WestJet Announces Strong Second Quarter Operating Results



    Airline continues momentum with record year-to-date earnings of
    $41.4 million

    CALGARY, Aug. 1 /CNW/ - WestJet (TSX:WJA) today announced second quarter
net earnings of $11.5 million. The airline reported earnings of $22.4 million
in the same period last year. WestJet's year-to-date net earnings were a
record $41.4 million compared to $35.2 million in the same period of 2006, an
increase of over 17 per cent.
    As reported on July 19, 2007, the airline's second quarter net earnings
were impacted by the one-time non-recurring impairment loss related to costs
previously capitalized for the aiRES project, which impacted the company's
earning from operations by $31.9 million ($22.2 million after tax).
    Excluding the reservation system write-down, the airline's earnings from
operations produced record second quarter and year-to-date operating margins
of 12.1 per cent for the quarter and 11.6 per cent for the first six months of
2007.
    Sean Durfy, WestJet President said today, "Our people worked very hard
for these results and we thank them for their continued efforts. Excluding the
impact of the non-cash aiRES write-down, our second quarter earnings from
operations increased by over 58 per cent."
    Diluted earnings per share were nine cents for the quarter compared to 17
cents in the same period last year, a decrease of 47.1 per cent. Year to date,
diluted earnings per share were 32 cents up from 27 cents in 2006, an increase
of 18.5 per cent.
    Second quarter revenue rose to $504.8 million, compared to $424.0 million
in the second quarter of 2006, an improvement of over 19 per cent. Year to
date, revenue increased to $984.0 million compared to $810.7 million in 2006,
an increase of 21.4 per cent.

    
    Operating Highlights
    -------------------------------------------------------------------------
                    Q2 2007  Q2 2006  % change  YTD 2007  YTD 2006  % change
    -------------------------------------------------------------------------
    Load Factor       80.9%    77.5%   3.4 pts.    81.0%     78.4%   2.6 pts.
    -------------------------------------------------------------------------
    ASM (available
     seat miles)
     billions         3.488    3.002       16%    6.938      5.899       18%
    -------------------------------------------------------------------------
    RPM (revenue
     passenger miles)
     billions         2.822    2.326       21%    5.620      4.626       21%
    -------------------------------------------------------------------------
    RASM (revenue per
     available seat
     mile) cents      14.47    14.12      2.5%    14.19      13.74      3.3%
    -------------------------------------------------------------------------
    Yield (revenue
     per passenger
     mile) cents      17.89    18.23     (1.9%)   17.51      17.52     (0.1%)
    -------------------------------------------------------------------------
    CASM(1)(cost per
     available seat
     mile) cents      12.72    12.84     (0.9%)   12.51      12.64     (1.0%)
    -------------------------------------------------------------------------
    CASM(1) excluding
     fuel cents        9.27     9.36     (1.0%)    9.19       9.25     (0.6%)
    -------------------------------------------------------------------------
    (1) excludes reservation system write-down of $31.9 million
    

    Sean Durfy commented, "We produced record load factors and improved RASM
while increasing our capacity significantly. This is a strong indicator that
we are delivering on our commitment to provide an exceptional guest
experience, while offering our guests a friendly reliable service and a
schedule that suits their travel needs.
    "Yields were down slightly this quarter; however this was more than
offset by the increase in load factor which means more guests are flying and
experiencing WestJet. This resulted in a 2.5 per cent increase in RASM which
aligned with our expectations.
    "We had a slight decrease in our fuel costs per ASM this quarter, due in
part to the strengthening Canadian dollar. We were able to reduce our CASM
while still significantly growing our business. This clearly demonstrates the
commitment of WestJetters to deliver on our low-cost strategy in an effective
manner.
    "Our seasonal capacity deployment strategy of redirecting our aircraft,
based on the winter and summer travel demands of Canadians, has produced
record operating results. In the second quarter, we increased our flying
capacity into our domestic schedule, while still developing a more robust
schedule in our transborder markets than we had in the previous year. The
success of our sun destinations, during the winter travel season, has
encouraged us to further build our international schedule. We announced three
new destinations: Montego Bay (Jamaica), Puerto Plata (Dominican Republic) and
Punta Cana (Dominican Republic); and Transport Canada recently granted us
designations to fly into four Mexican destinations. As we continue to take
delivery of new aircraft, we see numerous opportunities and markets to
profitably deploy our increased capacity.
    "Adding these sun destinations has additional benefits for WestJet
Vacations. As we increase our network and guests become familiar with our
vacation products, we have been able to strengthen our WestJet Vacations
business from a revenue and guest experience perspective.
    "In the second quarter we welcomed Don Hougan, a WestJet Captain, to our
Board of Directors, replacing James Homeniuk as our PACT Representative. We
were also pleased to have Ferio Pugliese join us in June as our new Executive
Vice-President of People.
    "We wish WestJet co-founder Don Bell much happiness in his recently
announced retirement and thank him for his important role in developing
WestJet's culture. We are confident the culture first created over 11 years
ago will continue to grow and live on in each and every WestJetter.
    "In the third quarter we will add three more aircraft, bringing our fleet
size to 68 737s by the end of September, and we will increase our capacity by
14 per cent.
    "We are now a team of more than 6,400 WestJetters. Working with such a
large group of people who share such similar values and who are committed to
an exceptional experience for each of our guests is the greatest strength of
our airline. The success of this quarter, as well as every other triumph or
achievement WestJet celebrates, belongs to all of us."
    The airline also reported second quarter and year-to-date operational
performance.

    
    -------------------------------------------------------------------------
                    Q2 2007  Q2 2006  % change  YTD 2007  YTD 2006  % change
    -------------------------------------------------------------------------
    On-time
     performance      88.5%    92.0% (3.5 pts.)    82.3%     79.5%   2.8 pts.
    -------------------------------------------------------------------------
    Completion rate   99.4%    99.6% (0.2 pts.)    99.0%     99.4% (0.4 pts.)
    -------------------------------------------------------------------------
    Bag ratio          3.47     4.03     13.9%      4.37      4.77      8.4%
    -------------------------------------------------------------------------
    

    SECOND 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 June 30, 2007. This
table has been prepared in accordance with Canadian generally accepted
accounting principles and are 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 EXCEPT PER SHARE DATA)

                                            Three Months Ended
                                June 30     Mar. 31     Dec. 31     Sept. 30
                                   2007        2007        2006         2006
    -------------------------------------------------------------------------
    Total revenues            $     505   $     479   $     459   $      502
    Net earnings              $      12   $      30   $      27   $       53
    Basic earnings per share  $    0.09   $    0.23   $    0.21   $     0.41
    Diluted earnings per
     share                    $    0.09   $    0.23   $    0.21   $     0.41


                                            Three Months Ended
                                June 30     Mar. 31     Dec. 31     Sept. 30
                                   2006        2006        2005         2005
    -------------------------------------------------------------------------
    Total revenues            $     424   $     387   $     368   $      406
    Net earnings              $      22   $      13   $       1   $       30
    Basic earnings per share  $    0.17   $    0.10   $    0.01   $     0.24
    Diluted earnings per
     share                    $    0.17   $    0.10   $    0.01   $     0.23
    

    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 affects of
the seasonal demand by allocating our network capacity to our various markets
as appropriate based on demand in the season.
    In the quarter ended December 31, 2005, the reported net earnings of
$1.0 million were impacted by elevated jet fuel prices caused by that season's
hurricanes.

    HIGHLIGHTS

    In the three months ended June 30, 2007, we reported net earnings of
$11.5 million ($0.09 per share) compared to $22.4 million ($0.17 per share) in
the comparable quarter in 2006. Our net earnings this quarter were negatively
impacted by a non-cash write-down of $31.9 million ($22.2 million after tax)
in capitalized costs for the assets associated with WestJet's aiRES
reservation system project. In the second quarter of 2006, the settlement of
the Air Canada lawsuit resulted in a $15.6 million charge ($10.8 million after
tax) which was more than offset by favourable tax legislation changes of
$11.2 million. For the first half of 2007, our net earnings rose 17.6 per cent
to $41.4 million compared to $35.2 million for the same period in 2006.
    In the three and six months ended June 30, 2007, excluding the
reservation system write-down of $31.9 million, we generated earnings from
operations of $61.1 million and $114.5 million which resulted in operating
margins of 12.1 and 11.6 per cent respectively. These results represent the
highest second quarter and first half-year earnings from operations and
operating margins in our history. These were up significantly from our
previous records for earnings from operations of $38.6 million and
$64.9 million and operating margins of 9.1 per cent and 8.0 per cent which
were achieved in the same periods of 2006. The growth in our earnings from
operations continues to be driven primarily by additional capacity, record
load factors, overall improvement in our RASM and continued cost control.
    This quarter's results reflect the continued success of our capacity
management strategy. By reallocating our capacity from U.S. charter and sun
destinations to our Canadian markets, in addition to overall capacity growth
of 16 per cent, we continued to experience record traffic for each month as
well as improved RASM by 2.5 per cent compared to the same periods in 2006.
    We remain focused on cost control. Excluding the reservation system
write-down, our unit costs decreased by 0.9 and 1.0 per cent for the three and
six months ended June 30, 2007, compared to the same periods in 2006.
    Our revenue results for the first half of the current year continued to
show strong growth. Our capacity increased 18 per cent over the prior year and
our RPMs increased by 21 per cent. Our load factor in this period was 81.0 per
cent which is another record for our airline. We maintained our yield at 17.51
cents per passenger mile and improved our RASM by 3.3 per cent.

    
                                           Three months ended June 30
                                   ------------------------------------------
                                                                    increase
                                             2007           2006   (decrease)
    -------------------------------------------------------------------------

    ASMs                            3,488,485,738  3,002,241,066         16%
    RPMs                            2,822,372,023  2,325,802,995         21%
    Load factor                             80.9%          77.5%         3.4
    Yield (cents)                           17.89          18.23       (1.9%)
    RASM (cents)                            14.47          14.12        2.5%
    Cost per passenger mile (cents)(1)      15.72          16.57       (5.1%)
    CASM (cents)(1)                         12.72          12.84       (0.9%)
    Fuel consumption (litres)         173,222,765    146,386,704         18%
    Fuel cost/litre (cents)                  69.4           71.4         (3%)
    Segment guests                      3,229,146      2,700,404         20%
    Average stage length (miles)              834            823          1%
    Number of full-time equivalent
     employees at period end                5,350          4,603         16%
    Fleet size at period end                   65             57         14%
    Aircraft available for use                 65             57         14%

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                             Six months ended June 30
                                   ------------------------------------------
                                                                    increase
                                             2007           2006   (decrease)
    -------------------------------------------------------------------------

    ASMs                            6,937,533,552  5,899,348,947         18%
    RPMs                            5,619,542,312  4,626,250,470         21%
    Load factor                             81.0%          78.4%         2.6
    Yield (cents)                           17.51          17.52       (0.1%)
    RASM (cents)                            14.19          13.74        3.3%
    Cost per passenger mile (cents)(1)      15.47          16.12       (4.0%)
    CASM (cents)(1)                         12.51          12.64       (1.0%)
    Fuel consumption (litres)         345,381,068    288,678,322         20%
    Fuel cost/litre (cents)                  66.7           69.3         (4%)
    Segment guests                      6,269,735      5,321,596         18%
    Average stage length (miles)              846            827          2%
    Number of full-time equivalent
     employees at period end                5,350          4,603         16%
    Fleet size at period end                   65             57         14%
    Aircraft available for use                 65             57         14%

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excludes reservation system write-down of $31.9 million



    REVENUES
                                           Three months ended June 30
                                   ------------------------------------------
                                                                   %increase/
                                             2007           2006   (decrease)
    -------------------------------------------------------------------------
    ($ in thousands)
     Guest revenues                     $ 449,312      $ 377,107         19%
     Charter and other                     50,198         43,634         15%
     Interest income                        5,284          3,231         64%
                                   ------------------------------------------
                                        $ 504,794      $ 423,972         19%
                                   ------------------------------------------
    RASM (cents)                            14.47          14.12        2.5%
                                   ------------------------------------------
                                   ------------------------------------------


                                            Six months ended June 30
                                   ------------------------------------------
                                                                  %increase/
                                             2007           2006  (decrease)
    -------------------------------------------------------------------------
    ($ in thousands)
     Guest revenues                     $ 840,044      $ 692,886         21%
     Charter and other                    134,275        112,225         20%
     Interest income                        9,683          5,594         73%
                                   ------------------------------------------
                                        $ 984,002      $ 810,705         21%
                                   ------------------------------------------
    RASM (cents)                            14.19          13.74        3.3%
                                   ------------------------------------------
                                   ------------------------------------------
    


    Our total guest revenues increased by 19 per cent from $377 million to
$449 million for the second quarter of 2007 on capacity growth of 16 per cent.
For the six months ended June 30, 2007, our guest revenues increased by 21 per
cent from $693 million to $840 million on capacity growth of 18 per cent. For
the second quarter and first half of 2007, our RASM increased by 2.5 per cent
and 3.3 per cent compared to the prior year periods, driven primarily by our
record load factor increases of 3.4 percentage points and 2.6 percentage
points to 80.9 per cent and 81.0 per cent respectively.
    During the second quarter of 2007, we transitioned 21 per cent of our
total capacity from our winter schedule of U.S., international and charter
destinations to Canadian domestic markets. This transition occurred in the
context of a 16 per cent year-over-year quarterly capacity increase. This
represented the largest single increase in domestic flying in our 11-year
history and the largest seasonal reallocation of capacity we have ever
undertaken. As demonstrated by our high load factors, this capacity increase
was absorbed by the market, although it contributed to a decrease in our
second quarter yield from 18.23 cents to 17.89 cents. This strategy has helped
us alleviate the traditionally seasonal fluctuation of the airline business by
optimizing the allocation of our ever-growing capacity.
    For the three and six months ended June 30, 2007, our load factors
averaged 80.9 and 81.0 per cent which are increases compared to the previous
year when the loads averaged 77.5 and 78.4 per cent respectively. Load factors
for the second quarter of 2007 and 2006 represented the highest second quarter
load factors in our history. WestJet satisfaction surveys reveal that almost
90 per cent of our guests will fly with us again and will recommend our
airline to others; therefore, we believe that our focus on load factors in the
second quarter provides a strong foundation for the upcoming quarters.
    Our charter and other revenues are up 15 and 20 per cent in the three and
six months ended June 30, 2007, compared to the prior year, due mainly to a
substantial increase in ancillary revenue including service fees and
incremental WestJet Vacations non-air revenue offset by a modest decrease in
charter revenue.

    
    COSTS

                        Three months ended June 30  Six months ended June 30
                       ------------------------------------------------------
    Cost per ASM                         %increase/                %increase/
     (cents)(1)            2007   2006   (decrease)  2007   2006   (decrease)
    -------------------------------------------------------------------------

    Aircraft fuel          3.45   3.48       (0.9%)  3.32   3.39       (2.1%)
    Airport operations     2.04   1.98        3.0%   2.12   2.06        2.9%
    Flight operations and
     navigational charges  1.84   1.88       (2.1%)  1.83   1.78        2.8%
    Sales and marketing    1.30   1.38       (5.8%)  1.21   1.29       (6.2%)
    Depreciation and
     amortization          0.89   0.93       (4.3%)  0.89   0.88        1.1%
    General and
     administration        0.72   0.72           -   0.69   0.71       (2.8%)
    Inflight               0.60   0.54       11.1%   0.58   0.52       11.5%
    Aircraft leasing       0.57   0.59       (3.4%)  0.55   0.61       (9.8%)
    Maintenance            0.54   0.53        1.9%   0.53   0.60      (11.7%)
    Interest expense       0.53   0.56       (5.4%)  0.54   0.55       (1.8%)
    Guest services         0.24   0.25       (4.0%)  0.25   0.25           -
    -------------------------------------------------------------------------
                          12.72  12.84       (0.9%) 12.51  12.64       (1.0%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CASM, excluding
     fuel(1)               9.27   9.36       (1.0%)  9.19   9.25       (0.6%)

    (1) Excludes reservation system write-down of $31.9 million
    

    In the three and six months ended June 30, 2007, we were able to grow our
capacity by 16 per cent and 18 per cent, respectively, compared to the prior
periods while also achieving a reduction in our total cost per ASM by 0.9 and
1.0 per cent for these same periods, excluding the reservation system
write-down of $31.9 million.
    Our second quarter unit costs were primarily impacted by numerous CASM
decreases from the same period last year including sales and marketing (0.08
cents or 5.8 per cent) and flight operations and navigational (0.04 cents or
2.1 per cent). These decreases were partially offset by CASM increases in
inflight (0.06 cents or 11.1 per cent) and airport operations (0.06 cents or
3.0 per cent).
    For the first half of 2007, the most significant variances in unit costs
came from CASM decreases in fuel (0.07 cents or 2.1 per cent), sales and
marketing (0.08 cents or 6.2 per cent), aircraft leasing (0.06 cents or 9.8
per cent) and maintenance (0.07 cents or 11.7 per cent) which were offset
slightly by CASM increases in inflight (0.06 cents or 11.5 per cent) and
airport operations (0.06 cents or 2.9 per cent).

    FUEL

    Fuel represents WestJet's most significant cost, representing
approximately 25 per cent of total operating expenses. In the second quarter
of 2007, our fuel cost per ASM decreased slightly from 3.48 cents to 3.45
cents compared to the same quarter in 2006. The drop in the average price of
jet fuel per litre by 2.8 per cent, due in part to a strengthening Canadian
dollar, was partially offset by an increase in fuel burn due to higher load
factors in the quarter. Year-to-date fuel cost per ASM decreased from 3.39
cents to 3.32 cents for the same reasons outlined above.
    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 June 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 on the inbound leg of
these flights.
    For the three months ended June 30, 2007, our cost per ASM increased by
3.0 per cent which is in line with the weighted average increase in airport
rates and fees across our network of destinations. We also increased our
transborder departures, as a percentage of overall departures, by
3.0 percentage points compared to the second quarter in 2006.
    For the first half of 2007, we showed a 2.9 per cent 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 3.7 percentage points
compared to the prior year. In addition, the particularly harsh Canadian
winter drove up our 2007 de-icing costs as well as our costs to accommodate
displaced guests due to cancelled or rerouted flights.

    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 second quarter of 2007, our flight operations and navigational
charge per ASM decreased by 2.1 per cent from 1.88 cents to 1.84 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 owing to
increased transborder traffic and a decrease in their rates in September 2006.
    Year-to-date cost per ASM was 2.8 per cent higher than the first half of
2006 due mainly to timing of the change in total pilot compensation agreements
offset by the decrease in NAV Canada rates.

    SALES AND MARKETING

    Sales and marketing expenses consist mainly of travel agency commissions
and advertising. For the first half of 2007, our sales and marketing CASM
decreased by 6.2 per cent compared to the prior year. In part, this gain was
due to leveraging previous market building efforts in Eastern Canada and
realizing advertising scale opportunities. In the second quarter, advertising
and promotions were down 15 per cent or $1.7 million over the previous year.
Furthermore, we continue to grow our contracted business with corporate Canada
as we add aircraft, new markets and frequency into key business markets. Our
ability to efficiently work with corporate Canada continued to improve. We are
now able to offer corporate discounts, at the time of booking, through a
multitude of channels. As well, web efforts have focused on improving the
performance of our system from the end-user perspective. A multi-stage
improvement program has been implemented and currently the performance of the
system, in terms of load time, has been reduced by more than eight seconds.
This represents a load-time performance improvement of close to 40 per cent on
westjet.com. This will contribute to increased utilization of the web which is
one of our most cost-effective booking channels.

    DEPRECIATION AND AMORTIZATION

    The most significant item impacting the comparison of our 2007 and 2006
second quarter depreciation costs was the $1.2 million in amortization of
transaction costs related to legal and financing fees on long-term debt that
were recorded in the second quarter of 2006. Starting January 1, 2007, we are
now expensing these costs as incurred, as per CICA handbook section S.3855, as
general and administration expense. No transaction costs were incurred in the
second quarter of 2007.
    Our year-to-date depreciation and amortization cost per ASM increased by
1.1 per cent to 0.89 cents from 0.88 cents. This increase is a result of the
one-time favourable adjustments recorded in the first quarter of 2006 related
to the disposals of the 737-200 capital leases, which represented the final
transition of our aircraft to a modernized, higher-efficiency Next-Generation
fleet. The impact of this adjustment was offset by $2.3 million in
amortization of transaction costs in the first half of 2006.

    INFLIGHT

    Our inflight expense consists mainly of flight attendant salaries,
benefits, travel costs and training. Our inflight CASM increased by 11.1 per
cent and 11.5 per cent for the three and six months, respectively, ended
June 30, 2007 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, bringing us to a total of 65 aircraft. We now lease a
total of 20 Next-Generation aircraft, representing 31 per cent of our total
fleet.
    Aircraft leasing costs per ASM decreased by 3.4 per cent and 9.8 per cent
in the three and six months ended June 30, 2007, respectively, primarily as a
result of the strengthening of the Canadian dollar and the dilution of
increased costs over a greater number of seat miles from the 16 and 18 per
cent growth in our operating capacity versus the prior year's comparative
periods.

    MAINTENANCE

    Our unit maintenance cost of 0.54 cents for the second quarter of 2007
was 1.9 per cent higher than in 2006 due mainly to the increase in the number
of aircraft out of warranty a year later. At June 30, 2006, six out of 57
aircraft in our fleet were out of warranty and at June 30, 2007, 20 out of 65
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 16 per cent capacity growth quarter over quarter.
    For the six months ended June 30, 2007, our unit maintenance cost of 0.53
cents was 11.7 per cent lower than the first half of 2006 due mainly to the
$4.6 million in incremental maintenance costs incurred in 2006 related to the
purchase and sale of the remaining 737-200 aircraft.

    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 is highly unlikely. As we can not assure the recovery of costs
previously capitalized in connection with the reservation system, we have
recognized an impairment loss of $31.9 million.
    Our current reservation system has been upgraded and is fully supported
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, including Travelport, to meet our strategic plan beyond 2008.

    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 $80 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
$6.9 million and $7.2 million during the three and six months ended June 30,
2007, respectively, on the revaluation of our US-dollar monetary assets. This
compares to $3.2 million and $3.0 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 28 per cent of our total
spend, primarily in fuel, aircraft leasing and certain maintenance costs.

    INCOME TAX EXPENSE (RECOVERY)

    Our tax expense for the three and six months ended June 30 in 2007 and
2006 is lower than would otherwise be expected because of substantively
enacted corporate tax rate reductions during the second quarter in both years.
In 2007, the revaluation of our future tax resulted in a recovery of
approximately $2.3 million of future income tax expense and in 2006, the
revaluation totalled approximately $11.2 million.

    FINANCIAL POSITION

    At June 30, 2007, our total cash and cash equivalents were $546 million
compared to $378 million at December 31, 2006. Our financial position remained
strong as we were able to achieve yet another increase in our working capital
ratio from 1.0 to 1.1 compared to December 31, 2006.
    Our debt-to-equity ratio at June 30, 2007 was 2.26 to 1, including
$440 million in off-balance-sheet debt related to the present value of
operating lease obligations. This compares favourably to our debt-to-equity
ratio at December 31, 2006 of 2.34 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 June 30, 2007 would have
been 2.16 to 1.

    Operating cash flow

    Operating cash flow in the second quarter and first half of 2007 was
$149 million and $294 million compared to $113 million and $196 million in the
same periods in 2006 due to growth in earnings from operations.

    Financing cash flow

    In the second quarter of 2007, our total cash flow used in financing
activities was $50 million, consisting mainly of $37 million in long-term debt
repayments and $12 million for the repurchase of WestJet shares. Under the
terms of our normal course issuer bid, which was approved in February 2007, we
repurchased 745,700 shares. This effectively eliminated the impact of dilution
resulting from the granting of shares under the terms of our stock option
program. In the second quarter of 2006, cash flow from financing activities
totalled $42 million and was made up primarily of long-term debt issuances of
$77 million, net of $31 million in long-term debt repayments.
    In the first half of 2007, our financing cash outflow totalled
$103 million and consisted mainly of $80 million in long-term debt repayments,
$12 million in repurchased shares and $9 million in deposits on future leased
aircraft. In the comparable period in 2006, cash flow from financing
activities was $146 million, which was made up of an increase of $216 million
in long-term debt to finance six aircraft offset by $59 million in long-term
debt repayments and $9 million in deposits on future leased aircraft.
    At June 30, 2007, we had commitments to take delivery, through the second
half of 2007 to 2009, of an additional 20 Next-Generation aircraft, of which
seven will be owned and 13 will be leased. In the remainder of 2007, we will
receive five aircraft (four 737-700s and one 737-800) and in 2008 and 2009, we
will receive six (five 737-700s and one 737-800) and nine aircraft (seven
737-700s and two 737-800s) respectively.
    In addition, on July 12, 2007, we signed a Letter of Intent to lease an
additional three aircraft for 2010 with options to lease three more aircraft
in 2011.

    Investing cash flow

    Cash used in investing activities for the second quarter and first half
of 2007 totalled $18 million and $19 million, respectively, compared to
$82 million and $242 million in the previous year's comparable periods. In the
current year, our investing activities were primarily related to Boeing
deposits on future aircraft deliveries 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 also primarily related to new aircraft acquisitions.
    On July 12, 2007, we received Final Commitment of US $105.6 million from
the Ex-Im Bank for the purchase of three aircraft, two of which were delivered
in July, with the third to be delivered in September 2007. We also have a
Preliminary Commitment for US $140.4 million outstanding to purchase four more
aircraft to be delivered in November 2007, two in January 2008 and another in
July 2008.
    On July 31, 2007, our board of directors approved the purchase of an
additional 20 Boeing 737-700 aircraft for delivery in 2012 and 2013. We have
an option to convert any of these aircraft to 737-800s.
    As at July 27, 2007, we had 125,656,884 shares outstanding - 125,177,597
common voting shares and 4,479,287 variable voting shares and 14,135,190 stock
options outstanding.

    ACCOUNTING POLICIES

    On January 1, 2007, we adopted the new Canadian accounting standards for
Financial Instruments - Disclosure and Presentation, Financial Instruments -
Recognition and Measurement, hedging and 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, 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.
    All derivative instruments, including embedded derivatives, are recorded
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 unless cash flow hedge accounting is used, in which case,
changes in fair value are recorded in other comprehensive income. As of
June 30, 2007, we did not have any outstanding derivative instruments.
    Effective January 1, 2007, we transferred $13.4 million of unamortized
hedging losses related to certain Boeing Next-Generation 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.
    Additional disclosure requirements for financial instruments have been
approved by the CICA and will be required disclosure beginning January 1,
2008.

    RESTRICTED SHARE UNIT PLAN

    We have a restricted share unit ("RSU") plan, whereby up to a maximum of
2,000,000 RSUs may be issued to WestJet officers and employees. 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 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. We will not issue any WestJet shares in
connection with the RSU Plan. In the second quarter of 2007, we granted 62,599
RSUs and incurred a compensation expense of $379,000 which is included in
general and administrative 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 June 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

    The third quarter looks to be a promising one from both an industry and a
WestJet perspective. From an industry perspective, two areas are worth
commenting on. Jet fuel prices continue to rise led by crude oil pricing
offset somewhat by decreasing crack spreads. This key airline input, which
represents approximately 25 per cent of WestJet's operating expenses, will put
pressure on the industry cost performance. The RASM environment, defined by
the prospects for demand and yield in Canada, looks relatively robust for the
third quarter. The economy is enabling Canadians to have ample discretionary
income to travel domestically this summer. The competitive environment is such
that most markets have two competitors who are acting rationally through this
high-demand period.
    With a healthy external environment and our cost advantages, we are
confident about the successful absorption of our planned third-quarter
capacity growth of approximately 14 per cent and the full year outlook of 15
per cent. We expect to slightly improve on year-over-year RASM in the third
quarter.
    Service to our three new destinations of Kitchener-Waterloo, Saint John
and Deer Lake has been well received. We will be continuing service on a
year-round basis to Kitchener-Waterloo and Saint John. As well, we announced
our winter schedule in the second quarter. Highlights include further
expansion into the Caribbean, including the Dominican Republic and Jamaica. In
June, we were also awarded designations to fly into Mexico.
    Overall, WestJet's guidance for the third quarter is that the company
will continue to perform in accordance with the momentum it has established
over the past several quarters.

    July 31, 2007


    
    WestJet Airlines Ltd.
    Consolidated Balance Sheets
    June 30, 2007, December 31, 2006 and June 30, 2006
    (Stated in Thousands of Dollars)
    (Unaudited)


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                        June 30    December 31       June 30
                                           2007           2006          2006
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash and cash equivalents
       (note 2)                     $   545,976    $   377,517   $   358,465
      Accounts receivable                11,072         12,645        11,780
      Income taxes recoverable              428         13,820        14,409
      Assets held for sale (note 3)           -         13,157             -
      Prepaid expenses and deposits      34,695         30,727        33,708
      Inventory                          13,326          8,200         6,774
    -------------------------------------------------------------------------
                                        605,497        456,066       425,136

    Property and equipment (note 3)   2,097,579      2,158,746     1,993,522

    Other assets (note 1)                47,843        111,715        94,740
    -------------------------------------------------------------------------
                                    $ 2,750,919    $ 2,726,527   $ 2,513,398
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders'
     Equity

    Current liabilities:
      Accounts payable and accrued
       liabilities                  $   150,499    $   121,157  $    121,134
      Advance ticket sales              228,479        148,743       201,870
      Non-refundable guest credits       42,593         40,508        34,547
      Current portion of long-term
       debt (note 4)                    148,247        153,720       132,550
      Current portion of obligations
       under capital lease
       (note 5(b))                          365            356           346
    -------------------------------------------------------------------------
                                        570,183        464,484       490,447

    Long-term debt (note 4)           1,216,505      1,291,136     1,183,234
    Obligations under capital lease
     (note 5(b))                          1,298          1,483         1,663
    Other liabilities                    11,215         14,114        14,548
    Future income tax (note 8)          153,157        149,283       108,045
    -------------------------------------------------------------------------
                                      1,952,358      1,920,500     1,797,937
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital (note 6(a))         439,088        431,248       429,711
      Contributed surplus                60,581         58,656        49,088
      Accumulated other comprehensive
       income                           (12,720)             -             -
      Retained earnings                 311,612        316,123       236,662
    -------------------------------------------------------------------------
                                        798,561        806,027       715,461
    -------------------------------------------------------------------------
    Commitments and contingencies
     (note 5)
    -------------------------------------------------------------------------
                                    $ 2,750,919    $ 2,726,527   $ 2,513,398
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    WestJet Airlines Ltd.
    Consolidated Statements of Shareholders' Equity
    June 30, 2007 and June 30, 2006
    (Stated in Thousands of Dollars)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         Accumulated
    For the six                         other compre-
     months ended      Share Contributed     hensive    Retained
     June 30, 2007   capital     surplus      income    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         -           -           -      41,404      41,404
      Amortization of
       hedge
       settlements         -           -         700           -         700
    -------------------------------------------------------------------------
    Total comprehensive
     income                                                           42,104
    Issuance of shares
     pursuant to stock
     option plans
     (note 6(a))       1,467           -           -           -       1,467
    Stock-based
     compensation
     expense
     (note 6(d))           -      10,801           -           -      10,801
    Stock-based
     compensation on
     stock options
     exercised
     (note 6(a))       8,876      (8,876)          -           -           -
    Shares repurchased
     (note 6(a))      (2,503)          -           -      (9,303)    (11,806)
    -------------------------------------------------------------------------
    Balance at
     June 30,
     2007          $ 439,088    $ 60,581   $ (12,720)  $ 311,612   $ 798,561
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the six months ended June 30, 2006
    -------------------------------------------------------------------------
    Balance at
     December 31,
     2005          $ 429,613    $ 39,093   $       -   $ 201,447   $ 670,153
    Net earnings           -           -           -      35,215      35,215
    Stock-based
     compensation expense
     (note 6(d))           -      10,100           -           -      10,100
    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
     June 30,
     2006          $ 429,711    $ 49,088   $       -   $ 236,662   $ 715,461
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    WestJet Airlines Ltd.
    Consolidated Statements of Earnings
    For the periods ended June 30, 2007 and 2006
    (Stated in Thousands of Dollars, Except Per Share Amounts)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30               June 30
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Revenues:
      Guest revenues              $ 449,312  $ 377,107  $ 840,044  $ 692,886
      Charter and other              50,198     43,634    134,275    112,225
      Interest income                 5,284      3,231      9,683      5,594
    -------------------------------------------------------------------------
                                    504,794    423,972    984,002    810,705
    Expenses:
      Aircraft fuel                 120,271    104,543    230,482    200,045
      Airport operations             71,134     59,437    147,246    121,709
      Flight operations and
       navigational charges          64,177     56,423    126,968    105,269
      Sales and marketing            45,428     41,533     84,195     75,936
      Loss on impairment of
       assets (note 3)               31,881          -     31,881          -
      Depreciation and
       amortization                  31,009     27,781     62,031     51,832
      General and administration     25,108     21,673     47,967     41,740
      Inflight                       20,811     16,332     40,296     30,776
      Aircraft leasing               19,835     17,610     38,310     36,103
      Maintenance                    19,144     15,673     37,558     34,983
      Interest                       18,418     16,897     37,190     32,453
      Guest services                  8,329      7,471     17,264     14,983
    -------------------------------------------------------------------------
                                    475,545    385,373    901,388    745,829
    -------------------------------------------------------------------------

    Earnings from operations         29,249     38,599     82,614     64,876

    Non-operating income (expense):
      Loss on foreign exchange       (6,912)    (3,218)    (7,234)    (2,952)
      Gain (loss) on disposal
       of property and equipment         (6)       (33)       497        801
      Non-recurring expenses
       (note 5(c))                        -    (15,600)         -    (15,600)
    -------------------------------------------------------------------------
                                     (6,918)   (18,851)    (6,737)   (17,751)

    Employee profit share (note 7)   (5,320)    (2,122)   (11,974)    (4,969)
    -------------------------------------------------------------------------

    Earnings before income taxes     17,011     17,626     63,903     42,156
    Income tax (expense)
      recovery (note 8):
      Current                        (1,314)      (252)    (2,303)    (1,544)
      Future                         (4,148)     4,981    (20,196)    (5,397)
    -------------------------------------------------------------------------
                                     (5,462)     4,729    (22,499)    (6,941)
    -------------------------------------------------------------------------
    Net earnings                  $  11,549  $  22,355  $  41,404  $  35,215
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Earnings per share (note 6(c)):

      Basic                       $    0.09  $    0.17  $    0.32  $    0.27
      Diluted                     $    0.09  $    0.17  $    0.32  $    0.27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    WestJet Airlines Ltd.
    Notes to Consolidated Financial Statements
    For the periods ended June 30, 2007 and 2006
    (Tabular Dollar Amounts are Stated in Thousands, Except Share and
     Per Share Data)
    (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30               June 30
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Cash flows from (used in):

    Operating activities:
      Net earnings                $  11,549  $  22,355  $  41,404  $  35,215
      Items not involving cash:
        Depreciation and
         amortization                31,009     27,781     62,031     51,832
        Amortization of other
         liabilities                   (217)      (217)      (434)      (434)
        Amortization of hedge
         settlements                    350        347        700        695
        Loss on disposal of
         property, equipment
         and aircraft parts
         (note 3)                    32,001      1,004     31,581        217
        Stock-based compensation
         expense (note 6(d))          5,730      5,417     11,180     10,100
        Future income tax expense
         (recovery)                   4,148     (4,981)    20,196      5,397
        Unrealized foreign
         exchange loss                7,764      3,469      8,064      3,163
        Decrease in non-cash
         working capital             56,571     57,560    118,812     89,571
    -------------------------------------------------------------------------
                                    148,905    112,735    293,534    195,756
    -------------------------------------------------------------------------

    Financing activities:
      Repayment of long-term debt
       (note 4)                     (37,046)   (30,727)   (80,104)   (59,247)
      Increase in long-term debt
       (note 4)                           -     77,316          -    216,197
      Decrease in obligations
       under capital lease
       (note 5(b))                      (88)       (84)      (176)      (310)
      Share issuance costs
       (note 6(a))                        -        (10)         -        (10)
      Shares repurchased
       (note 6(a))                  (11,806)         -    (11,806)         -
      Increase in other assets         (133)    (3,484)    (9,264)    (9,185)
      Issuance of common shares
       (note 6(a))                    1,343          -      1,467          -
      Increase in non-cash working
       capital                       (2,627)    (1,071)    (2,627)    (1,071)
    -------------------------------------------------------------------------
                                    (50,357)    41,940   (102,510)   146,374
    -------------------------------------------------------------------------

    Investing activities:
      Aircraft additions             (9,946)   (58,882)   (22,174)  (218,615)
      Aircraft disposals                  -         40          -      3,760
      Other property and equipment
       additions                     (8,347)   (23,461)   (10,772)   (28,237)
      Other property and equipment
       disposals                         21         37     13,781      1,472
    -------------------------------------------------------------------------
                                    (18,272)   (82,266)   (19,165)  (241,620)
    -------------------------------------------------------------------------
    Cash flow from operating,
     investing and financing
     activities                      80,276     72,409    171,859    100,510
    Effect of exchange rate on cash
     and cash equivalents (note 2)   (3,344)    (2,044)    (3,400)    (1,685)
    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents                     76,932     70,365    168,459     98,825
    Cash and cash equivalents,
     beginning of period            469,044    288,100    377,517    259,640
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                $ 545,976  $ 358,465  $ 545,976  $ 358,465
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash interest paid            $ (18,462) $ (15,713) $ (37,798) $ (30,491)
    Cash taxes received (paid)    $   1,269  $  (1,102) $  11,089  $  (2,044)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    The interim consolidated financial statements of WestJet Airlines Ltd.
("WestJet" or "the Corporation") have been prepared by management in
accordance with accounting principles generally accepted in Canada. 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.


    
    1. Change in accounting policies:

    On January 1, 2007, the Corporation adopted the new Canadian accounting
    standards for Financial Instruments - Disclosure and Presentation,
    Financial Instruments - Recognition and Measurement, Hedging and
    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
    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 unless cash flow hedge accounting is
    used, in which case, changes in fair value are recorded in other
    comprehensive income. As of June 30, 2007, the Corporation did not have
    any outstanding derivative instruments.

    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.

    Additional disclosure requirements for financial instruments have been
    approved by the Canadian Institute of Chartered Accountants and will be
    required disclosure for fiscal years beginning January 1, 2008.

    2. Financial instruments:

    At June 30, 2007, the Corporation had US dollar cash and cash equivalents
    totalling US $39,576,000 (December 31, 2006 - US $32,019,000;
    June 30, 2006 - US $40,048,000).

    As at June 30, 2007, cash and cash equivalents included US $170,000 of
    restricted cash (December 31, 2006 - US $5,279,000; June 30, 2006 -
    US $8,959,000) and CAD $1,475,000 (December 31, 2006 - CAD $1,858,000,
    June 30, 2006 - CAD $NIL) of restricted cash. US $139,000 (December 31,
    2006 - US $186,000; June 30, 2006 - US $125,000) is cash not yet remitted
    for passenger facility charges.

    3. Property and equipment:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                Accumulated
    June 30, 2007                       Cost   depreciation   Net book value
    -------------------------------------------------------------------------
    Aircraft                     $ 2,091,510      $ 235,579      $ 1,855,931
    Ground property and
     equipment                       157,273         74,468           82,805
    Spare engines and parts           75,066         11,826           63,240
    Buildings                         40,028          5,325           34,703
    Leasehold improvements             7,130          4,856            2,274
    Assets under capital lease         2,481            942            1,539
    -------------------------------------------------------------------------
                                   2,373,488        332,996        2,040,492
    Deposits on aircraft              54,389              -           54,389
    Assets under development           2,698              -            2,698
    -------------------------------------------------------------------------
                                 $ 2,430,575      $ 332,996      $ 2,097,579
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                Accumulated
    December 31, 2006                   Cost   depreciation   Net book 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
    June 30, 2006                       Cost   depreciation   Net book value
    -------------------------------------------------------------------------
    Aircraft                     $ 1,846,743      $ 141,280      $ 1,705,463
    Ground property and
     equipment                       150,690         56,711           93,979
    Spare engines and parts           84,700         10,938           73,762
    Buildings                         39,501          4,318           35,183
    Leasehold improvements             6,519          4,273            2,246
    Assets under capital lease         2,481            445            2,036
    -------------------------------------------------------------------------
                                   2,130,634        217,965        1,912,669
    Deposits on aircraft              57,661              -           57,661
    Assets under development          23,192              -           23,192
    -------------------------------------------------------------------------
                                 $ 2,211,487      $ 217,965      $ 1,993,522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 have agreed to discontinue such negotiations
    and the Corporation has concluded that it is highly unlikely that
    implementation will occur in the near term. As the Corporation can not
    assure the recovery of costs previously capitalized in connection with
    the reservations system, it has recognized an impairment loss of
    $31,881,000.

    During the three and six months ended June 30, 2007, the Corporation
    expensed $114,000 and $197,000, respectively (three months ended June 30,
    2006 - $971,000; six months ended June 30, 2006 - $1,018,000), of
    aircraft parts deemed to be beyond economic repair, which were included
    in maintenance expense.

    4. Long-term debt:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                           June 30  December 31      June 30
                                              2007         2006         2006
    -------------------------------------------------------------------------
    $1,709,467,000 in 45 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 5.31%, maturing
    between 2014 and 2018. These
    facilities are guaranteed by the
    Ex-Im Bank and secured by 32
    700-series aircraft and 13
    600-series aircraft.               $ 1,322,212  $ 1,393,439  $ 1,260,933

    $35,000,000 in three individual
    term loans, repayable in monthly
    installments ranging from $104,000
    to $166,000, including floating
    interest at the bank's prime rate
    plus 0.88%, with an effective
    interest rate of 6.88% as at
    June 30, 2007, maturing in 2008
    and 2011, secured by three
    Next-Generation flight simulators.      24,797       26,223       27,580

    $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 4.40% as
    at June 30, 2007, maturing between
    2007 and 2011, guaranteed by the
    Ex-Im Bank and secured by certain
    700-series and 600-series aircraft.      4,651       11,699       13,396

    $12,000,000 term loan repayable
    in monthly installments of
    $108,000, including interest at
    9.03%, maturing April 2011,
    secured by the Calgary hangar
    facility.                               10,240       10,426       10,597

    $4,550,000 term loan repayable
    in monthly installments of $50,000,
    including floating interest at the
    bank's prime plus 0.50%, with an
    effective interest rate of 6.50%
    as at June 30, 2007, maturing
    April 2013, secured by the
    Calgary hangar facility.                 2,852        3,069        3,278

    -------------------------------------------------------------------------
                                         1,364,752    1,444,856    1,315,784
    Less current portion                   148,247      153,720      132,550
    -------------------------------------------------------------------------
                                       $ 1,216,505  $ 1,291,136  $ 1,183,234
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    2007                                                         $    74,128
    2008                                                             161,239
    2009                                                             145,407
    2010                                                             144,737
    2011                                                             157,465
    2012 and thereafter                                              681,776
    -------------------------------------------------------------------------
                                                                 $ 1,364,752
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Subsequent to June 30, 2007, the Corporation converted a preliminary
    commitment to final commitment from Ex-Im Bank for three aircraft to be
    delivered between July 2007 and September 2007 for a total value of
    US $105.6 million. Subsequent to June 30, 2007 the Corporation has taken
    delivery on two aircraft under this facility and has drawn a total of
    CAD $74.1 million (US $70.6 million).The Corporation has 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.

    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 is
    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:

    The Corporation has committed to purchase six 737-700s, and one 737-800
    Next-Generation aircraft for delivery between 2007 and 2008. Subsequent
    to June 30, 2007, the Corporation has committed to purchase an additional
    20 737-700s aircraft for delivery in 2012 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                                                         $   143,289
    2008                                                             101,984
    2009                                                               7,342
    2010                                                               2,432
    2011                                                                 271
    2012 and thereafter                                              852,735
    -------------------------------------------------------------------------
                                                                 $ 1,108,053
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 Leases   Operating Leases
    -------------------------------------------------------------------------
    2007                                         $    222        $    49,749
    2008                                              444            111,628
    2009                                              444            130,599
    2010                                              698            154,491
    2011                                               38            155,597
    2012 and thereafter                                 -            746,094
    -------------------------------------------------------------------------
    Total lease payments                            1,846        $ 1,348,158
                                                            -----------------
                                                            -----------------
    Less imputed interest at 5.29%                   (183)
    ------------------------------------------------------
    Net minimum lease payments                      1,663
    Less current portion of obligations
     under capital lease                             (365)
    ------------------------------------------------------
    Obligations under capital lease               $ 1,298
    ------------------------------------------------------
    ------------------------------------------------------

    The Corporation has committed to lease an additional 10 737-700 aircraft
    and three 737-800 aircraft to be delivered between 2007 and 2009 for
    terms ranging between eight and 10 years in US dollars. Subsequent to
    June 30, 2007, the Corporation has committed to lease an additional two
    737-700 aircraft and one 737-800 aircraft to be delivered in 2010 for
    terms ranging between eight and 10 years in US dollars. These amounts
    have been included at their Canadian dollar equivalent in the table on
    the previous page with the US dollar equivalent in the following table:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    2007                                                         $    39,646
    2008                                                              93,996
    2009                                                             117,602
    2010                                                             142,169
    2011                                                             145,758
    2012 and thereafter                                              687,874
    -------------------------------------------------------------------------
                                                                 $ 1,227,045
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 $5.5 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 accepted the Corporation's apology and 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). The principal allegations were
    that the Defendants conspired together to unlawfully obtain Jetsgo's
    proprietary information and to use this proprietary information to harm
    Jetsgo. Jetsgo was seeking damages in an unspecified amount to be
    determined prior to trial plus $50 million for spoliation, punitive and
    exemplary damages. Jetsgo provided no details or evidence to substantiate
    its claim. 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     Six Months Ended  Twelve Months Ended
                     June 30, 2007        June 30, 2007    December 31, 2006
    -------------------------------------------------------------------------
                   Number   Amount      Number   Amount      Number   Amount
    -------------------------------------------------------------------------

    Common and
     variable
     voting
     shares:

    Balance,
     beginning
     of
     period   129,902,322 $435,016 129,648,688 $431,248 129,575,099 $429,613
    Exercise
     of options
     (cash and
     cashless)    493,637    1,343     747,271    1,467      73,589        -
    Stock-based
     compensation
     expense on
     stock options
     exercised          -    5,232           -    8,876           -    1,642
    Shares
     repurchased (745,700)  (2,503)   (745,700)  (2,503)          -        -
    Share issuance
     costs              -        -           -        -           -      (10)
    Tax benefit of
     issue costs        -        -           -        -           -        3
    -------------------------------------------------------------------------
    Balance,
     end of
     period   129,650,259 $439,088 129,650,259 $439,088 129,648,688 $431,248
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   Three Months Ended       Six Months Ended
                                        June 30, 2006          June 30, 2006
    -------------------------------------------------------------------------
                                     Number    Amount       Number    Amount
    -------------------------------------------------------------------------

    Common and variable voting
     shares:

    Balance, beginning of
     period                     129,578,305 $ 429,718  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)           -       (10)
    Tax benefit of issue costs            -         3            -         3
    -------------------------------------------------------------------------
    Balance, end of period      129,578,305 $ 429,711  129,578,305 $ 429,711
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at June 30, 2007, the number of common voting shares and variable
    voting shares amounted to 125,178,225 (December 31, 2006 - 124,495,951;
    June 30, 2006 - 121,826,524) and 4,472,034 (December 31, 2006 -
    5,152,737; June 30, 2006 - 7,751,781), respectively.

    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 months ended June 30, 2007, the Corporation
    purchased 745,700 shares under the bid for total consideration of
    $11,806,000. The $9,303,000 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        Six Months Ended
                                       June 30, 2007           June 30, 2007
    -------------------------------------------------------------------------
                                            Weighted                Weighted
                                             average                 average
                              Number of     exercise   Number of    exercise
                                options        price     options       price
    -------------------------------------------------------------------------
    Stock options outstanding,
     beginning of period     13,964,545   $    13.35  15,046,201  $    13.21
    Issued                    1,634,999        16.43   1,645,958       16.42
    Exercised                (1,342,644)       11.44  (2,304,196)      11.35
    Forfeited                   (25,032)       13.98    (156,095)      13.00
    Expired                           -            -           -           -
    -------------------------------------------------------------------------
    Stock options outstanding,
     end of period           14,231,868   $    13.89  14,231,868  $    13.89
    -------------------------------------------------------------------------
    Exercisable, end of
     period                   6,351,375   $    15.08   6,351,375  $    15.08
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                         Twelve Months Ended
                                                           December 31, 2006
    -------------------------------------------------------------------------
                                                                    Weighted
                                                                     average
                                                       Number of    exercise
                                                         options       price
    -------------------------------------------------------------------------
    Stock options outstanding,
     beginning of period                              11,428,718  $    13.94
    Issued                                             5,980,660       11.82
    Exercised                                           (433,129)      11.21
    Forfeited                                           (332,711)      13.19
    Expired                                           (1,597,337)      13.78
    -------------------------------------------------------------------------
    Stock options outstanding,
     end of period                                    15,046,201  $    13.21
    -------------------------------------------------------------------------
    Exercisable, end of period                         4,846,236  $    13.63
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   Three Months Ended       Six Months Ended
                                        June 30, 2006          June 30, 2006
    -------------------------------------------------------------------------
                                             Weighted               Weighted
                                              average                average
                                Number of    exercise  Number of    exercise
                                  Options       price    Options       price
    -------------------------------------------------------------------------
    Stock options outstanding,
     beginning of period       11,337,573  $    13.94 11,428,718  $    13.94
    Issued                      5,862,405       11.82  5,879,979       11.82
    Exercised                           -           -    (27,736)      11.21
    Forfeited                     (21,860)      13.49    (81,756)      14.42
    Expired                    (1,551,060)      13.82 (1,572,147)      13.80
    -------------------------------------------------------------------------
    Stock options outstanding,
     end of period             15,627,058  $    13.16 15,627,058  $    13.16
    -------------------------------------------------------------------------
    Exercisable, end of period  5,264,888  $    13.44  5,264,888  $    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 six months ended June 30, 2007, option holders
    exercised 1,222,877 and 2,173,400 options, respectively (12 months ended
    December 31, 2006 - 433,129 options; three months ended June 30, 2006 -
    NIL options; six months ended June 30, 2006 - 27,736 options) on a
    cashless settlement basis and received 373,870 and 616,475 shares,
    respectively (12 months ended December 31, 2006 - 73,589 shares; three
    months ended June 30, 2006 - NIL shares; six months ended June 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        Six Months Ended
                                             June 30                 June 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding
     - basic                 129,870,817 129,578,305 129,827,284 129,577,787
    Effect of dilutive
     employee stock options    1,240,874      55,252     827,102      97,962
    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding
     - diluted               131,111,691 129,633,557 130,654,386 129,675,749
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the three and six month periods ended June 30, 2007, 2,041,356 and
    4,823,034 (three months ended June 30, 2006 - 12,981,013; six months
    ended June 30, 2006 - 12,981,013) 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
    $5,730,000 and $10,801,000 for the three and six months ended June 30,
    2007, respectively (three months ended June 30, 2006 - $5,417,000; six
    months ended June 30, 2006 - $10,100,000).

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

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      Three Months Ended    Six Months Ended
                                                 June 30             June 30
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Weighted average fair market value
     per option                         $ 5.65    $ 4.29    $ 5.65    $ 4.29
    Average risk-free interest rate      4.20%     4.24%     4.20%     4.24%
    Average volatility                     38%       42%       38%       42%
    Expected life (years)                  3.7       3.6       3.7       3.6
    Dividends per share                 $    -    $    -    $    -    $    -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Corporation has a restricted share unit (RSU) plan, whereby up to a
    maximum of 2,000,000 RSUs may be issued to officers and employees 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 six months ended June 30, 2007, 62,599 RSUs were
    granted with $379,000 of compensation expense included in general and
    administrative expenses and accrued liabilities. Each RSU granted vests
    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 percent
    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 three and six months ended June 30, 2007.

    9. Comparative figures:

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

    Conference call information

    WestJet will hold a live analysts' conference call today at 9 a.m. MT
(11 a.m. ET). Sean Durfy, President and Vito Culmone, Executive
Vice-President, Finance and CFO will discuss WestJet's second quarter 2007
results and answer questions from financial analysts. Following the analysts'
question period, members of the media are invited to participate in a question
and answer session as time permits. 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, (403) 444-2615,
Website: www.westjet.com


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