News Releases

WestJet reports all-time high quarterly net earnings

Airline achieves 40th consecutive profitable quarter and record return on invested capital

CALGARY, May 5, 2015 /CNW/ - WestJet (TSX: WJA) today announced its first quarter results for 2015, with record net earnings of $140.7 million, or $1.09 per diluted share. This compares with the net earnings of $89.3 million, or $0.69 per diluted share reported in the first quarter of 2014, up 57.6 per cent and 58.0 per cent, respectively. WestJet achieved an on-time performance rate of 78.0 per cent in the first quarter, a year-over-year improvement of 10.1 percentage points. Based on the trailing twelve months, the airline achieved a return on invested capital of 15.8 per cent, compared with the 14.3 per cent reported in the previous quarter.

"We started 2015 with a record quarter as we achieved our best ever quarterly net earnings and earnings per share, exceeded our 12 per cent ROIC target for the 11th consecutive quarter by achieving an all-time high of 15.8 per cent, and saw our operating margin expand by 5.6 percentage points to 18.2 per cent," said WestJet President and CEO Gregg Saretsky. "I thank our more than 10,000 WestJetters for the passion and positivity they exhibit every day as they remain focused on providing our guests with a remarkable experience. WestJetters are at the core of our success, and I am very excited to celebrate that success with a record profit share pay out later this month."

Operating highlights (stated in Canadian dollars)

  Q1 2015 Q1 2014 Change
Net earnings (millions) $140.7 $89.3 57.6%
Diluted earnings per share $1.09 $0.69 58.0%
Total revenues (millions) $1,083.5 $1,042.1 4.0%
Operating margin 18.2% 12.6% 5.6 pts
ASMs (available seat miles) (billions) 6.819 6.515 4.7%
RPMs (revenue passenger miles) (billions) 5.566 5.416 2.8%
Load factor 81.6% 83.1% (1.5 pts)
Segment guests 4,914,579 4,806,685 2.2%
Yield (revenue per revenue passenger mile) (cents) 19.47 19.24 1.2%
RASM (revenue per available seat mile) (cents) 15.89 16.00 (0.7%)
CASM (cost per available seat mile) (cents) 13.00 13.98 (7.0%)
CASM, excluding fuel and employee profit share (cents)* 9.18 9.28 (1.1%)

*Refer to reconciliations in the accompanying tables for further information regarding calculations.

Normal course issuer bid
Today, WestJet also announced intention, upon the expiry of the 12-month period of its 2014 normal course issuer bid, to make an application to the Toronto Stock Exchange to initiate a further normal course issuer bid to purchase up to 1.6 per cent of its currently issued and outstanding shares.

Dividend declaration
On May 4, 2015, WestJet's Board of Directors declared a cash dividend of $0.14 per common voting share and variable voting share for the second quarter of 2015, to be paid on June 30, 2015, to shareholders of record on June 17, 2015. All dividends paid by WestJet are, pursuant to subsection 89(14) of the Income Tax Act, designated as eligible dividends, unless indicated otherwise. An eligible dividend paid to a Canadian resident is entitled to the enhanced dividend tax credit.

Caution regarding forward-looking information
Certain information set forth in this news release, including, without limitation, information regarding our intention upon the expiry of the 12-month period of our 2014 normal course issuer bid, to make an application to the Toronto Stock Exchange to initiate a further normal course issuer bid. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond WestJet's control. The forward-looking information contained in this news release is based on WestJet's current forecasts and strategy, the expected demand environment, the utilization of our fleet, the forward-curve for jet fuel price, the expected exchange rate of the Canadian dollar to the U.S. dollar, agreements and bookings, but may vary due to factors including, but not limited to, changes in guest demand, changes in fuel prices, delays in aircraft delivery, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems and other factors and risks described in WestJet's public reports and filings which are available under WestJet's profile at sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking information as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.

Non-GAAP measures
This news release contains disclosure respecting non-GAAP performance measures including, without limitation, CASM, excluding fuel and employee profit share and return on invested capital. These measures are included to enhance the overall understanding of WestJet's current financial performance and to provide an alternative method for assessing WestJet's operating results in a manner that is focused on the performance of WestJet's ongoing operations, and to provide a more consistent basis for comparison between reporting periods. These measures are not calculated in accordance with, or an alternative to, GAAP and do not have standardized meanings. Therefore, they may not be comparable to similar measures provided by other entities. Readers are urged to review the section entitled "Reconciliation of non-GAAP and additional GAAP measures" in WestJet's management's discussion and analysis of financial results for the three months ended March 31, 2015, which is available under WestJet's profile on SEDAR at sedar.com, for a further discussion of such non-GAAP measures and a reconciliation of such measures to GAAP. The financial information accompanying this news release was prepared in accordance with International Financial Reporting Standards unless otherwise noted.

Management's discussion and analysis of financial results and consolidated financial statements and notes for the three months ended March 31, 2015, are available through the Internet in the Media and Investor Relations section of westjet.com or under WestJet's SEDAR profile at sedar.com.

Analyst conference call
WestJet will hold its quarterly analysts' conference call today, May 5, 2015, at 8 a.m. MDT (10 a.m. EDT). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Vito Culmone will discuss WestJet's first quarter results and answer questions from financial analysts and members of the media. The conference call will be available in Toronto by calling 416-915-3239, in Vancouver by calling 604-638-5340 and across Canada and the United States through the toll-free telephone number 1-800-319-4610. The call can also be heard live through an Internet webcast accessible via the Media and Investor Relations section of westjet.com.

Annual general meeting (AGM)
WestJet will hold its AGM today, May 5, 2015, at 10 a.m. MDT (12 p.m. EDT) at WestJet's Calgary Campus at 22 Aerial Place NE. The AGM webcast will be available live in the Media and Investor Relations section of westjet.com.

About WestJet
We are proud to be Canada's most-preferred airline, powered by an award-winning culture of care and recognized as one of the country's top employers. We offer scheduled service to more than 90 destinations in North America, Central America, the Caribbean and Europe. Through our regional airline, WestJet Encore, and with partnerships with airlines representing every major region of the world, we offer our guests more than 120 destinations in more than 20 countries. Leveraging WestJet's extensive network, flight schedule and remarkable guest experience, WestJet Vacations delivers affordable, flexible travel experiences with a variety of accommodation options for every guest. Members of our WestJet Rewards program earn WestJet dollars on flights, vacation packages and more. Our members use WestJet dollars towards the purchase of WestJet flights and vacation packages on any day, at any time, to any WestJet destination with no blackout periods  ̶  even on seat sales. For more information about everything WestJet, please visit westjet.com.

Recent recognition includes:
2015 Best Employers in Canada (Aon Hewitt)
2014 Interbrand Canada's Best Canadian Brands (Rank #20)
2014 Brands of the Year (Strategy magazine)
2014 Canada's Most Preferred Airline (Ipsos)
2014 Value Airline of the Year (Air Transport World magazine)
2014/2013/2012 Canada's Most Attractive Employer (Randstad)
2014/2013 WestJet RBC MasterCard ranked #1 in Canada (Money Sense magazine and RewardsCanada.ca)
2014/2013/2012/2011 Highest equity score: airline, vacation package supplier brands (Harris/Decima EquiTrend Study)

Connect with WestJet on Facebook at facebook.com/westjet
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Read the WestJet blog at blog.westjet.com

Condensed Consolidated Statement of Earnings
For the three months ended March 31
(Stated in thousands of Canadian dollars, except per share amounts)
(Unaudited)
     
  2015 2014
     
Revenue:    
     Guest 956,946 936,829
      Other 126,551 105,261
  1,083,497 1,042,090
Operating expenses:    
  Aircraft fuel 210,445 284,836
  Airport operations 137,616 127,361
  Flight operations and navigational charges 125,222 116,145
  Sales and distribution 98,269 101,310
  Marketing, general and administration 58,083 52,221
  Depreciation and amortization 57,179 61,022
  Maintenance 53,721 52,795
  Inflight 48,384 44,702
  Aircraft leasing 47,655 49,108
  Employee profit share 49,763 20,998
  886,337 910,498
Earnings from operations 197,160 131,592
     
Non-operating income (expense):    
  Finance income 4,219 4,357
  Finance costs (13,921) (11,668)
  Gain (loss) on foreign exchange (627) (1,487)
  Gain (loss) on disposal of property and equipment 5,618 11
  (4,711) (8,787)
Earnings before income tax 192,449 122,805
     
Income tax expense (recovery):    
  Current 39,576 44,694
  Deferred 12,136 (11,180)
  51,712 33,514
Net earnings 140,737 89,291
     
Earnings per share:    
  Basic 1.11 0.70
  Diluted 1.09 0.69


Condensed Consolidated Statement of Financial Position
(Stated in thousands of Canadian dollars)
(Unaudited)
     
  March 31
2015 		December 31
2014
Assets    
Current assets:    
  Cash and cash equivalents 1,405,339 1,358,071
  Restricted cash 54,104 58,149
  Accounts receivable 74,931 54,950
  Prepaid expenses, deposits and other 133,941 144,192
  Inventory 38,536 36,658
   Assets held for sale 34,199 78,306
  1,741,050 1,730,326
Non-current assets:    
  Property and equipment 2,958,330 2,793,194
  Intangible assets 62,454 60,623
  Other assets 79,660 62,290
  Total assets 4,841,494 4,646,433
     
Liabilities and shareholders' equity    
Current liabilities:    
  Accounts payable and accrued liabilities 504,244 415,562
  Advance ticket sales 530,856 575,781
  Deferred Rewards program 97,152 86,870
  Non-refundable guest credits 40,239 45,434
  Current portion of maintenance provisions 32,303 54,811
  Current portion of long-term debt 161,254 159,843
  1,366,048 1,338,301
Non-current liabilities:    
  Maintenance provisions 240,740 191,768
  Long-term debt 1,052,583 1,028,820
  Other liabilities 17,765 13,150
  Deferred income tax 309,857 296,892
  Total liabilities 2,986,993 2,868,931
     
Shareholders' equity:    
  Share capital 596,547 603,287
  Equity reserves 74,671 75,094
  Hedge reserves (479) (3,179)
  Retained earnings 1,183,762 1,102,300
Total shareholders' equity 1,854,501 1,777,502
     
Total liabilities and shareholders' equity 4,841,494 4,646,433



Condensed Consolidated Statement of Cash Flows
For the three months ended March 31
(Stated in thousands of Canadian dollars)
(Unaudited)
     
  2015 2014
     
Operating activities:    
Net earnings 140,737 89,291
Items not involving cash:    
  Depreciation and amortization 57,179 61,022
  Change in maintenance provisions 5,140 432
  Change in other liabilities (186) (75)
  Amortization of hedge settlements 350 350
  (Gain) loss on disposal of property and equipment (5,618) (11)
  Share-based payment expense 3,500 3,858
  Deferred income tax expense (recovery) 12,136 (11,180)
  Unrealized foreign exchange (gain) loss (7,352) (2,808)
Change in non-cash working capital 63,819 (93,258)
Change in restricted cash 4,045 11,559
Change in other assets (9,205) 8,551
Purchase of shares pursuant to compensation plans (7,962) (5,432)
  256,583 62,299
     
Investing activities:    
Aircraft additions (203,017) (136,963)
Aircraft disposals 47,434 58
Other property and equipment and intangible additions (16,969) (9,757)
  (172,552) (146,662)
     
Financing activities:    
Increase in long-term debt 66,324 32,430
Repayment of long-term debt (41,266) (47,674)
Shares repurchased (44,305) (24,724)
Dividends paid (17,672) (15,325)
Issuance of shares pursuant to compensation plans - 40
Cash interest paid (15,339) (10,186)
Change in non-cash working capital (3,370) (418)
  (55,628) (65,857)
     
Cash flow from operating, investing and financing activities 28,403 (150,220)
Effect of foreign exchange on cash and cash equivalents 18,865 6,699
Net change in cash and cash equivalents 47,268 (143,521)
     
Cash and cash equivalents, beginning of period 1,358,071 1,256,005
     
Cash and cash equivalents, end of period 1,405,339 1,112,484
     
Supplemental disclosure of operating cash flows    
Cash interest received 4,642 4,492
Cash taxes paid, net (31,272) (129,662)


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

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

   
  Three months ended March 31
  2015 2014 Change
Operating expenses 886,337 910,498 (24,161)
Aircraft fuel expense (210,445) (284,836) 74,391
Employee profit share expense (49,763) (20,998) (28,765)
Operating expenses, adjusted 626,129 604,664 21,465
ASMs 6,818,613,161 6,514,585,070 4.7%
CASM, excluding above items (cents) 9.18 9.28 (1.1%)

Return on invested capital
(Stated in thousands of Canadian dollars, except percentages)
(Unaudited)

ROIC is a measure commonly used to assess the efficiency with which a company allocates its capital to generate returns. Return is calculated based on our earnings before tax, excluding special items, finance costs and implied interest on our off-balance-sheet aircraft leases. Invested capital includes average long-term debt, average finance lease obligations, average shareholders' equity and off-balance-sheet aircraft operating leases.

       
  March 31
2015 		December 31
2014 		Change
Earnings before income taxes 459,951 390,307 69,644
   Special item(i) 45,459 45,459 -
Adjusted earnings before income taxes 505,410 435,766 69,644
Add:      
   Finance costs 54,091 51,838 2,253
   Implicit interest in operating leases(ii) 95,023 95,786 (763)
  654,524 583,390 71,134
Invested capital:      
   Average long-term debt(iii) 1,038,516 1,033,529 4,987
   Average shareholders' equity 1,746,001 1,683,671 62,330
   Off-balance-sheet aircraft leases(iv) 1,357,478 1,368,375 (10,897)
  4,141,995 4,085,575 56,420
Return on invested capital 15.8% 14.3% 1.5 pts
(i)      Pre-tax non-cash loss recorded in the third quarter of 2014 associated with the sale of 10 aircraft to Southwest.
(ii)      Interest implicit in operating leases is equal to 7.0 per cent of 7.5 times the trailing 12 months of aircraft lease expense. 7.0 per cent is a proxy and does not necessarily represent actual for any given period.
(iii)      Average long-term debt includes the current portion and long-term portion.
(iv)      Off-balance-sheet aircraft leases are calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. At March 31, 2015, the trailing 12 months of aircraft leasing expense totaled $180,997 (December 31, 2014 - $182,450).

 

 

 

 

SOURCE WestJet

For further information:

WestJet Media Relations
1-888-WJ-4-NEWS (1-888-954-6397)
Email: media@westjet.com

WestJet Investor Relations
1-877-493-7853 Email: investor_relations@westjet.com 

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