WestJet Reports Record Third Quarter and Year-To-Date Results



    Airline continues its positive momentum with a 44% increase in net
    earnings

    CALGARY, Nov. 7 /CNW/ - WestJet (TSX:WJA) today announced record third
quarter net earnings of $76.1 million, a 44.0% increase over the $52.8 million
for the same period last year. Record year-to-date net earnings of
$117.5 million were 33.5% higher than $88.0 million in 2006.
    The airline's third quarter earnings from operations were $144.2 million.
This represented an operating margin of 23.5% and an increase of 60.6% over
2006.
    Sean Durfy, WestJet President and CEO said today, "These results
demonstrate another quarter of hard work by our people and their ability to
continue the positive momentum of our airline. The strength of the Canadian
economy and the strong demand for our product, evidenced by our highest load
factor in history, achieved in August, allowed us to deliver our strongest
third quarter results on record. Our people met the demands of higher loads
with on-time performance that was among the top three in North America."
    WestJet's diluted earnings per share (EPS) for the third quarter was
58 cents compared to 41 cents in the same period last year, an increase of
41.5%. Year to date, diluted EPS was 90 cents, an increase of 32.4% compared
to 68 cents in 2006. Excluding the second quarter reservation system
write-down of $31.9 million, year-to-date diluted EPS was $1.07, or a 57.4%
increase when compared to the same period in 2006.
    Third quarter revenue of $614.1 million compared to $502.3 million in the
third quarter of 2006 was an improvement of 22.3%. Year to date, revenue
increased to $1.6 billion compared to $1.3 billion in 2006, an increase of
21.7%.

    
    Operating Highlights
    -------------------------------------------------------------------------
                                Q3     Q3         %     YTD    YTD         %
                              2007   2006    change    2007   2006    change
    -------------------------------------------------------------------------
    Load Factor              83.2%  80.5%  2.7 pts.   81.8%  79.2%  2.6 pts.
    -------------------------------------------------------------------------
    ASM (available seat
     miles) billions           3.8    3.3     14.4%    10.7    9.2     16.5%
    -------------------------------------------------------------------------
    RPM (revenue passenger
     miles) billions           3.2    2.7     18.3%     8.8    7.3     20.3%
    -------------------------------------------------------------------------
    RASM (revenue per
     available seat mile)
     cents                    16.2   15.2      6.6%    14.9   14.3      4.2%
    -------------------------------------------------------------------------
    Yield (revenue per
     passenger mile) cents    19.5   18.9      3.2%    18.2   18.0      1.1%
    -------------------------------------------------------------------------
    CASM (cost per available
     seat mile) cents         12.4   12.5     (0.6%) 12.5(1)  12.6     (0.9%)
    -------------------------------------------------------------------------
    CASM excluding fuel cents  8.9    8.9         -   9.1(1)   9.1         -
    -------------------------------------------------------------------------
    (1) excludes reservation system write-down of $31.9 million
    -------------------------------------------------------------------------
    

    Sean Durfy continued, "In the third quarter, we flew a record number of
guests, with an 83.2% load factor, achieved a 3.2% increase in our yield, and
did so while adding 14.4% more capacity over the same period last year. Our
continuing effort to build our commercial and leisure network and increase
load factor, while effectively managing yield during this traditionally strong
demand period, contributed to year-over-year increases in RASM of 6.6%. We are
particularly pleased with our improved RASM, which is a key indicator of an
airline's financial success.
    "We look at all areas of our business in the most cost-conscious manner,
keeping our commitment to maintaining the lowest sustainable CASM, while
providing a great guest experience. CASM for the quarter was down slightly
from the previous year, even with our continued expansion and growth.
Increased utilization of 2.5% to 12.2 hours helped maintain CASM this quarter
by diluting our costs across a wider asset base.
    "In the fourth quarter we will add two more 737-700 series aircraft,
bringing our fleet size to 70 by year end. We will increase our capacity by
over 14% compared to the fourth quarter of 2006. Yesterday, our Board of
Directors signed an agreement for two more leased aircraft to be received in
November 2008 and January 2009. This decision is based on the continued
foreseeable success in our market penetration. These aircraft will bring our
2008 and 2009 ASM growth to 16% and 8% respectively. This brings our firm
deliveries to 46 additional aircraft between 2008 and 2013 and our fleet size
to 116 Boeing Next-Generation aircraft by the end of 2013. We will continue to
benefit from operating a modern fleet of fuel-efficient aircraft in the face
of rising fuel prices.
    "We are heading into the fourth quarter with the strong foundation of the
last nine months behind us. Our people are dedicated and committed to going
above and beyond when it comes to delivering the best experience to our
guests. Our success over the last quarter and the last 11 years is testament
to this fact; a sincere thanks to our over 6,500 WestJetters for once again
delivering such great results."

    
    WestJet also reported third quarter and year-to-date operational
    performance.

    -------------------------------------------------------------------------
                                Q3     Q3         %     YTD    YTD         %
                              2007   2006    change    2007   2006    change
    -------------------------------------------------------------------------
    On-time performance      87.4%  87.8% (0.4 pts.)  84.2%  82.5%  1.7 pts.
    -------------------------------------------------------------------------
    Completion rate          99.7%  99.7%         -   99.2%  99.5% (0.3 pts.)
    -------------------------------------------------------------------------
    Bag ratio                 4.02   4.47     10.1%    4.25   4.69      9.4%
    -------------------------------------------------------------------------
    

    THIRD QUARTER 2007 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
    RESULTS

    FORWARD-LOOKING INFORMATION

    Certain information set forth in this document, including management's
assessment of WestJet's future plans and operations, contains forward-looking
statements. These forward looking statements typically contain the words
"anticipate", "believe", "estimate", "intend", "expect", "may", "will",
"should" or other similar terms. By their nature, forward-looking statements
are subject to numerous risks and uncertainties, some of which are beyond
WestJet's control, including the impact of general economic conditions,
changing domestic and international industry conditions, volatility of fuel
prices, terrorism, currency fluctuations, interest rates, competition from
other industry participants (including new entrants, and generally as to
capacity fluctuations and pricing environment), labour matters, government
regulation, stock-market volatility and the ability to access sufficient
capital from internal and external sources. Readers are cautioned that
management's expectations, estimates, projections and assumptions used in the
preparation of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance should not
be placed on forward-looking statements. WestJet's actual results, performance
or achievements could differ materially from those expressed in, or implied
by, these forward-looking statements.

    Additional information relating to WestJet, including Annual Information
Forms and financial statements, is located on SEDAR at www.sedar.com.

    To supplement its consolidated financial statements presented in
accordance with Canadian generally accepted accounting principles (GAAP), the
Company uses various non-GAAP performance measures, including ASM, CASM, RASM,
yield, operating revenues, operating margin and load factor as defined below.
These measures are provided to enhance the user's overall understanding of the
Company's current financial performance and are included to provide investors
and management with an alternative method for assessing the Company's
operating results in a manner that is focused on the performance of the
Company's ongoing operations and to provide a more consistent basis for
comparison between quarters. These measures are not in accordance with or an
alternative for GAAP and may be different from measures used by other
companies.

    OPERATIONAL TERMS

    Operating revenues: Total of guest revenues, charter and other revenues
    and interest income.

    Operating margin: Earnings from operations divided by total revenues.

    ASMs - Available Seat Miles: Total passenger capacity (calculated by
    multiplying the total number of seats available for sale by the total
    distance flown).

    RPMs - Revenue Passenger Miles: Passenger traffic (number of revenue
    passengers multiplied by the total distance flown).

    Load Factor: Total capacity utilization (proportion of total ASMs
    occupied by revenue passengers).

    Yield - Revenue per RPM: Unit yield (total revenue generated per RPM).

    RASM - Revenue per ASM: Unit revenue (total revenue divided by ASMs).

    CASM - Cost per ASM: Unit costs (operating expenses divided by ASMs).

    Selected Quarterly Unaudited Financial Information

    The table below sets forth selected data derived from our consolidated
financial statements for the eight previous quarters ended September 30, 2007.
This table has been prepared in accordance with Canadian GAAP and is reported
in Canadian dollars. This information should be read in conjunction with the
consolidated financial statements for the year ended December 31, 2006 and
related notes thereto.

    
    (IN MILLIONS OF DOLLARS EXCEPT PER SHARE DATA)

                                            Three Months Ended
    -------------------------------------------------------------------------
                             Sept. 30      June 30      Mar. 31      Dec. 31
                                 2007         2007         2007         2006
    -------------------------------------------------------------------------
    Total revenues       $      614.1  $     504.8  $     479.2  $     458.6
    Net earnings         $       76.1  $      11.5  $      29.9  $      26.7
    Basic earnings per
     share               $       0.59  $      0.09  $      0.23  $      0.21
    Diluted earnings per
     share               $       0.58  $      0.09  $      0.23  $      0.21
    -------------------------------------------------------------------------
                                            Three Months Ended
    -------------------------------------------------------------------------
                             Sept. 30      June 30      Mar. 31      Dec. 31
                                 2006         2006         2006         2005
    -------------------------------------------------------------------------
    Total revenues       $      502.3  $     424.0  $     386.7  $     366.8
    Net earnings         $       52.8  $      22.4  $      12.9  $       1.0
    Basic earnings per
     share               $       0.41  $      0.17  $      0.10  $      0.01
    Diluted earnings per
     share               $       0.41  $      0.17  $      0.10  $      0.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Our business is seasonal in nature with varying levels of activity
throughout the year. We traditionally experience increased domestic travel in
the summer months and more demand for transborder and charter sun destinations
over the winter period. However, we have been able to alleviate the effects of
the seasonal demand by allocating our network capacity to the appropriate
market, based on demand in the season.
    In the quarter ended June 30, 2007, the reported net earnings of
$11.5 million were negatively impacted by a non-cash write-down of $31.9
million ($22.2 million after tax or 17 cents per share) in capitalized costs
for the assets associated with WestJet's aiRES reservation system project.
    In the quarter ended December 31, 2005, the reported net earnings of
$1.0 million were negatively impacted by elevated jet fuel prices caused by
that season's hurricanes.

    HIGHLIGHTS

    The three months ended September 30, 2007 represented the most successful
quarter in our history. We experienced record revenues, earnings from
operations, operating margins and net earnings while simultaneously reporting
record load factors. We improved our CASM and increased our RASM while
maintaining our exceptional level of guest service.
    Net earnings in the third quarter of 2007 increased 44.0% to $76.1
million or $0.58 per share (diluted) from $52.8 million or $0.41 per share
(diluted) in the same quarter of 2006. For the first nine months of 2007, net
earnings rose 33.5% to $117.5 million or $0.90 per share (diluted) compared to
$88.0 million or $0.68 per share (diluted) for the same period in 2006.
Excluding the second quarter reservation system write-down of $31.9 million,
our earnings per share would have been $1.07 or a 57.4% increase for the
nine-month period ended September 30, 2007 when compared to the same period in
2006.
    For the three months ended September 30, 2007, earnings from operations
were $144.2 million which represents a record quarterly operating margin of
23.5% and an increase of 60.6% over 2006. For the first nine months of 2007,
excluding the second quarter reservation system write-down, our earnings from
operations were $258.7 million which resulted in an operating margin of 16.2%.
These results represent the highest quarterly and nine-month earnings from
operations in our history. The growth in our earnings from operations was
driven primarily by record load factors, overall improvement in our RASM,
sustained cost control and the continued absorption of additional capacity by
the market.
    For the quarter ended September 30, 2007, our revenue results continued
to show strong growth with an increase of 22.3% compared to the same quarter
in 2006. For the first nine months of 2007, our revenue increased by 21.7%
compared to the same period in 2006. Our capacity increased 14.4% and 16.5%,
respectively, over the prior year and our RPMs increased by 18.3% and 20.3%.
Our load factors were 83.2% and 81.8% for the three and nine months ended
September 30, 2007 and included our highest monthly load factor in our 11-year
history of 88.0% in August. We also experienced strong third quarter yield and
RASM figures at 19.5 cents and 16.2 cents respectively.

    
                                               Three Months Ended Sept. 30
    -------------------------------------------------------------------------
                                                                    increase/
                                             2007           2006   (decrease)
    -------------------------------------------------------------------------
    ASMs                            3,788,590,681  3,310,271,095       14.4%
    RPMs                            3,151,875,384  2,663,252,640       18.3%
    Load factor                             83.2%          80.5%         2.7
    Yield (cents)                            19.5           18.9        3.2%
    RASM (cents)                             16.2           15.2        6.6%
    Cost per passenger mile (cents)(1)       14.9           15.5       (3.9%)
    CASM (cents)(1)                          12.4           12.5       (0.6%)
    Fuel consumption (litres)         188,288,840    163,679,642       15.0%
    Fuel costs/litre (cents)                 69.6           72.8       (4.4%)
    Segment guests                      3,454,649      2,956,996       16.8%
    Average stage length (miles)              862            850        1.4%
    Number of full-time equivalent
     employees at period end                5,598          4,903       14.2%
    Fleet size at period end                   68             62        9.7%
    Aircraft available for use                 68             62        9.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                               Nine Months Ended Sept. 30
    -------------------------------------------------------------------------
                                                                    increase/
                                             2007           2006   (decrease)
    -------------------------------------------------------------------------
    ASMs                           10,726,124,233  9,209,620,042       16.5%
    RPMs                            8,771,417,696  7,289,503,110       20.3%
    Load factor                             81.8%          79.2%         2.6
    Yield (cents)                            18.2           18.0        1.1%
    RASM (cents)                             14.9           14.3        4.2%
    Cost per passenger mile (cents)(1)       15.3           15.9       (3.8%)
    CASM (cents)(1)                          12.5           12.6       (0.9%)
    Fuel consumption (litres)         533,669,908    452,357,964       18.0%
    Fuel costs/litre (cents)                 67.8           70.6       (4.0%)
    Segment guests                      9,724,384      8,278,592       17.5%
    Average stage length (miles)              852            835        2.0%
    Number of full-time equivalent
     employees at period end                5,598          4,903       14.2%
    Fleet size at period end                   68             62        9.7%
    Aircraft available for use                 68             62        9.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes reservation system write-down of $31.9 million in Q2 of 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    In the third quarter of 2007, WestJet introduced several initiatives
which both improved our exceptional guest service and helped with our
continued cost-containment efforts. In August, we became the first airline in
North America to introduce electronic boarding passes at all Canadian airports
and in September, we extended our web check-in capability for scheduled
flights to and from international and transborder destinations. We also
improved our web service by enabling an online change feature, allowing our
guests the ability to make their own changes to their bookings.

    FLEET

    In the three months ended September 30, 2007, we took delivery of an
additional three purchased aircraft which brought our total fleet to 68
aircraft.
    On July 12, 2007, we signed a Letter of Intent to lease three aircraft in
2010 with options to lease three more aircraft in 2011. On July 31, 2007, we
announced an agreement to purchase 20 Boeing 737-700 aircraft with 14
scheduled for delivery in 2012 and six in 2013. On August 7, 2007, we signed
another Letter of Intent to lease three aircraft with two scheduled for
delivery in 2010 and one in 2011. The additional capacity is in line with our
strategic deliverables of continued commercialization of our domestic
schedule, an increase in scheduled routes into the U.S. and the introduction
of new routes into the Caribbean and Mexican markets. In total, at September
30, 2007, we had existing commitments to take delivery of an additional 43
Next-Generation aircraft as summarized below:

    
    -------------------------------------------------------------------------
                                                 Series
                             ------------------------------------------------
                                      600s                    700s
                             ------------------------------------------------
                              Leased  Owned  Total    Leased  Owned  Total
    -------------------------------------------------------------------------
    Fleet at Sept. 30, 2007        -     13     13        15     34     49
    Commitments:
     Remainder of 2007             -      -      -         1      1      2
                  2008             -      -      -         2      3      5
                  2009             -      -      -         7      -      7
                  2010             -      -      -         4      -      4
                  2011             -      -      -         1      -      1
                  2012             -      -      -         -     14(1)  14(1)
                  2013             -      -      -         -      6(1)   6(1)
    -------------------------------------------------------------------------
    Total Commitments              -      -      -        15     24     39
    -------------------------------------------------------------------------
    Committed fleet as of 2013     -     13     13        30     58     88
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) We have an option to convert any of these aircraft to 737-800s.


    -------------------------------------------------------------------------
                                                 Series
                             ------------------------------------------------
                                      800s                 Total Fleet
                             ------------------------------------------------
                              Leased  Owned  Total    Leased  Owned  Total
    -------------------------------------------------------------------------
    Fleet at Sept. 30, 2007        5      1      6        20     48     68
    Commitments:
     Remainder of 2007             -      -      -         1      1      2
                  2008             1      -      1         3      3      6
                  2009             2      -      2         9      -      9
                  2010             1      -      1         5      -      5
                  2011             -      -      -         1      -      1
                  2012             -      -      -         -     14     14
                  2013             -      -      -         -      6      6
    -------------------------------------------------------------------------
    Total Commitments              4      -      4        19     24     43
    -------------------------------------------------------------------------
    Committed fleet as of 2013     9      1     10        39     72    111
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    On October 26, 2007, we exercised our options to lease three additional
737-700 aircraft in 2011 and on November 6, 2007, we signed a Letter of Intent
for two more 737-800 aircraft to be delivered in November 2008 and January
2009, which brings our future commitments to 48 aircraft and total committed
fleet to 116 by 2013.

    REVENUES

                                                 Three Months Ended Sept. 30
    -------------------------------------------------------------------------
                                                                    increase/
    ($ in thousands)                          2007           2006  (decrease)
    -------------------------------------------------------------------------
    Guest revenues                     $   556,736    $   453,342      22.8%
    Charter and other                       50,667         44,978      12.6%
    Interest income                          6,675          3,942      69.3%
    -------------------------------------------------------------------------
                                       $   614,078    $   502,262      22.3%
    -------------------------------------------------------------------------
    RASM (cents)                              16.2           15.2       6.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                  Nine Months Ended Sept. 30
    -------------------------------------------------------------------------
                                                                    increase/
    ($ in thousands)                          2007           2006  (decrease)
    -------------------------------------------------------------------------
    Guest revenues                     $ 1,396,780    $ 1,146,228      21.9%
    Charter and other                      184,942        157,203      17.6%
    Interest income                         16,358          9,536      71.5%
    -------------------------------------------------------------------------
                                       $ 1,598,080    $ 1,312,967      21.7%
    -------------------------------------------------------------------------
    RASM (cents)                              14.9           14.3       4.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The third quarter of 2007 was a record quarter with respect to revenue
driven by increased ASM capacity, load factor and yield. Our total guest
revenues increased by 22.8%, from $453.3 million to $556.7 million, on
capacity growth of 14.4% when compared to the third quarter of 2006. For the
nine months ended September 30, 2007, our guest revenues increased by 21.9%,
from $1.1 billion to $1.4 billion, on capacity growth of 16.5%. For the third
quarter and first nine months of 2007, our RASM increased by 6.6% and 4.2%
compared to the prior-year periods.
    The third quarter is traditionally the busiest air travel period with
significant domestic traffic. To accommodate the increased domestic demand in
the summer months, we continued with our seasonal deployment strategy,
allocating over 90% of our capacity to domestic routes in the third quarter.
In the 2007 summer period, WestJet introduced new routes into
Kitchener-Waterloo, Saint John and Deer Lake. As evidenced by our record load
factors for the third quarter of 2007, the capacity was absorbed by the market
during this period and we were also able to grow yield from 18.9 cents to 19.5
cents or 3.2%.
    For the three and nine months ended September 30, 2007, our load factors
averaged 83.2% and 81.8% which are both increases when compared to the
previous year's load factors of 80.5% and 79.2% respectively. As previously
mentioned, the load factor for the third quarter of 2007 represents our
highest quarterly load factor in our 11-year history. Our record load factor
demonstrates wide acceptance of WestJet's amazing guest experience, product
and brand. Results of our satisfaction surveys indicate that 90% of our guests
say they will fly with us again and will recommend our airline to others. As
previously stated, we believe the optimal load factor to be in the high 70%
and low 80% range and we anticipate our 2007 full-year load factor to be
approximately 80% to 81%.
    Our charter and other revenues are up 12.6% and 17.6% in the three and
nine months ended September 30, 2007 compared to the prior year. This is due
mainly to a substantial increase in ancillary revenue including service fees
and incremental WestJet Vacations non-air revenue.

    
    COSTS

                              Three Months Ended         Nine Months Ended
                                   Sept. 30                  Sept. 30
    -------------------------------------------------------------------------
                                          increase/                 increase/
    CASM (cents)(1)         2007   2006  (decrease)   2007   2006  (decrease)
    -------------------------------------------------------------------------
    Aircraft fuel           3.46   3.60      (3.9%)   3.37   3.47      (2.9%)
    Airport operations      1.93   1.86       3.8%    2.06   1.99       3.5%
    Flight operations and
     navigational charges   1.76   1.88      (6.4%)   1.80   1.82      (1.1%)
    Sales and marketing     1.34   1.32       1.5%    1.26   1.30      (3.1%)
    Depreciation and
     amortization           0.85   0.89      (4.5%)   0.88   0.88          -
    General and
     administration         0.78   0.56      39.3%    0.72   0.66       9.1%
    Inflight                0.57   0.54       5.6%    0.58   0.53       9.4%
    Interest expense        0.50   0.56     (10.7%)   0.52   0.55      (5.5%)
    Aircraft leasing        0.49   0.53      (7.5%)   0.53   0.58      (8.6%)
    Maintenance             0.49   0.47       4.3%    0.51   0.55      (7.3%)
    Guest services          0.22   0.25     (12.0%)   0.24   0.25      (4.0%)
    -------------------------------------------------------------------------
                           12.39  12.46      (0.6%)  12.47  12.58      (0.9%)
    -------------------------------------------------------------------------
    CASM, excluding fuel(1) 8.93   8.86       0.8%    9.10   9.11      (0.1%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes reservation system write-down of $31.9 million in Q2 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    In the three and nine months ended September 30, 2007, we were able to
grow our capacity by 14.4% and 16.5%, respectively, compared to the prior
periods. We did so while also achieving a slight reduction in our total cost
per ASM by 0.6% and 0.9% for these same periods, excluding the reservation
system write-down of $31.9 million in June 2007.
    For the third quarter of 2007, the primary variances in unit costs came
from CASM decreases in fuel (0.14 cents or 3.9%), flight operations and
navigational charges (0.12 cents or 6.4%) and interest expense (0.06 cents or
10.7%). These decreases were partially offset by CASM increases in general and
administration expense (0.22 cents or 39.3%) and airport operations (0.07
cents or 3.8%).
    For the first nine months of 2007, the most significant variances in unit
costs came from CASM decreases in fuel (0.10 cents or 2.9%), aircraft leasing
(0.05 cents or 8.6%), sales and marketing (0.04 cents or 3.1%) and maintenance
(0.04 cents or 7.3%), which were offset slightly by CASM increases in airport
operations (0.07 cents or 3.5%), general and administration expense
(0.06 cents or 9.1%) and inflight (0.05 cents or 9.4%).

    FUEL

    Fuel is a significant cost to WestJet, representing approximately 26% of
total operating expenses. In the third quarter of 2007, our fuel cost per ASM
decreased from 3.60 cents to 3.46 cents compared to the same quarter in 2006.
Despite a 7% increase in the market price of crude oil and the higher fuel
burn associated with our record load factors, our cost per ASM declined as
these increases were more than offset by the strengthening Canadian dollar and
a 1% drop in the crack spread (the difference between the price of crude oil
and refined products such as gasoline and jet fuel).
    Year-to-date fuel cost per ASM decreased by 2.9% compared to 2006 due
mainly to the strengthening Canadian dollar and a 3% decrease in crude oil
pricing partially offset by a 14% increase in crack spreads as well as
increased fuel burn.
    For 2007, we estimate our sensitivity to changes in crude oil and jet
fuel pricing to be approximately CAD $5 million annually for every US dollar
change per barrel of crude oil and CAD $7 million for every one-cent-per-litre
change in the price of jet fuel. We also estimate that every one-cent change
in the value of the Canadian dollar versus the US dollar to be an approximate
CAD $4 million impact to our annual fuel costs.
    To help mitigate our exposure to fluctuations in jet fuel prices, we
periodically use short-term and long-term financial and physical derivatives
and account for these derivatives as cash flow hedges. As at September 30,
2007, we had no outstanding hedge contracts.

    AIRPORT OPERATIONS

    Airport operations expense consists primarily of airport landing and
terminal fees as well as ground handling and charter costs. These expenditures
typically fluctuate depending on destinations, aircraft weights and inclement
weather conditions. Transborder flights are more expensive than domestic
flights due to increased charges from domestic airports for higher terminal
and pre-clearance fees.
    For the three months ended September 30, 2007, our cost per ASM for
airport operations increased by 3.8%. This was due mainly to an increase in
airport rates and fees as well as ground handling fees across our destination
network in addition to an increase in employee salary and benefits from the
continued tight labour market. We also increased our transborder departures,
as a percentage of overall departures, by 0.7 percentage points compared to
the third quarter in 2006.
    For the first nine months of 2007, we showed a 3.5% increase in our
airport operations cost per ASM. This was due to airport rate increases as
well as changes to our destination mix, whereby transborder departures
increased as a percentage of overall departures by 2.7 percentage points
compared to the prior year.

    FLIGHT OPERATIONS AND NAVIGATIONAL CHARGES

    Flight operations and navigational charges consist mainly of pilot
salaries, benefits, training, stock-based compensation expense, salaries and
benefits for operations control centre staff and fees levied by NAV Canada
related to air traffic control.
    For the third quarter of 2007, our flight operations and navigational
charge per ASM decreased by 6.4% from 1.88 cents to 1.76 cents. This is mainly
due to lower stock-based compensation expense as a result of the 2006 pilot
agreement as well as a decrease in the NAV Canada charges due to decreases in
rates in August 2007 and September 2006 and increased transborder traffic.
    Year-to-date cost per ASM was 1.1% lower than the first nine months of
2006 due mainly to the timing of the change in total pilot compensation
agreements and the decreases in NAV Canada rates.

    SALES AND MARKETING

    Sales and marketing expenses consist mainly of travel agency commissions,
credit card fees and advertising. Our sales and marketing cost per ASM
increased by 1.5% to 1.34 cents due mainly to an increase in commission-based
sales tracing to increased revenue from WestJet Vacations. Sales and marketing
costs have also increased due to additional credit card fees as a result of
the continued growth in the associated ancillary revenue.
    For the first nine months of 2007, our sales and marketing CASM decreased
by 3.1% to 1.26 cents compared to 1.30 cents in the prior year. Brand
recognition and awareness remains high. Year-to-date advertising and
promotional costs are relatively flat in dollar terms, thus enabling us to
achieve unit cost reductions with our increasing capacity.

    DEPRECIATION AND AMORTIZATION

    Our quarterly unit depreciation and amortization expense decreased by
0.04 cents or 4.5% mainly due to $1.4 million in amortization of transaction
costs in the third quarter of 2006. Starting January 1, 2007, per the new
Canadian Institute of Chartered Accountants (CICA) handbook section S.3855,
these costs are now classified as general and administration expense and are
expensed as incurred.
    Our year-to-date depreciation and amortization cost per ASM remained
constant at 0.88 cents. This was mainly due to the change in accounting policy
related to $3.7 million in amortization of transaction costs now classified in
general and administration expense, as well as the dilutive impact from our
ASM growth, offset by one-time favourable adjustments recorded in the first
quarter of 2006 related to the disposals of the 737-200 capital leases. This
represented the final transition of our aircraft to a modernized,
higher-efficiency Next-Generation fleet.

    GENERAL AND ADMINISTRATION

    General and administration costs consist of our corporate office
departments, professional fees and insurance costs.
    Our quarterly unit general and administration expense increased by 0.22
cents or 39.3% compared to the prior year due in part to $3.6 million of
transaction costs related to new aircraft purchased in the quarter, which
represented approximately half of the increase. In previous years, these costs
were capitalized as Other Assets and amortized over the life of the related
long-term debt as depreciation and amortization expense. The rest of the
variance relates primarily to salary increases from the one-time market wage
adjustment in May 2007, salaries being expensed in 2007 that were previously
capitalized in 2006 as part of the aiRES project, increased rental costs
resulting from our growth and cost transfers from other line items.
    On a year-to-date basis, our general and administration unit costs
increased by 9.1% due to $4.1 million in transaction costs related to new
aircraft purchased and leased this year, increased salary expenses, increased
rental costs and line item transfers.

    INFLIGHT

    Our inflight expense consists mainly of flight attendant salaries,
benefits, travel costs and training. Our inflight CASM increased by 5.6% and
9.4% for the three and nine months ended September 30, 2007, respectively,
compared to the prior year. These increases are mainly due to a one-time
market wage adjustment on May 1, 2007, increased hotel rates as well as higher
training costs due to a change in training compensation philosophy in May 2006
whereby we are now paying for a greater proportion of initial and recurrent
annual training.

    AIRCRAFT LEASING

    In February and late March of this year, we added two new leased 737-700
aircraft to our fleet. We now lease a total of 20 Next-Generation aircraft,
representing 29.4% of our total fleet.
    Aircraft leasing costs per ASM decreased by 7.5% and 8.6% in the three
and nine months ended September 30, 2007, respectively, as a result of the
dilution of increased costs over a greater number of seat miles from our 14.4%
and 16.5% growth as well as the strengthening Canadian dollar. This was
partially offset by incremental lease costs on the two new 737-700 aircraft
leased earlier this year.

    MAINTENANCE

    Our unit maintenance cost of 0.49 cents for the third quarter of 2007 was
4.3% higher than in 2006 due mainly to an increase in the number of aircraft
out of warranty. At September 30, 2006, eight out of 62 aircraft in our fleet
were out of warranty and at September 30, 2007, 23 out of 68 aircraft were out
of warranty. The impact of this on our unit cost is mitigated by the
strengthening Canadian dollar as well as the dilutive effect of our 14.4%
capacity growth quarter over quarter.
    For the nine months ended September 30, 2007, our unit maintenance cost
of 0.51 cents was 7.3% lower than the first nine months of 2006 due mainly to
$4.6 million in incremental maintenance costs incurred in early 2006 related
to the purchase and sale of the remaining 737-200 aircraft.

    GUEST SERVICES

    Guest services expense consists mainly of our reservations Sales Super
Centre and Guest Relations teams. Our quarterly unit guest services expense
decreased by 0.03 cents or 12.0% compared to the prior year mainly due to
efforts to control costs while enhancing our guests' experience. This was
accomplished through our "frontline empowerment" initiative, improvements to
our website to allow itinerary changes as well as a revamped quality and
incentive program to increase call centre productivity.
    On a year-to-date basis, our guest services unit costs decreased slightly
by 0.01 cents or 4.0% for the same reasons as above.

    LOSS ON IMPAIRMENT OF RESERVATION SYSTEM

    During the second quarter of 2007, we continued our discussions with the
vendor of the aiRES reservations system regarding an amendment of the aiRES
contract. Following these discussions, we reached an agreement to discontinue
negotiations on an amendment to the aiRES contract. We concluded that
implementing a future version of aiRES in the timeframe needed to meet our
requirements was highly unlikely. As we could not assure the recovery of costs
previously capitalized in connection with the reservation system, we
recognized an impairment loss of $31.9 million.
    Our current reservation system is being upgraded and is fully expected to
meet our strategic plan for the remainder of 2007 and throughout 2008. All of
the key functionalities we require to achieve our objectives are available to
us. We will review our options for a new reservation system from a variety of
companies.

    FOREIGN EXCHANGE

    The foreign exchange gains and losses that we realize are largely
attributable to the effect of the changes in the value of the Canadian dollar,
relative to the US dollar, on our US-denominated net monetary assets over the
respective periods. These assets, totalling approximately US $90 million at
September 30, 2007 (December 31, 2006 - $62 million), consist of US-dollar
cash and cash equivalents and security deposits on various leased and financed
aircraft. We hold US-denominated cash and short-term investments to reduce the
foreign currency risk inherent in our US-dollar expenditures. We reported an
unrealized foreign exchange loss of $4.1 million and $11.4 million during the
three and nine months ended September 30, 2007, respectively, on the
revaluation of our US-dollar monetary assets. This compares to a gain of
$0.2 million and a loss of $2.8 million during the same periods in the prior
year.
    Operationally, we benefit from the strengthening Canadian dollar on our
expenditures which are either denominated in US-dollars or linked to U.S.
indices. These expenditures represent approximately one-third of our total
spend, primarily in fuel, aircraft leasing and certain maintenance costs.
    For 2007, we estimate that every one-cent change in the value of the
Canadian dollar versus the US dollar will have an approximate CAD $6 million
impact on our annual costs (approximately $4 million for fuel and $2 million
for remaining costs). On October 16, 2007, we entered into forward foreign
exchange contracts on our US-dollar aircraft lease payments to mitigate the
exposure to fluctuations in the Canadian/US-dollar exchange rate.

    INCOME TAX EXPENSE

    The effective tax rates for the three and nine months ended September 30,
2007 were 32.3% and 33.3%, respectively, compared to 34.0% and 28.0% for the
same periods in 2006. The variance from 2006 reflects the effect of federal
and provincial corporate tax rate reductions enacted in June 2007
($2.3 million) and June 2006 ($11.2 million).
    The federal government recently announced reductions in the federal
corporate income tax rate which would gradually reduce the rate to 15% by
2012. We estimate that if the rate reductions were to be enacted in 2007, our
2007 future income tax expense would be reduced by approximately $20 million.

    FINANCIAL POSITION

    At September 30, 2007, our total cash and cash equivalents were $634.2
million compared to $377.5 million at December 31, 2006. Part of this cash
balance relates to cash collected with respect to advance tickets sales, for
which the balance at September 30, 2007 was $210.6 million. Our financial
position remained strong as we were able to achieve an increase in our working
capital ratio from 1.0 at December 31, 2006 to 1.2 at September 30, 2007.
    Our debt-to-equity ratio at September 30, 2007 was 2.1 to 1, including
$405.8 million which represents the present value of our operating lease
obligations. This compares favourably to our debt-to-equity ratio at December
31, 2006 of 2.3 to 1. Our debt-to-equity ratio was impacted negatively by an
adjustment to our opening retained earnings during the period as a result of
the adoption of the new CICA Handbook sections for Financial Instruments.
Effective January 1, 2007, we adjusted our opening retained earnings balance
by $36.6 million (net of future tax of $16.3 million) related to transaction
costs on long-term debt we previously included in Other Assets. Without this
adjustment, our debt-to-equity ratio at September 30, 2007 would have been 2.0
to 1.

    Operating cash flow

    Cash from operations in the third quarter increased 78.1% to $156.0
million from $87.6 million for the same period in 2006. For the nine months
ended September 30, 2007, cash from operations increased by 58.6% from $283.5
million to $449.5 million in the same period in 2006, due to growth in
earnings from operations.

    Financing cash flow

    In the third quarter of 2007, our total cash flow from financing
activities was $65.6 million, consisting mainly of $109.1 million in long-term
debt related to the financing of three new purchased aircraft offset by
$37.1 million in long-term debt repayments. In the third quarter of 2006, cash
flow from financing activities totalled $117.1 million and was made up
primarily of long-term debt issuances of $164.6 million for five aircraft, net
of $36.8 million in long-term debt repayments.
    In the first nine months of 2007, our financing cash outflow totalled
$36.9 million and consisted mainly of $117.2 million in long-term debt
repayments, $13.3 million in repurchased shares and $12.7 million in deposits
on future leased aircraft offset by $109.1 million in long-term debt
issuances. In the comparable period in 2006, cash flow from financing
activities was $263.5 million, which was made up of an increase of $380.8
million in long-term debt to finance 11 aircraft offset by $96.0 million in
long-term debt repayments, $13.6 million in transaction costs related to 12
aircraft and $5.6 million in deposits on future leased aircraft.

    Investing cash flow

    Cash used in investing activities for the third quarter and first nine
months of 2007 totalled $131.6 million and $150.7 million, respectively,
compared to $184.3 million and $426.1 million in the previous year's
comparable periods. In the current year, our investing activities were
primarily related to the addition of three new aircraft as well as
$26.8 million in Boeing deposits on 23 future owned aircraft deliveries
partially offset by $13.7 million received in the first quarter related to the
sale of two engines. In 2006, cash used in investing activities was primarily
related to 11 new aircraft acquisitions.
    We are currently in the process of converting our Preliminary Commitment
for US $140.4 million with Ex-Im Bank to a Final Commitment to purchase a
total of four more aircraft. The delivery dates for these aircraft are one in
November 2007, two in January 2008 and one in July 2008.

    ACCOUNTING POLICIES

    On January 1, 2007, we adopted the new Canadian accounting standards for
financial instruments: S.3861 "Financial Instruments - Disclosure and
Presentation," S. 3855 "Financial Instruments - Recognition and Measurement,"
S.3865 "Hedges" and S.1530 "Comprehensive Income." Prior periods have not been
restated. Under adoption of these new standards, we designated our cash and
cash equivalents, including US-dollar deposits, as held-for-trading, which is
measured at fair value. Accounts receivable are classified as loans and
receivables, which are measured at amortized cost. Accounts payable and
accrued liabilities and long-term debt are classified as other financial
liabilities, which are measured at amortized cost.
    Effective January 1, 2007, and as provided for on transition, we selected
a policy of immediately expensing transaction costs incurred related to the
acquisition of financial assets and liabilities. Previously, transaction costs
had been deferred and included on the balance sheet as other assets or
liabilities and amortized over the term of the related asset or liability.
Under the transitional provisions, we retrospectively adopted this change in
accounting policy without the restatement of prior period financial statements
and incurred a charge to retained earnings of $36.6 million (net of future tax
of $16.3 million) related to legal and financing fees on long-term debt.
    Effective January 1, 2007, we transferred $13.4 million of unamortized
hedging losses related to certain leased aircraft to accumulated other
comprehensive income. We will continue to amortize the hedging losses to net
earnings over the remaining term of the previously related hedged item.

    Future accounting policy changes

    In December 2006, the CICA issued three new accounting standards which
will be effective on January 1, 2008: S.1535 "Capital Disclosures," S.3862
"Financial Instruments - Disclosures" and S.3863 "Financial Instruments -
Presentation."
    S.1535 establishes guidelines for the disclosure of information on an
entity's capital and how it is managed. This enhanced disclosure enables users
to evaluate the entity's objectives, policies and processes for managing
capital.
    S.3862 and S.3863 replace the existing standard S.3861 "Financial
Instruments - Disclosure and Presentation." S.3862 requires enhanced
disclosure on the nature and extent of financial instrument risks and how an
entity manages those risks. S.3863 carries forward current presentation
requirements and provides additional guidance for the classification of
financial instruments.
    These new requirements are for disclosure purposes only and will not
impact WestJet's financial results.

    SHARE CAPITAL

    As at November 2, 2007, we had 129,716,696 shares outstanding -
125,686,597 common voting shares and 4,030,099 variable voting shares and
13,240,404 stock options outstanding.

    RESTRICTED SHARE UNIT PLAN

    In the first half of 2007, WestJet introduced a restricted share unit
(RSU) plan, whereby up to a maximum of 2,000,000 RSUs may be issued to our
executive officers. Each RSU entitles a participant to receive cash equal to
the market value of the equivalent number of our common shares. Each RSU will
vest on a fixed vesting date no later than three years from the date of grant
and is to be paid out based on the market value for the five trading days
prior to the vesting date. Payments under the RSU plan are made in cash. No
WestJet shares will be issued in connection with the RSU plan. In the three
and nine months of 2007, we granted 1,587 and 64,186 RSUs, respectively, and
incurred compensation expense of $111,000 and $490,000, which is included in
general and administration expenses and accrued liabilities.

    CONTROLS AND PROCEDURES

    Management is responsible for the establishment and maintenance of a
system of disclosure controls and procedures. The Chief Executive Officer and
the Chief Financial Officer have evaluated the effectiveness of our disclosure
controls and procedures as of September 30, 2007, as defined under the rules
of the Canadian Securities Administrators, and have concluded that our
disclosure controls and procedures are effective. Management is also
responsible for the establishment and maintenance of a system of internal
controls over financial reporting. Management has designed internal controls
over financial reporting effectively to provide reasonable assurance regarding
the reliability of our financial reporting and the preparation of financial
statements in accordance with Canadian GAAP. There were no changes in our
internal controls over financial reporting during the most recent interim
period that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

    OUTLOOK

    Looking forward to the fourth quarter and full year 2007, the focus will
remain on continued revenue growth and cost containment.
    We expect increased revenue and RASM growth, with the strong financial
and operational trends of the third quarter continuing through to the end of
the year. We will be receiving two more aircraft by the end of the 2007 (one
leased, one owned), bringing our total fleet to 70 aircraft, which translates
into a 14% increase in capacity for the fourth quarter versus the fourth
quarter of 2006. Our expectation for full-year capacity is in the range of a
15.5% to 16.0% growth when compared to 2006. In the fourth quarter, we will
begin service to our new scheduled international sun destinations including
Montego Bay (Jamaica), Puerto Plata and Punta Cana (Dominican Republic),
Mazatlan and Cabo San Lucas (Mexico) and St. Lucia. These new destinations,
along with our existing sun and transborder destinations and a Canadian dollar
that is now above par with the US dollar, will contribute to our fourth
quarter revenues exceeding levels from a year ago.
    The overall current fuel pricing environment is unfavourable when
compared to the prior year. Higher crude oil prices and refinery costs are
being partially offset by the strengthening Canadian dollar versus the US
dollar. Based on market prices for jet fuel and the Canadian dollar at the end
of October 2007, our estimated fourth quarter fuel cost per litre would be
approximately 74 cents which would result in our fuel costs being 14% to 15%
higher than the fourth quarter of 2006 on a CASM basis.

    
    WestJet Airlines Ltd.
    Consolidated Financial Statements
    September 30, 2007
    (Unaudited)


    WestJet Airlines Ltd.
    Consolidated Balance Sheet
    (Stated in Thousands of Dollars)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      September 30  December 31 September 30
                                              2007         2006         2006
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash and cash equivalents
      (note 2)                         $   634,229  $   377,517  $   378,944
      Accounts receivable                   13,043       12,645       10,931
      Income taxes recoverable                   -       13,820       14,162
      Assets held for sale (note 3)              -       13,157            -
      Prepaid expenses and deposits         29,797       30,727       34,931
      Inventory                             11,727        8,200        5,161
    -------------------------------------------------------------------------
                                           688,796      456,066      444,129

    Property and equipment (note 3)      2,196,852    2,158,746    2,149,757

    Other assets (note 1)                   49,693      111,715      103,719
    -------------------------------------------------------------------------
                                       $ 2,935,341  $ 2,726,527  $ 2,697,605
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


     Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued
       liabilities                     $   164,059  $   121,157  $   129,601
      Advance ticket sales                 210,613      148,743      165,498
      Non-refundable guest credits          44,728       40,508       34,465
      Current portion of long-term debt
       (note 4)                            170,901      153,720      146,334
      Current portion of obligations
       under capital lease (note 5(b))         370          356          351
    -------------------------------------------------------------------------
                                           590,671      464,484      476,249

    Long-term debt (note 4)              1,265,926    1,291,136    1,297,265

    Obligations under capital lease
     (note 5(b))                             1,203        1,483        1,573

    Other liabilities                       11,379       14,114       14,331

    Future income tax (note 8)             188,399      149,283      134,519
    -------------------------------------------------------------------------
                                         2,057,578    1,920,500    1,923,937
    -------------------------------------------------------------------------


    Shareholders' equity:
      Share capital (note 6(a))            440,242      431,248      429,711
      Contributed surplus                   63,356       58,656       54,485
      Accumulated other comprehensive
       loss                                (12,370)           -            -
      Retained earnings                    386,535      316,123      289,472
    -------------------------------------------------------------------------
                                           877,763      806,027      773,668
    -------------------------------------------------------------------------
    Commitments and contingencies
     (note 5)
    -------------------------------------------------------------------------
                                       $ 2,935,341  $ 2,726,527  $ 2,697,605
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    WestJet Airlines Ltd.
    Consolidated Statement of Shareholders' Equity
    (Stated in Thousands of Dollars)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    For the nine                            Accumulated
     months ended                                 other
     September 30,      Share Contributed comprehensive   Retained
     2007             capital     surplus          loss   earnings     Total
    -------------------------------------------------------------------------

    Balance at
     January 1,
     2007           $ 431,248    $ 58,656     $       -  $ 316,123 $ 806,027
      Change in
       accounting
       policies (note 1)    -           -       (13,420)   (36,612)  (50,032)
    -------------------------------------------------------------------------
    Balance at
     January 1, 2007,
     restated         431,248      58,656       (13,420)   279,511   755,995
    Comprehensive
     income:
      Net earnings          -           -             -    117,474   117,474
      Amortization of
       hedge settlements    -           -         1,050          -     1,050
    -------------------------------------------------------------------------
    Total
     comprehensive
     income                 -           -         1,050    117,474   118,524
    Issuance of shares
     pursuant to stock
     option plans
     (note 6(a))        1,467           -             -          -     1,467
    Stock-based
     compensation
     expense
     (note 6(d))            -      15,069             -          -    15,069
    Stock-based
     compensation on
     stock options
     exercised
     (note 6(a))       10,369     (10,369)            -          -         -
    Shares repurchased
     (note 6(a))       (2,842)          -             -    (10,450)  (13,292)
    -------------------------------------------------------------------------
    Balance at
     September 30,
     2007           $ 440,242    $ 63,356     $ (12,370) $ 386,535 $ 877,763
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the nine
     months ended
     September 30, 2006
    -------------------------------------------------------------------------
    Balance at
     December 31,
     2005           $ 429,613    $ 39,093     $       -  $ 201,447 $ 670,153
    Net earnings            -           -             -     88,025    88,025
    Stock-based
     compensation
     expense
     (note 6(d))            -      15,497             -          -    15,497
    Stock-based
     compensation on
     stock options
     exercised
     (note 6(a))          105        (105)            -          -         -
    Share issuance
     costs (note 6(a))    (10)          -             -          -       (10)
    Tax benefit of
     issue costs
     (note 6(a))            3           -             -          -         3
    -------------------------------------------------------------------------
    Balance at
     September 30,
     2006           $ 429,711    $ 54,485     $       -  $ 289,472 $ 773,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    WestJet Airlines Ltd.
    Consolidated Statement of Earnings
    (Stated in Thousands of Dollars, Except Per Share Amounts)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three Months Ended         Nine Months Ended
                                      September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues:
      Guest revenues      $   556,736  $   453,342  $ 1,396,780  $ 1,146,228
      Charter and other        50,667       44,978      184,942      157,203
      Interest income           6,675        3,942       16,358        9,536
    -------------------------------------------------------------------------
                              614,078      502,262    1,598,080    1,312,967

    Expenses:
      Aircraft fuel           131,090      119,154      361,572      319,199
      Airport operations       73,176       61,465      220,422      183,173
      Flight operations and
       navigational charges    66,529       62,254      193,497      167,523
      Sales and marketing      50,869       43,595      135,064      119,532
      Depreciation and
       amortization            32,354       29,495       94,385       81,327
      General and
       administration          29,387       18,628       77,354       60,368
      Inflight                 21,715       17,834       62,011       48,610
      Interest                 19,105       18,446       56,295       50,899
      Aircraft leasing         18,739       17,682       57,049       53,785
      Maintenance              18,606       15,648       56,164       50,631
      Guest services            8,290        8,269       25,554       23,252
      Loss on impairment of
       assets (note 3)              -            -       31,881            -
    -------------------------------------------------------------------------
                              469,860      412,470    1,371,248    1,158,299
    -------------------------------------------------------------------------


    Earnings from operations  144,218       89,792      226,832      154,668

    Non-operating income
     (expense):
      Gain (loss) on foreign
       exchange                (4,137)         201      (11,371)      (2,751)
      Gain (loss) on disposal
       of property and
       equipment                  (44)          (9)         453          792
      Non-recurring expenses
       (note 5(c))                  -            -            -      (15,600)
    -------------------------------------------------------------------------
                               (4,181)         192      (10,918)     (17,559)

    Employee profit share
     (note 7)                 (27,749)      (9,960)     (39,723)     (14,929)
    -------------------------------------------------------------------------
    Earnings before income
     taxes                    112,288       80,024      176,191      122,180

    Income tax expense
     (note 8):
      Current                    (976)        (740)      (3,279)      (2,284)
      Future                  (35,242)     (26,474)     (55,438)     (31,871)
    -------------------------------------------------------------------------
                              (36,218)     (27,214)     (58,717)     (34,155)
    -------------------------------------------------------------------------
    Net earnings          $    76,070  $    52,810  $   117,474  $    88,025
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Earnings per share
     (note 6(c)):
      Basic               $      0.59  $      0.41  $      0.91  $      0.68
      Diluted             $      0.58  $      0.41  $      0.90  $      0.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    WestJet Airlines Ltd.
    Consolidated Statement of Cash Flows
    (Stated in Thousands)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three Months Ended         Nine Months Ended
                                      September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash flows from (used in):

    Operating activities:
      Net earnings        $    76,070  $    52,810  $   117,474  $    88,025
      Items not involving
       cash:
        Depreciation and
         amortization          32,354       29,495       94,385       81,327
        Amortization of
         other liabilities       (228)        (217)        (662)        (651)
        Amortization of hedge
         settlements              350          348        1,050        1,043
        Loss on disposal
         of property,
         equipment and
         aircraft parts
         (note 3)                 619            9       32,200          350
        Stock-based
         compensation
         expense (note 6(d))    4,379        5,397       15,559       15,497
        Future income tax
         expense               35,242       26,474       55,438       31,871
        Unrealized foreign
         exchange loss (gain)   4,449         (241)      12,513        2,922
      Change in non-cash
       working capital          2,747      (26,501)     121,559       63,070
    -------------------------------------------------------------------------
                              155,982       87,574      449,516      283,454
    -------------------------------------------------------------------------

    Financing activities:
      Repayment of long-term
       debt                   (37,063)     (36,758)    (117,167)     (96,005)
      Increase in long-term
       debt                   109,138      164,573      109,138      380,770
      Decrease in
       obligations under
       capital lease              (90)         (85)        (266)        (395)
      Share issuance costs
       (note 6(a))                  -            -            -          (10)
      Shares repurchased       (1,486)           -      (13,292)           -
      Increase in other
       assets                  (4,531)     (10,634)     (13,795)     (19,819)
      Issuance of common
       shares (note 6(a))           -            -        1,467            -
      Increase in non-cash
       working capital           (373)           -       (3,000)      (1,071)
    -------------------------------------------------------------------------
                               65,595      117,096      (36,915)     263,470
    -------------------------------------------------------------------------

    Investing activities:
      Aircraft additions     (124,159)    (176,502)    (146,345)    (395,117)
      Aircraft disposals           12            6           12        3,766
      Other property and
       equipment additions     (7,417)      (7,926)     (18,189)     (36,287)
      Other property and
       equipment disposals          8           74       13,801        1,546
    -------------------------------------------------------------------------
                             (131,556)    (184,348)    (150,721)    (426,092)
    -------------------------------------------------------------------------
    Cash flow from
     operating, financing
     and investing
     activities                90,021       20,322      261,880      120,832
    Effect of exchange rate
     on cash and cash
     equivalents               (1,768)         157       (5,168)      (1,528)
    -------------------------------------------------------------------------
    Net change in cash and
     cash equivalents          88,253       20,479      256,712      119,304

    Cash and cash
     equivalents, beginning
     of period                545,976      358,465      377,517      259,640

    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period               $   634,229  $   378,944  $   634,229  $   378,944
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Interest paid         $   (18,387) $   (17,240) $   (56,185) $   (47,731)
    Taxes received (paid) $       341  $      (489) $    11,430  $    (2,537)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    WestJet Airlines Ltd.
    Notes to Consolidated Financial Statements
    For the three and nine month periods ended September 30, 2007 and 2006
    (Tabular Dollar Amounts Are Stated in Thousands, Except Share and Per
    Share Data)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    1. Significant Accounting Policies:

    The interim consolidated financial statements of WestJet Airlines Ltd.
    ("WestJet" or "the Corporation") have been prepared by management in
    accordance with Canadian generally accepted accounting principles (GAAP).
    The interim consolidated financial statements have been prepared
    following the same accounting policies and methods of computation as the
    consolidated financial statements for the fiscal year ended December 31,
    2006, except as described below. The disclosures provided below are
    incremental to those included with the annual consolidated financial
    statements. The interim consolidated financial statements should be read
    in conjunction with the consolidated financial statements and the notes
    thereto in the Corporation's annual report for the year ended
    December 31, 2006.

    The Corporation's business is seasonal in nature with varying levels of
    activity throughout the year. The Corporation experiences increased
    domestic travel in the summer months and more demand for transborder and
    charter sun destinations over the winter period.

    Change in accounting policies:

    On January 1, 2007, the Corporation adopted the following new Canadian
    accounting standards: S.3855 "Financial Instruments - Recognition and
    Measurement," S.3865 "Hedging" and S.1530 "Comprehensive Income." Prior
    periods have not been restated.

    Comprehensive income consists of changes in gains and losses on hedge
    settlements. Other comprehensive income refers to items recognized in
    comprehensive income that are excluded from net earnings.

    The new standard on Financial Instruments prescribes when a financial
    asset, financial liability or non-financial derivative is to be
    recognized on the balance sheet and at what amount, requiring fair value
    or cost-based measures under different circumstances. Financial
    instruments must be classified into one of these five categories:
    held-for-trading, held-to-maturity, loans and receivables,
    available-for-sale financial assets or other financial liabilities. All
    financial instruments, including derivatives, are measured on the balance
    sheet at fair value except for loans and receivables, held-to-maturity
    investments and other financial liabilities, which are measured at
    amortized cost. Subsequent measurement and changes in fair value will
    depend on initial classification, as follows: held-for-trading financial
    assets are measured at fair value and changes in fair value are
    recognized in net earnings; available-for-sale financial instruments are
    measured at fair value with changes in fair value recorded in other
    comprehensive income until the investment is derecognized or impaired, at
    which time the amounts would be recorded in net earnings.

    Under adoption of these new standards, the Corporation designated its
    cash and cash equivalents, including US-dollar deposits, as held-for-
    trading, which is measured at fair value. Accounts receivable are
    classified as loans and receivables, which are measured at amortized
    cost. Accounts payable and accrued liabilities and long-term debt are
    classified as other financial liabilities, which are measured at
    amortized cost.

    Effective January 1, 2007, and as provided for on transition, the
    Corporation has selected a policy of immediately expensing transaction
    costs incurred related to the acquisition of financial assets and
    liabilities. Previously, transaction costs had been deferred and included
    on the balance sheet as other assets or liabilities, and amortized over
    the term of the related asset or liability. Under the transitional
    provisions, the Corporation retrospectively adopted this change in
    accounting policy without the restatement of prior period financial
    statements and incurred a charge to retained earnings of $36.6 million
    (net of future tax of $16.3 million) related to legal and financing fees
    on long-term debt.

    All derivative instruments, including embedded derivatives, are recorded
    on the balance sheet and in the statement of earnings at fair value
    unless exempted from derivative treatment as a normal purchase and sale.
    All changes in their fair value are recorded in earnings. If cash flow
    hedge accounting is used, the fair value of derivative instruments is
    included in accumulated other comprehensive income with any
    ineffectiveness recorded in earnings. Any changes in the fair value to
    the extent effective are recorded through other comprehensive income. As
    of September 30, 2007, the Corporation did not have any outstanding
    derivative instruments. During October 2007, the Corporation entered into
    foreign exchange contracts to hedge US-dollar aircraft lease payments.
    The forward contracts were designated as cash flow hedges and qualify for
    hedge accounting.

    Effective January 1, 2007, the Corporation transferred $13.4 million of
    unamortized hedging losses related to certain Boeing Next-Generation
    leased aircraft to accumulated other comprehensive income. The
    Corporation will continue to amortize the hedging losses to net earnings
    over the remaining term of the previously related hedged item.

    Future accounting policies:

    In December 2006, the Canadian Institute of Chartered Accountants (CICA)
    issued three new accounting standards which the Corporation will adopt
    effective January 1, 2008: S.1535 "Capital Disclosures," S.3862
    "Financial Instruments - Disclosures" and S.3863 "Financial Instruments -
    Presentation."

    S.1535 establishes guidelines for the disclosure of information on an
    entity's capital and how it is managed. This enhanced disclosure enables
    users to evaluate the entity's objectives, policies and processes for
    managing capital.

    S.3862 and S.3863 replace the existing S.3861 "Financial Instruments -
    Disclosure and Presentation." S.3862 requires enhanced disclosure on the
    nature and extent of financial instrument risks and how an entity manages
    those risks. S.3863 carries forward the existing presentation
    requirements and provides additional guidance for the classification of
    financial instruments.

    These new requirements are for disclosure purposes only and will not
    impact the financial results of the Corporation.

    2. Cash and cash equivalents:

    At September 30, 2007, the Corporation had US-dollar cash and cash
    equivalents totalling US $43,988,000 (December 31, 2006 - US $32,019,000;
    September 30, 2006 - US $34,838,000).

    As at September 30, 2007, cash and cash equivalents included restricted
    cash for letters of credit of US $172,000 (December 31, 2006 -
    US $5,279,000; September 30, 2006 - US $5,033,000) and CAD $1,846,000
    (December 31, 2006 - CAD $1,858,000; September 30, 2006 - CAD $NIL). Also
    in cash and cash equivalents at September 30, 2007 was US $231,000
    (December 31, 2006 - US $186,000; September 30, 2006 - US $157,000) not
    yet remitted for passenger facility charges.

    3. Property and equipment:

    ------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    Accumulated     Net book
    September 30, 2007                        Cost depreciation        value
    -------------------------------------------------------------------------
    Aircraft                           $ 2,221,000  $   261,974  $ 1,959,026
    Ground property and equipment          157,948       77,634       80,314
    Spare engines and parts                 76,403       12,728       63,675
    Buildings                               40,028        5,559       34,469
    Leasehold improvements                   7,155        4,978        2,177
    Assets under capital lease               2,481        1,067        1,414
    -------------------------------------------------------------------------
                                         2,505,015      363,940    2,141,075
    Deposits on aircraft                    48,083            -       48,083
    Assets under development                 7,694            -        7,694
    -------------------------------------------------------------------------
                                       $ 2,560,792    $ 363,940  $ 2,196,852
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    Accumulated     Net book
    December 31, 2006                         Cost depreciation        value
    -------------------------------------------------------------------------
    Aircraft                           $ 2,086,301    $ 185,526  $ 1,900,775
    Ground property and equipment          153,896       65,854       88,042
    Spare engines and parts                 70,459       10,145       60,314
    Buildings                               40,028        4,825       35,203
    Leasehold improvements                   6,914        4,579        2,335
    Assets under capital lease               2,481          694        1,787
    -------------------------------------------------------------------------
                                         2,360,079      271,623    2,088,456
    Deposits on aircraft                    38,011            -       38,011
    Assets under development                32,279            -       32,279
    -------------------------------------------------------------------------
                                       $ 2,430,369    $ 271,623  $ 2,158,746
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    Accumulated     Net book
    September 30, 2006                        Cost depreciation        value
    -------------------------------------------------------------------------
    Aircraft                           $ 2,040,824    $ 163,069  $ 1,877,755
    Ground property and equipment          152,621       61,335       91,286
    Spare engines and parts                 85,596       11,943       73,653
    Buildings                               39,501        4,564       34,937
    Leasehold improvements                   6,769        4,430        2,339
    Assets under capital lease               2,481          569        1,912
    -------------------------------------------------------------------------
                                         2,327,792      245,910    2,081,882
    Deposits on aircraft                    39,971            -       39,971
    Assets under development                27,904            -       27,904
    -------------------------------------------------------------------------
                                       $ 2,395,667    $ 245,910  $ 2,149,757
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    In 2006, the Corporation entered into agreements to sell certain spare
    engines and aircraft parts to an unrelated third party. At December 31,
    2006, these engines and parts had been taken out of revenue-generating
    service and were included at their net book value in current assets, as
    assets held for sale. These transactions were completed in the first
    quarter of 2007.

    During the second quarter of 2007, the Corporation continued its
    discussions with the vendor of the aiRES reservations system regarding an
    amendment to the aiRES contract. Following these discussions, the
    Corporation and the vendor agreed to discontinue such negotiations and
    the Corporation concluded that it was highly unlikely that implementation
    would occur in the near term. As the Corporation could not assure the
    recovery of costs previously capitalized in connection with the
    reservations system, it recognized an impairment loss of $31,881,000.

    During the three and nine months ended September 30, 2007, the
    Corporation expensed $127,000 and $324,000 respectively (three months
    ended September 30, 2006 - $124,000; nine months ended September 30, 2006
    - $1,142,000), of aircraft parts deemed to be beyond economic repair,
    which were included in maintenance expense.

    4. Long-term debt:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      September 30  December 31 September 30
                                              2007         2006         2006
    -------------------------------------------------------------------------
    $1,818,605,000 in 48 individual
    term loans, amortized on a
    straight-line basis over a 12-year
    term, repayable in quarterly
    principal instalments ranging from
    $674,000 to $955,000, including
    fixed interest at a weighted
    average rate of 5.34%, maturing
    between 2014 and 2019. These
    facilities are guaranteed by the
    Ex-Im Bank and secured by one
    800-series aircraft, 34 700-series
    aircraft and 13 600-series
    aircraft.                          $ 1,395,735  $ 1,393,439  $ 1,390,455

    $35,000,000 in three individual
    term loans, repayable in monthly
    instalments ranging from $105,000
    to $169,000, including floating
    interest at the bank's prime rate
    plus 0.88%, with an effective
    interest rate of 7.13% as at
    September 30, 2007, maturing in
    2008 and 2011, secured by three
    Next-Generation flight simulators.      24,068       26,223       26,911

    $10,341,000 in 15 individual term
    loans, amortized on a straight-line
    basis over a five-year term,
    repayable in quarterly principal
    instalments ranging from $29,000 to
    $47,000, including floating
    interest at the Canadian LIBOR rate
    plus 0.08%, with a weighted average
    effective interest rate of 4.96% as
    at September 30, 2007, maturing
    between 2007 and 2011, guaranteed
    by the Ex-Im Bank and secured by
    certain 700-series and 600-series
    aircraft.                                4,134       11,699       12,547

    $12,000,000 term loan repayable in
    monthly instalments of $108,000,
    including interest at 9.03%,
    maturing April 2011, secured by the
    Calgary hangar facility.                10,148       10,426       10,512

    $4,550,000 term loan repayable in
    monthly instalments of $50,000,
    including floating interest at the
    bank's prime rate plus 0.50%, with
    an effective interest rate of 6.75%
    as at September 30, 2007, maturing
    April 2013, secured by the Calgary
    hangar facility.                         2,742        3,069        3,174


    -------------------------------------------------------------------------
                                         1,436,827    1,444,856    1,443,599
    Less current portion                   170,901      153,720      146,334
    -------------------------------------------------------------------------
                                       $ 1,265,926  $ 1,291,136  $ 1,297,265
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Future scheduled repayments of long-term debt are as follows:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    2007                                                         $    39,347
    2008                                                             170,315
    2009                                                             154,497
    2010                                                             153,829
    2011                                                             166,579
    2012 and thereafter                                              752,260
    -------------------------------------------------------------------------
                                                                 $ 1,436,827
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    At September 30, 2007, the Corporation had a Preliminary Commitment from
    Ex-Im Bank for four aircraft to be delivered between November 2007 and
    July 2008 at a total value of US $140.4 million. Upon conversion of the
    Preliminary Commitment to a Final Commitment, the Corporation will be
    charged a commitment fee of 0.125% per annum on the unutilized and
    uncancelled balance of the Ex-Im Bank facility, payable at specified
    dates and upon delivery of each aircraft, and will be charged a 3%
    exposure fee on the financed portion of the aircraft price, payable upon
    delivery of an aircraft.

    5. Commitments and contingencies:

    a) Aircraft Purchases:

    At September 30, 2007, the Corporation has committed to purchase 24
    737-700 Next-Generation aircraft for delivery between 2007 and 2013.

    The remaining estimated amounts to be paid in deposits and purchase
    prices in US dollars relating to the purchases of the remaining aircraft
    and live satellite television systems are as follows:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    2007                                                         $    41,630
    2008                                                             102,141
    2009                                                               7,614
    2010                                                              36,645
    2011                                                              78,680
    2012 and thereafter                                              739,841
    -------------------------------------------------------------------------
                                                                 $ 1,006,551
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    b) Leasehold Commitments:

    The Corporation has entered into operating leases and agreements for
    aircraft, buildings, computer hardware and software licences, satellite
    programming, and capital leases relating to ground handling equipment.
    The obligations are as follows:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        Capital    Operating
                                                         Leases       Leases
    -------------------------------------------------------------------------
    2007                                            $       111  $    24,433
    2008                                                    444      108,173
    2009                                                    444      124,810
    2010                                                    698      152,126
    2011                                                     38      161,787
    2012 and thereafter                                       -      791,508
    -------------------------------------------------------------------------
    Total lease payments                                  1,735  $ 1,362,837
    Less imputed interest at 5.29%                         (162) ------------
    ------------------------------------------------------------ ------------
    Net minimum lease payments                            1,573
    Less current portion of obligations under capital
     lease                                                 (370)
    ------------------------------------------------------------
    Obligations under capital lease                 $     1,203
    ------------------------------------------------------------
    ------------------------------------------------------------

    At September 30, 2007, the Corporation has committed to lease 15 737-700
    series aircraft and four 737-800 series Next-Generation aircraft to be
    delivered between 2007 and 2011 for terms ranging between eight and
    10 years in US dollars. These amounts have been included at their
    Canadian dollar equivalent in the above table with the US-dollar
    equivalent in the following table:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    2007                                                         $    20,104
    2008                                                              92,800
    2009                                                             115,534
    2010                                                             144,221
    2011                                                             156,206
    2012 and thereafter                                              752,954
    -------------------------------------------------------------------------
                                                                 $ 1,281,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    c) Contingencies:

    On April 4, 2004, Air Canada commenced a lawsuit against WestJet. Air
    Canada claimed damages in the amount of $220 million in an amendment to
    its statement of claim. On May 29, 2006, as a full settlement, the
    Corporation agreed to pay Air Canada's investigation and litigation costs
    incurred of $5.6 million and accept Air Canada's request that WestJet
    make a donation in the amount of $10 million in the name of Air Canada
    and the Corporation to children's charities across the country. Air
    Canada withdrew its claims in light of this settlement. All legal
    proceedings between the parties have been terminated. These amounts and
    other settlement costs have been included in non-recurring expenses.

    A Statement of Claim was filed by Jetsgo Corporation (Jetsgo) in the
    Ontario Superior Court on October 15, 2004, against WestJet, an officer,
    and a former officer (the Defendants). Jetsgo was seeking damages in an
    unspecified amount to be determined prior to trial plus $50 million for
    spoliation, punitive and exemplary damages. On May 13, 2005, Jetsgo
    sought bankruptcy protection. Based on an Order of the Ontario Supreme
    Court of Justice dated April 25, 2007, this action has been formally
    dismissed.

    The Corporation is party to other legal proceedings and claims that arise
    during the ordinary course of business. It is the opinion of management
    that the ultimate outcome of these matters will not have a material
    effect upon the Corporation's financial position, results of operations
    or cash flows.

    6. Share capital:

    a) Issued and outstanding:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three Months Ended       Nine Months Ended
                                September 30, 2007      September 30, 2007
    -------------------------------------------------------------------------
                                 Number      Amount      Number      Amount
    -------------------------------------------------------------------------
    Common and variable
     voting shares:

    Balance, beginning of
     period                   129,650,259   $439,088  129,648,688   $431,248
    Exercise of options
     (cash and cashless)           29,097          -      776,368      1,467
    Stock-based compensation
     expense on stock
     options exercised                  -      1,493            -     10,369
    Shares repurchased           (100,000)      (339)    (845,700)    (2,842)
    Share issuance costs                -          -            -          -
    Tax benefit of issue
     costs                              -          -            -          -
    -------------------------------------------------------------------------
    Balance, end of period    129,579,356   $440,242  129,579,356   $440,242
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ------------------------------------------------
                               Twelve Months Ended
                                December 31, 2006
    ------------------------------------------------
                                 Number     Amount
    ------------------------------------------------
    Common and variable
     voting shares:

    Balance, beginning of
     period                   129,575,099  $429,613

    Exercise of options
     (cash and cashless)          73,589          -
    Stock-based compensation
     expense on stock
     options exercised                 -      1,642
    Shares repurchased                 -          -
    Share issuance costs               -        (10)
    Tax benefit of issue
     costs                             -          3
    ------------------------------------------------
                             129,648,688   $431,248
    ------------------------------------------------
    ------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three Months Ended         Nine Months Ended
                                September 30, 2006        September 30, 2006
    -------------------------------------------------------------------------
                                Number       Amount      Number       Amount
    -------------------------------------------------------------------------
    Common and variable
     voting shares:

    Balance, beginning of
     period                  129,578,305  $ 429,711   129,575,099  $ 429,613
    Exercise of options
     (cash and cashless)               -          -         3,206          -
    Stock-based
     compensation expense
     on stock options
     exercised                         -          -             -        105
    Share issuance costs               -          -             -        (10)
    Tax benefit of issue
     costs                             -          -             -          3
    -------------------------------------------------------------------------
    Balance, end of period   129,578,305  $ 429,711   129,578,305  $ 429,711
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at September 30, 2007, the number of common voting shares outstanding
    was 125,357,776 (December 31, 2006 - 124,495,951; September 30, 2006 -
    122,844,030) and the number of variable voting shares was 4,221,580
    (December 31, 2006 - 5,152,737; September 30, 2006 - 6,734,275).

    On February 26, 2007, WestJet filed a notice with the Toronto Stock
    Exchange (the "TSX") to make a normal course issuer bid to purchase
    outstanding shares on the open market. As approved by the TSX, WestJet is
    authorized to purchase up to 2,000,000 shares (representing approximately
    1.5% of its currently issued and outstanding shares) during the period
    from February 28, 2007 to February 27, 2008, or until such earlier time
    as the bid is completed or terminated at the option of WestJet. Any
    shares WestJet purchases under this bid will be purchased on the open
    market through the facilities of the TSX at the prevailing market price
    at the time of the transaction. Shares acquired under the bid will be
    cancelled. In the three and nine months ended September 30, 2007, the
    Corporation purchased 100,000 and 845,700 shares, respectively, under the
    bid for total consideration of $1,486,000 and $13,292,000. The $1,147,000
    and $10,450,000 excess of the market price over the average book value
    was charged to retained earnings.

    b) Stock option plan:

    Changes in the number of options, with their weighted average exercise
    prices, are summarized below:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
               Three Months Ended     Nine Months Ended  Twelve Months Ended
               September 30, 2007    September 30, 2007    December 31, 2006
    -------------------------------------------------------------------------
                         Weighted              Weighted             Weighted
                          average               average              average
              Number of  exercise   Number of  exercise  Number of  exercise
                options     price     options     price    options     price
    -------------------------------------------------------------------------
    Stock options
     outstanding,
     beginning
     of
     period   14,231,868  $ 13.89  15,046,201   $ 13.21  11,428,718  $ 13.94
    Issued        23,649    15.50   1,669,607     16.41   5,980,660    11.82
    Exercised   (269,523)   15.12  (2,573,719)    11.74    (433,129)   11.21
    Forfeited    (41,539)   13.48    (197,634)    13.10    (332,711)   13.19
    Expired       (6,259)   15.97      (6,259)    15.97  (1,597,337)   13.78
    -------------------------------------------------------------------------
    Stock options
     outstanding,
     end of
     period   13,938,196  $ 13.86  13,938,196   $ 13.86  15,046,201  $ 13.21
    -------------------------------------------------------------------------

    Exercisable,
     end of
     period    6,099,334  $ 15.07   6,099,334   $ 15.07   4,846,236  $ 13.63
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   Three Months Ended      Nine Months Ended
                                   September 30, 2006     September 30, 2006
    -------------------------------------------------------------------------
                                             Weighted               Weighted
                                              average                average
                                 Number of   exercise    Number of  exercise
                                   Options      price      Options     price
    -------------------------------------------------------------------------

    Stock options outstanding,
     beginning of period        15,627,058    $ 13.16   11,428,718   $ 13.94
    Issued                          26,266       9.90    5,906,245     11.81
    Exercised                            -          -      (27,736)    11.21
    Forfeited                     (228,077)     12.89     (309,833)    13.29
    Expired                        (22,998)     12.16   (1,595,145)    13.78
    -------------------------------------------------------------------------

    Stock options outstanding,
     end of period              15,402,249    $ 13.16   15,402,249   $ 13.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable, end of period   5,252,553    $ 13.44    5,252,553   $ 13.44
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Under the terms of the Corporation's stock option plan, a cashless
    settlement alternative is available, whereby option holders can either
    (a) elect to receive shares by delivering cash to the Corporation in the
    amount of the options, or (b) elect to receive a number of shares
    equivalent to the market value of the options over the exercise price.
    For the three and nine months ended September 30, 2007, option holders
    exercised 269,523 and 2,442,923 options, respectively (12 months ended
    December 31, 2006 - 433,129 options; three months ended September 30,
    2006 - NIL options; nine months ended September 30, 2006 - 27,736
    options) on a cashless settlement basis and received 29,097 and 645,572
    shares, respectively (12 months ended December 31, 2006 - 73,589 shares;
    three months ended September 30, 2006 - NIL shares; nine months ended
    September 30, 2006 - 3,206 shares).

    c) Per share amounts:

    The following table summarizes the shares used in calculating net
    earnings per share:
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three Months Ended         Nine Months Ended
                                      September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Weighted average
     number of shares
     outstanding - basic  129,610,501  129,578,305  129,754,229  129,577,962
    Effect of dilutive
     employee stock
     options                1,334,989            -    1,094,785          184
    -------------------------------------------------------------------------
    Weighted average
     number of shares
     outstanding -
     diluted              130,945,490  129,578,305  130,849,014  129,578,146
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the three and nine month periods ended September 30, 2007, 1,659,989
    and 4,633,046 (three months ended September 30, 2006 - 15,402,249; nine
    months ended September 30, 2006 - 12,774,317) options, respectively, were
    not included in the calculation of dilutive potential shares as the
    result would be anti-dilutive.

    d) Stock-based compensation:

    As new options are granted, the fair value of these options will be
    expensed over the vesting period, with an offsetting entry to contributed
    surplus. The fair value of each option grant is estimated on the date of
    grant using the Black-Scholes option-pricing model. Upon the exercise of
    stock options, consideration received, together with amounts previously
    recorded in contributed surplus, is recorded as an increase in share
    capital.

    Stock-based compensation expense related to stock options included in
    flight operations and general and administration expenses totalled
    $4,268,000 and $15,069,000 for the three and nine months ended
    September 30, 2007, respectively (three months ended September 30, 2006 -
    $5,397,000; nine months ended September 30, 2006 - $15,497,000).

    The fair market value of options granted during the three and nine months
    ended September 30, 2007 and 2006 and the assumptions used in their
    determination are as follows:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three Months Ended         Nine Months Ended
                                      September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Weighted average fair
     market value per option  $  5.36      $  3.46      $  5.65      $  4.29
    Average risk-free interest
     rate                        4.65%        3.98%        4.20%        4.24%
    Average volatility             38%          42%          38%          42%
    Expected life (years)         3.6          3.6          3.7          3.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Corporation has a restricted share unit (RSU) plan, whereby up to a
    maximum of 2,000,000 RSUs may be issued to executive officers of the
    Corporation. Each RSU entitles a participant to receive cash equal to the
    market value of the equivalent number of shares of the Corporation. The
    Corporation determines compensation expense for the RSUs based on the
    intrinsic value, considered to be the market value, at each reporting
    period which is recognized in earnings over the vesting period. During
    the three and nine months ended September 30, 2007, 1,587 and 64,186
    RSUs, respectively, were granted with $111,000 and $490,000 of
    compensation expense included in general and administration expenses and
    accrued liabilities. RSUs granted in 2007 will vest in January 2010.

    7. Employee profit share:

    The provision for employee profit share is estimated based on adjusted
    actual year-to-date earnings results. The actual employee profit share
    amount is to be determined by the Board of Directors based on audited
    financial results at the completion of the financial year.

    8. Income taxes:

    During the second quarter of 2007, the federal government substantively
    enacted a reduction of the general corporate tax rate by one-half per
    cent to 18.5%, effective January 1, 2011. The impact of this legislation
    is a reduction of the Corporation's liability and provision for future
    income taxes of $2.3 million in the nine months ended September 30, 2007.

    9. Comparative figures:

    Certain prior period balances have been reclassified to conform to
    current period's presentation.

    10. Subsequent events:

    On October 26, 2007, the Corporation exercised options to lease an
    additional three 737-700 Next-Generation aircraft to be delivered in 2011
    for terms ranging between eight and 10 years for a total commitment of
    US $132.6 million.

    On November 6, 2007, the Corporation signed a Letter of Intent for two
    additional 737-800 Next-Generation aircraft to be delivered in November
    2008 and January 2009 for an estimated total commitment of
    US $80.0 million.

    WestJet will hold a live analysts' conference call today at 9 a.m. MT
    (11 a.m. ET). Sean Durfy, President and CEO and Vito Culmone, Executive
    Vice-President, Finance and CFO will discuss WestJet's third quarter 2007
    results and answer questions from financial analysts. The conference call
    is available through the toll-free telephone number 1-888-564-1610.
    Participants are encouraged to join the call 10 minutes prior to the
    scheduled start, at 8:50 a.m. MT (10:50 ET). The call can also be heard
    live through an Internet webcast in the Investor Relations section of
    westjet.com.
    





For further information:

For further information: WestJet, Media Relations, Gillian Bentley,
(403) 444-2615, Website: www.westjet.com


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