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WestJet’s June traffic increases, but load factor falls

July 5, 2013, Calgary - WestJet says its passenger traffic increased more than eight per cent in June, despite some cancellations and weakness in advance bookings following severe floods in southern Alberta.


July 5, 2013
By The Canadian Press

The Calgary-based airline said its load factor decreased for the fifth consecutive month, falling 2.2 percentage points to 76.8 per cent as capacity increased 11.3 per cent, outpacing traffic gains.

WestJet says it flew nearly nine million passengers in the first half of the year, a 5.7 per cent increase from the prior year and achieved a load factor of 81.9 per cent.

"We continue to be pleased with our strong year-over-year traffic growth, notwithstanding reservation cancellations and weakness in advance bookings in southern Alberta since the June 21 flood,'' stated CEO Gregg Saretsky.

The airline launched its WestJet Encore regional service in the month following the delivery of its first two new Bombardier Q400 turboprop aircraft.

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Walter Spracklin of RBC Capital Markets said increased traffic in the month was below his estimate for 10 per cent growth while capacity additions were higher than expected.

"While traffic growth still remains resilient on a relative basis, we note that we are seeing the largest capacity uptick from WestJet since the first quarter of 2011, leading to what we believe will be continued pressure on yields and RASM (revenues per available seat mile),'' he wrote in a report.

In the second quarter, load factor decreased to 79.4 per cent from 81.6 per cent in the prior year as a 9.3 per cent increase in capacity outpaced the 6.4 per cent growth in traffic.

Spracklin said the traffic growth in the quarter lagged the 7.8 per cent growth in the first quarter and 8.1 per cent increase achieved in fiscal 2012.

"Coupled with the recent ramp in WTI (fuel) prices and a stronger U.S. dollar, we continue to believe that a valuation pause in the airline sector is warranted,'' he added.