)
(millions) $612.1 $531.2 15.2% $1,231.9 $1,110.4 10.9%
margin 6.6% 6.9% (0.3 pts.) 6.4% 8.8% (2.4 pts.)
(billions) 4.784 4.315 10.9% 9.483 8.672 9.4%
(billions) 3.825 3.285 16.4% 7.665 6.787 12.9%
Load factor 80.0% 76.1% 3.9 pts. 80.8% 78.3% 2.5 pts.
mile) (cents) 16.00 16.17 (1.1%) 16.07 16.36 (1.8%)
(cents) 12.80 12.31 4.0% 12.99 12.81 1.4%
CASM (cost per
(cents) 11.96 11.46 4.4% 12.16 11.68 4.1%
(cents)* 8.44 8.45 (0.1%) 8.67 8.48 2.2%
* Refer to reconciliations in the accompanying tables for further
information regarding adjustments.
"We are pleased to deliver our 21st consecutive quarter of profitability," said WestJet President and CEO Gregg Saretsky. "It is WestJetters' unrelenting focus on friendly service and great value that allows our dedicated and talented team to continue producing solid results, quarter after quarter, year in and year out."
"The improving demand and traffic results experienced during the quarter enabled us to increase our revenue by 15.2 per cent and our RASM by 4.0 per cent, compared to the prior period," commented Gregg Saretsky. "In June, we introduced our everyday low pricing structure to provide great fares year-round across our entire schedule and reduce the volatility in pricing. We are encouraged by the early booking trends and the improved mix of fares we are selling." Third quarter RASM estimates are anticipated to be positive again on a year-over-year basis.
During the second quarter, CASM increased 4.4 per cent as the cost of fuel in cents per litre is up 14.5 per cent, including hedging, year-over-year. Focusing on controllable costs, CASM ex fuel and profit share was down 0.1 per cent year-over-year. The main cost reductions came from a stronger Canadian dollar and increased average stage length, offset by higher commissions from WestJet Vacations' significant revenue growth, quarter over quarter. An increase of one to three per cent, year-over-year, in CASM ex fuel and profit share is expected for the third quarter.
Significant investments in technology to enhance WestJet's strategic capabilities in 2009 are now being leveraged to deliver new revenue opportunities, while mitigating cost impacts from the increased complexity in the organization. WestJet continues to focus on implementing innovative self-serve solutions that will enhance guest experience and save time for guests, while expanding margins.
WestJet believes the Canadian economy needs to rebound further before it can support more new domestic capacity growth. Domestic capacity was therefore reduced during the second quarter and new capacity directed into the airline's southern markets. Most of the new capacity will continue to be deployed outside of Canada in the third and fourth quarters as well. The airline's capacity for the third quarter is expected to increase between 11 and 12 per cent. Its full-year capacity is expected to increase nine to 10 per cent.
In light of a recent downward revision to the Canadian GDP growth estimates and the continual assessment of other economic indicators, WestJet is deferring the delivery of three aircraft from 2011 (1) and 2012 (2), out to 2017. WestJet will now be taking delivery of six aircraft in 2011 and five aircraft in 2012. "Economic uncertainty has caused us to re-think our short-term capacity plan," commented Gregg Saretsky. "We have worked closely with our valued partner Boeing to further enhance our fleet plan flexibility."