Airline achieves 20th consecutive quarter of positive earnings
CALGARY , May 4 /PRNewswire-FirstCall/ - WestJet (TSX:WJA) today reported first quarter 2010 net earnings of
"We are very pleased to be starting 2010 with another quarter of profitability," said WestJet President and CEO Gregg Saretsky , "especially in light of the challenging economic environment and rising energy costs. Our talented and dedicated team of WestJetters and a disciplined approach to running a low-cost business have produced first quarter results that continue to be among the best in North America based on normalized earnings before tax margins."
With regard to the airline's first quarter operational highlights, Gregg Saretsky commented, "We are happy to have achieved a seven per cent year-over-year improvement in revenue, notwithstanding a 2.4 per cent decline in yield. Our yield continued to be under pressure from price-sensitive travellers, which resulted in a RASM decline of 0.8 per cent."
Indications that stronger load factor and improving yield trends are starting to emerge - and assuming this trend remains - the airline expects to see year-over-year RASM gains in the second quarter of 2010.
A 3.9 per cent increase in CASM, contributed to the company's first quarter profit declining from the profit recorded in the first quarter of 2009. CASM increases were primarily due to higher sales and distribution costs and elevated fuel prices. Significant WestJet Vacations' revenue growth and the associated commissions on sales during the quarter were the main drivers behind the increased sales and distribution expense. Based on current cost trends, WestJet anticipates second quarter 2010 CASM, excluding fuel and employee profit share, to increase less than 2.5 per cent year-over-year compared to the 4.9 per cent year-over-year increase seen in the first quarter.
WestJet's capacity growth of 7.9 per cent for the first quarter was driven exclusively by expansion in the airline's southern markets. WestJet Vacations' continued growth helped support the airline's performance in its southern markets and positively contributed to the bottom line. The airline's capacity for the second quarter is expected to increase 10 per cent. Its full-year capacity is expected to increase nine to 10 per cent with the majority of the additional capacity going to southern destinations.
"WestJet's focus for 2010 will be to leverage the investments we made in technology and capabilities throughout 2009," said Gregg Saretsky . "Our priorities are to drive cost efficiencies and to tap into new sources of revenue now that we have our long-term reservation system in place, while utilizing our capacity to drive profitability, including airline partnerships and new ancillary revenues from our recently launched Frequent Guest Program and our WestJet RBC MasterCard program."
WestJet also announced its first quarter 2010 operational performance statistics. WestJet calculates its on-time performance (the percentage of flights that arrived within 15 minutes of their scheduled time) and completion rate (the percentage of flights completed from flights originally scheduled) 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 reported improvements in all three categories for the first quarter of 2010.
Caution regarding forward-looking statements
Certain information set forth in this press release, including information regarding future load factors and yield, anticipated RASM in Q2 2010, anticipated CASM in Q2 2010, expected capacity growth, demand recovery and WestJet's 2010 business focus, contains 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, 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 described in WestJet's public reports and filings, 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 statements. WestJet does not undertake to update, correct or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by applicable law.
Management's Discussion & Analysis and the Consolidated Financial Statements and Notes for the three months ended March 31, 2010 , are available through the Internet on www.westjet.com or WestJet's SEDAR profile at www.sedar.com.
WestJet will hold its quarterly analysts' conference call today, May 4, 2010 , 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 2010 results and answer questions from financial analysts. Following the analysts' question-and-answer period, media will be given an opportunity to ask questions pertaining to the airline's first quarter results. 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 section of www.westjet.com.
Annual general meeting (AGM)
WestJet will hold its AGM at 2 p.m. MDT ( 4 p.m. EDT ) today on May 4, 2010 , at WestJet's Calgary Campus, which is located at 22 Aerial Place NE. The AGM webcast will be available live in the Media and Investor section of www.westjet.com.
Reconciliation of non-GAAP measures to GAAP
To supplement the consolidated financial statements presented in accordance with Canadian GAAP, WestJet uses various non-GAAP performance measures. These measures are provided to enhance the reader's overall understanding of WestJet's current financial performance and 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, Canadian GAAP and do not have standardized meanings. Therefore, they are not likely to be comparable to similar measures presented by other entities.
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.
WestJet is Canada's preferred airline, offering scheduled service throughout its 68-city North American and Caribbean network. Inducted into the corporate culture hall of fame after being named one of Canada's most admired corporate cultures in 2005, 2006, 2007 and 2008, 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 88 Boeing Next-Generation 737 aircraft. With future confirmed deliveries for an additional 47 aircraft through 2016, WestJet strives to be one of the five most successful international airlines in the world.