WestJet reports strong first quarter net earnings

Airline achieves EPS of 34 cents, up from 2 cents in the first quarter of 2010

WestJet reports 24th consecutive quarter of profitability

CALGARY, May 3 /CNW/ - WestJet (TSX:WJA) today reported first quarter 2011 net earnings of $48.2 million, or 34 cents per share, a significant improvement from $2.4 million or 2 cents per share reported in the first quarter of 2010. The airline achieved an operating margin of 10.3 per cent which represents an increase of 6.4 points compared to the first quarter of 2010.

"To start 2011 with strong earnings in an environment of elevated fuel costs is another testament to the resiliency of WestJet, the effectiveness of our business model, and the hard work of every WestJetter," commented WestJet President and CEO Gregg Saretsky.

    <<
              Operating highlights (stated in Canadian dollars)
    -------------------------------------------------------------------------
                                             Q1 2011   Q1 2010*     Change
    -------------------------------------------------------------------------
    Net earnings (millions)                    $48.2        $2.4    1,940.1%
    -------------------------------------------------------------------------
    Earnings per share (cents)                 $0.34       $0.02    1,600.0%
    -------------------------------------------------------------------------
    Total revenue (millions)                  $772.4      $619.3       24.7%
    -------------------------------------------------------------------------
    Operating margin                           10.3%        3.9%     6.4 pts.
    -------------------------------------------------------------------------
    ASMs (available seat miles) (billions)     5.230       4.700       11.3%
    -------------------------------------------------------------------------
    RPMs (revenue passenger miles) (billions)  4.290       3.840       11.7%
    -------------------------------------------------------------------------
    Load factor                                82.0%       81.7%     0.3 pts.
    -------------------------------------------------------------------------
    Yield (revenue per revenue passenger
     mile) (cents)                             18.00       16.13       11.6%
    -------------------------------------------------------------------------
    RASM (revenue per available seat mile)
     (cents)                                   14.77       13.18       12.1%
    -------------------------------------------------------------------------
    CASM (cost per available seat mile)
     (cents)                                   13.24       12.67        4.5%
    -------------------------------------------------------------------------
    CASM, excluding fuel and employee
     profit share (cents)(xx)                   8.91        9.21       (3.3%)
    -------------------------------------------------------------------------
    Segment guests                         3,899,108   3,688,490        5.7%
    -------------------------------------------------------------------------
    Average stage length (miles)               1,021         963        6.0%
    -------------------------------------------------------------------------
    *  Financial information has been restated in accordance with
         International Financial Reporting Standards (IFRS).
    (xx) Refer to reconciliations in the accompanying tables for further
         information regarding adjustments.
    >>

Revenue per available seat mile (RASM) was up 12.1 per cent year over year which was mostly attributable to significant yield improvement and slight load factor growth. "We are pleased that the market has absorbed the fare increases put in place to offset rising fuel costs. These strong first quarter results represent net earnings per guest of roughly twelve dollars which highlights the competitive nature of the airline industry," said Gregg Saretsky. For the second quarter of 2011, WestJet is projecting fuel costs, excluding hedging, to range between $0.95 and $0.98 per litre, and is anticipating continued strong year-over-year RASM growth.

For the first half of 2011, WestJet is expecting cost per available seat mile (CASM), excluding fuel and employee profit share, to be relatively flat on a year-over-year basis compared to the first half of 2010. "WestJetters are well known for providing a great guest experience, as recognized by the recent J.D. Power 2011 Customer Service award, but they are also very cost-conscious and I thank them for their ongoing efforts in keeping our controllable costs in check," concluded Gregg Saretsky.

WestJet's board of directors declared a cash dividend of $0.05 per common voting share and variable voting share for the second quarter of 2011, to be paid on June 30, 2011, to shareholders of record on June 15, 2011. All dividends paid by WestJet are, pursuant to subsection 89(14) of the Income Tax Act, designated as eligible dividends, unless indicated otherwise. An eligible dividend paid to a Canadian resident is entitled to the enhanced dividend tax credit.

Caution regarding forward-looking statements

Certain information set forth in this news release, including, without limitation, the information regarding second quarter fuel costs, RASM growth in the second quarter of 2011, and CASM growth in the first half of 2011, is forward-looking information within the meaning of applicable Canadian securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond WestJet's control. The forward-looking information contained in this press release is based on WestJet's current budget and forecasts, realized jet fuel prices for April 2011 and forward curve prices for 2011, the expected exchange rate of the Canadian dollar to the U.S. dollar, along with available implementation plans, agreements and bookings, but may vary due to factors including, but not limited to, changes in consumer demand, changes in fuel prices, delays in aircraft delivery, changes in guest demand, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems and other factors and risks described in WestJet's public reports and filings including WestJet's management's discussion and analysis and annual information form for the year ended December 31, 2010, which are available on WestJet's profile at www.sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking statements as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.

This press release contains disclosure respecting non-IFRS performance measures including, without limitation, net earnings and diluted earnings per share, excluding special items, net earnings per guest, and CASM, excluding fuel and employee profit share. These measures are included to enhance overall understanding of WestJet's current financial performance and to provide an alternative method for assessing WestJet's operating results in a manner that is focused on the performance of WestJet's ongoing operations, and to provide a more consistent basis for comparison between quarters. These measures are not in accordance with, or an alternative to, IFRS and do not have standardized meanings. Therefore, they are not likely to be comparable to similar measures provided by other entities. Readers are urged to review the section entitled "Non-IRFS Measures" in WestJet's management's discussion and analysis of financial results for the three months ended March 31, 2011, which is available under WestJet's profile on SEDAR at www.sedar.com, for a further discussion of such non-IFRS measures and a reconciliation of such measures to IFRS.

Management's discussion & analysis and the consolidated interim financial statements and notes for the three months ended March 31, 2011, are available through the Internet on www.westjet.com or WestJet's SEDAR profile at www.sedar.com.

Analyst conference call

WestJet will hold its quarterly analysts' conference call today, May 3, 2011, at 8 a.m. MDT (10 a.m. EDT). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Vito Culmone will discuss WestJet's first quarter 2011 results and answer questions from financial analysts and members of the media. The conference call is available in Toronto by calling 1-647-427-7450 and outside Toronto through the toll-free telephone number 1-888-231-8191. The call can also be listened to through an Internet webcast in the Media and Investor Relations section of www.westjet.com.

Annual general and special meeting (AGM)

WestJet will hold its AGM at 2 p.m. MDT (4 p.m. EDT) today on May 3, 2011 at WestJet's Calgary Campus at 22 Aerial Place NE. The AGM webcast will be available live in the Media and Investor Relations section of www.westjet.com.

About WestJet

WestJet is Canada's favourite airline, offering scheduled service throughout its 71-city North American and Caribbean network. Inducted into Canada's Most Admired Corporate Cultures Hall of Fame and named one of Canada's best employers, WestJet pioneered low-cost flying in Canada. WestJet offers increased legroom, leather seats and live seatback television provided by Bell TV on its modern fleet of 95 Boeing Next-Generation 737 aircraft. With future confirmed deliveries for an additional 40 aircraft through 2018, WestJet strives to be one of the five most successful international airlines in the world.

Connect with WestJet on Facebook at www.facebook.com/westjet

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Subscribe to WestJet on YouTube at www.youtube.com/westjet

    <<
    Consolidated Statement of Earnings
    (Stated in thousands of Canadian dollars, except share and per share
    data)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Three months ended March 31                          2011         2010
    -------------------------------------------------------------------------
    Revenues:
      Guest                                             688,588      559,725
      Other                                              83,834       59,567
    -------------------------------------------------------------------------
                                                        772,422      619,292
    Expenses:
      Aircraft fuel                                     218,963      160,054
      Airport operations                                109,151      101,039
      Flight operations and navigational charges         84,097       79,052
      Sales and distribution                             76,822       66,439
      Marketing, general and administration              47,816       49,819
      Depreciation and amortization                      43,307       42,621
      Aircraft leasing                                   40,713       34,258
      Inflight                                           33,499       30,330
      Maintenance                                        30,622       29,272
      Employee profit share                               7,592        2,315
    -------------------------------------------------------------------------
                                                        692,582      595,199
    -------------------------------------------------------------------------
    Earnings from operations                             79,840       24,093

    Non-operating income (expense):
      Finance income                                      3,931        1,707
      Finance costs                                     (16,198)     (18,461)
      Gain (loss) on foreign exchange                     1,499       (2,119)
      Loss on disposal of property and equipment             (7)          (6)
      Gain (loss) on derivatives                         (2,257)         632
    -------------------------------------------------------------------------
                                                        (13,032)     (18,247)
    -------------------------------------------------------------------------
    Earnings before income tax                           66,808        5,846

    Income tax expense:
      Current                                               581          362
      Deferred                                           17,978        3,119
    -------------------------------------------------------------------------
                                                         18,559        3,481
    -------------------------------------------------------------------------
    Net earnings                                         48,249        2,365
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                                                0.34         0.02
      Diluted                                              0.34         0.02
    -------------------------------------------------------------------------

    Weighted average number of shares
      outstanding - basic                           142,308,050  144,630,179
    Weighted average number of shares
      outstanding - diluted                         143,141,454  144,960,449
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statement of Financial Position
    (Stated in thousands of Canadian dollars)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                          March 31  December 31    January 1
                                            2011         2010         2010
    -------------------------------------------------------------------------

    Assets
    Current assets:
      Cash and cash equivalents          1,252,416    1,187,899    1,005,181
      Accounts receivable                   27,230       17,518       27,654
      Prepaid expenses, deposits and
       other                                70,164       53,761       64,868
      Inventory                             25,090       26,095       31,505
    -------------------------------------------------------------------------
                                         1,374,900    1,285,273    1,129,208
    Non-current assets:
      Property and equipment             1,997,262    1,989,522    2,108,351
      Intangible assets                     12,134       13,018       14,087
      Other assets                          93,193       96,167       98,451
    -------------------------------------------------------------------------
    Total assets                         3,477,489    3,383,980    3,350,097
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
    Current liabilities:
      Accounts payable and accrued
       liabilities                         350,866      287,710      228,911
      Advance ticket sales                 371,254      336,926      297,720
      Non-refundable guest credits          35,054       36,381       63,164
      Current portion of long-term debt    178,060      178,337      165,111
      Current portion of obligations
       under finance leases                     73          108          744
    -------------------------------------------------------------------------
                                           935,307      839,462      755,650
    Non-current liabilities:
      Maintenance provisions               106,793      106,711       91,227
      Long-term debt                       806,833      848,465    1,028,165
      Obligations under finance leases       3,231        3,249        3,358
      Other liabilities                      9,678        8,958        9,517
      Deferred income tax                  287,057      268,069      225,170
    -------------------------------------------------------------------------
    Total liabilities                    2,148,899    2,074,914    2,113,087

    Shareholders' equity:
      Share capital                        639,717      647,637      633,075
      Equity reserves                       69,674       66,726       75,866
      Hedge reserves                        (7,211)     (10,470)     (14,852)
      Retained earnings                    626,410      605,173      542,921
    -------------------------------------------------------------------------
    Total shareholders' equity           1,328,590    1,309,066    1,237,010

    -------------------------------------------------------------------------
    Total liabilities and
     shareholders' equity                3,477,489    3,383,980    3,350,097
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statement of Cash Flows
    (Stated in thousands of Canadian dollars)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Three months ended March 31                          2011         2010
    -------------------------------------------------------------------------

    Operating activities:
    Net earnings                                         48,249        2,365
    Items not involving cash:
      Depreciation and amortization                      43,307       42,621
      Change in long-term maintenance provisions          6,698        6,750
      Change in other liabilities                          (209)        (190)
      Amortization of hedge settlements                     350          349
      Gain (loss) on derivative instruments               2,257         (632)
      Gain (loss) on disposal of property and equipment       7          (23)
      Share-based payment expense                         3,369        5,601
      Income tax credit                                       -       (1,816)
      Deferred income tax expense                        17,978        3,119
      Unrealized foreign exchange loss                      432        2,565
      Change in non-cash working capital                 76,494       64,353
    Change in other assets                               (1,627)      (1,450)
    -------------------------------------------------------------------------
                                                        197,305      123,612
    -------------------------------------------------------------------------

    Investing activities:
      Aircraft additions                                (43,140)      (4,795)
      Other property and equipment and intangible
       additions                                         (9,380)      (2,748)
    -------------------------------------------------------------------------
                                                        (52,520)      (7,543)
    -------------------------------------------------------------------------

    Financing activities:
      Repayment of long-term debt                       (41,283)     (41,167)
      Decrease in obligations under finance leases          (54)        (119)
      Shares repurchased                                (28,297)           -
      Dividends paid                                    (14,205)           -
      Change in other assets                               (672)      (4,471)
      Change in non-cash working capital                  6,153        2,529
    -------------------------------------------------------------------------
                                                        (78,358)     (43,228)
    -------------------------------------------------------------------------

    Cash flow from operating, investing and
     financing activities                                66,427       72,841
    Effect of foreign exchange on cash and cash
     equivalents                                         (1,910)      (1,383)
    -------------------------------------------------------------------------
    Net change in cash and cash equivalents              64,517       71,458

    Cash and cash equivalents, beginning of period    1,187,899    1,005,181

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period          1,252,416    1,076,639
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash taxes paid                                        (371)        (723)
    Cash interest received                                2,908        1,168
    Cash interest paid                                  (14,024)     (16,239)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Operating Highlights
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                            Three months ended March 31
                                          2011          2010        Change
    -------------------------------------------------------------------------
    ASMs                           5,230,276,750  4,699,519,345        11.3%
    RPMs                           4,290,347,966  3,839,947,560        11.7%
    Load factor                            82.0%          81.7%      0.3 pts.
    Yield (cents)                          18.00          16.13        11.6%
    RASM (cents)                           14.77          13.18        12.1%
    CASM (cents)                           13.24          12.67         4.5%
    CASM, excluding fuel and
     employee profit share (cents)          8.91           9.21        (3.3%)
    Fuel consumption (litres)        257,692,812    230,468,379        11.8%
    Fuel costs per litre (dollars)          0.85           0.69        23.2%
    Segment guests                     3,899,108      3,688,490         5.7%
    Average stage length (miles)           1,021            963         6.0%
    Utilization (hours)                    12.15          11.70         3.8%
    Number of full-time equivalent
     employees at period end               6,908          6,259        10.4%
    Fleet size at period end                  94             88         6.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Reconciliation of non-IFRS measures to IFRS

To supplement the consolidated interim financial statements presented in accordance with IFRS, WestJet uses various non-IFRS performance measures. These measures are provided to enhance the reader's overall understanding of WestJet's current financial performance. They are included to provide investors and management with an alternative method for assessing the operating results in a manner that is focused on the performance of ongoing operations and to provide a more consistent basis for comparison between quarters. These measures are not in accordance with, or an alternative to, IFRS and do not have standardized meanings. Therefore, they are not likely to be comparable to similar measures presented by other entities.

    <<
    Net earnings and diluted earnings per share, excluding special items
    (Stated in thousands of Canadian dollars, except per share data)
    (Unaudited)

    WestJet believes excluding special items is useful for investors to
    evaluate its recurring operational performance.

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                 Three months ended March 31
                                                         2011         2010
    -------------------------------------------------------------------------

    Net earnings                                         48,249        2,365
    Adjusted for:
      CEO departure (net of tax)                              -        3,700
    -------------------------------------------------------------------------
    Net earnings, excluding special items                48,249        6,065
    -------------------------------------------------------------------------
    Weighted average number of shares
     outstanding - diluted                          143,141,454  144,960,449
    -------------------------------------------------------------------------
    Diluted earnings per share, excluding
     special items                                         0.34         0.04
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CASM, excluding fuel and employee profit share
    (Stated in thousands of Canadian dollars, except per unit data)
    (Unaudited)

    WestJet excludes the effects of aircraft fuel expense and employee profit
    share expense to assess the operating performance of the business. Fuel
    expense is excluded from operating results due to the fact that fuel
    prices are impacted by a host of factors outside WestJet's control, such
    as significant weather events, geopolitical tensions, refinery capacity
    and global demand and supply. Excluding this expense allows WestJet to
    analyze its operating results on a comparable basis. Employee profit
    share expense is excluded from operating results due to its variable
    nature and excluding this expense allows greater comparability.

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                 Three months ended March 31
                                                         2011         2010
    -------------------------------------------------------------------------

    Operating expenses                                  692,582      595,199
    Adjusted for:
      Aircraft fuel expense                            (218,963)    (160,054)
      Employee profit share expense                      (7,592)      (2,315)
    -------------------------------------------------------------------------
    Operating expenses, excluding above items           466,027      432,830
    -------------------------------------------------------------------------
    ASMs (in thousands)                               5,230,277    4,699,519
    -------------------------------------------------------------------------
    CASM, excluding above items (cents)                    8.91         9.21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net earnings per guest
    (Stated in thousands of Canadian dollars, except per unit data)
    (Unaudited)

    WestJet believes that the measure of net earnings per guest provides
useful information to investors about unit profit.


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                 Three months ended March 31
                                                         2011         2010
    -------------------------------------------------------------------------
    Net earnings                                         48,249        2,365
    -------------------------------------------------------------------------
    Segment guests                                    3,899,108    3,688,490
    -------------------------------------------------------------------------
    Net earnings per guest                                12.37         0.64
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

SOURCE WestJet

For further information: WestJet Media Relations, 1-888-WJ-4-NEWS (1-888-954-6397), Email: media@westjet.com; WestJet Investor Relations, 1-877-493-7853, Email: investor_relations@westjet.com, Website: www.westjet.com


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