News Releases

WestJet reports record full-year results

Airline achieves record full-year net earnings of $368 million, up 16 per cent year over year
Announces plans to increase normal course issuer bid by 2 million shares

CALGARY, Feb. 2, 2016 /CNW/ - WestJet (TSX: WJA) today announced its fourth quarter and year-end results for 2015, with record full-year net earnings of $367.5 million, or $2.92 per diluted share. This compares with the adjusted net earnings¹ of $317.2 million, or $2.46 per diluted share reported in the full-year 2014, up 16 per cent and 19 per cent, respectively. For the fourth quarter, the airline reported diluted earnings per share of $0.51, down 27 per cent from $0.70 reported last year. These fourth quarter 2015 results include a pre-tax loss on foreign exchange of $10.1 million.

This represents WestJet's 43^rd consecutive quarter of profitability and based on the trailing twelve months, the airline achieved a return on invested capital of 15.3 per cent, compared with the 16.1 per cent reported in the previous quarter, and within WestJet's target range of 13 to 16 per cent.

"Today we reported the third best fourth quarter in WestJet's history to complete a record year in 2015. Notwithstanding the impact that recent economic weakness in Alberta has had on our results, our decision to increase our normal course issuer bid demonstrates our confidence in WestJet's proven business model and the financial strength of our airline," said WestJet President and CEO Gregg Saretsky. "My thanks go out to our more than 11,000 WestJetters for all their hard work in driving our continuing success as we look forward to celebrating WestJet's 20^th birthday in 2016, a year which will see the launch of our exciting new wide-body service to London Gatwick."

Operating highlights (stated in Canadian dollars)
	Q4 2015	Q4 2014	Change	Full-year 2015	Full-year 2014	Change
Net earnings (millions)	$63.4	$90.7	(30.1%)	$367.5	$284.0	29.4%
Adjusted net earnings (millions)¹	$63.4	$90.7	(30.1%)	$367.5	$317.2	15.9%
Diluted earnings per share	$0.51	$0.70	(27.1%)	$2.92	$2.20	32.7%
Adjusted diluted earnings per share¹	$0.51	$0.70	(27.1%)	$2.92	$2.46	18.7%
Total revenues (millions)	$958.7	$994.4	(3.6%)	$4,029.3	$3,976.6	1.3%
Operating margin	11.8%	14.0%	(2.2 pts)	14.1%	12.0%	2.1 pts
ASMs (available seat miles) (billions)	6.525	6.378	2.3%	26.902	25.584	5.2%
RPMs (revenue passenger miles) (billions)	5.114	5.081	0.6%	21.526	20.829	3.3%
Load factor	78.4%	79.7%	(1.3 pts)	80.0%	81.4%	(1.4 pts)
Segment guests	4,893,020	4,826,149	1.4%	20,281,376	19,651,977	3.2%
Yield (revenue per revenue passenger mile) (cents)	18.75	19.57	(4.2%)	18.72	19.09	(1.9%)
RASM (revenue per available seat mile) (cents)	14.69	15.59	(5.8%)	14.98	15.54	(3.6%)
CASM (cost per available seat mile) (cents)	12.97	13.40	(3.2%)	12.86	13.68	(6.0%)
CASM, excluding fuel and employee profit share (cents)*	10.04	9.21	9.0%	9.46	9.15	3.4%

⁽¹⁾

Full-year 2014 adjusted net earnings exclude an after-tax non-cash loss of $33.2 million recorded in the third quarter of 2014 associated with the previously disclosed sale of 10 of WestJet's oldest Boeing 737 aircraft. Refer to reconciliations in the accompanying tables for further information regarding calculations.

Normal course issuer bid
Today, WestJet also announced that the Toronto Stock Exchange has approved WestJet's amendment to its existing normal course issuer bid to increase the maximum number of shares the Company is authorized to purchase from 4 million shares to 6 million shares during the period of May 13, 2015 to May 12, 2016.

Dividend declaration
On February 1, 2016, WestJet's Board of Directors declared a cash dividend of $0.14 per common voting share and variable voting share for the first quarter of 2016, to be paid on March 31, 2016, to shareholders of record on March 16, 2016. 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 is forward-looking information within the meaning of applicable Canadian securities law. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including those risk factors described in WestJet's public reports and filings which are available under WestJet's profile at www.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.

⁽¹⁾Non-GAAP measures
This news release contains disclosure of non-GAAP performance measures including, without limitation, adjusted net earnings, adjusted diluted earnings per share, 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 year ended December 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 year ended December 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, February 2, 2016, at 8 a.m. MST (10 a.m. EST). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Harry Taylor will discuss WestJet's fourth quarter and year end 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.

About WestJet
We are proud to be Canada's highest-rated airline for customer service, powered by an award-winning culture of care and recognized as one of the country's top employers. We offer scheduled service to 100 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 150 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 vacations 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:
2015/2011/2008-2005 Canada's 10 Most-Admired Corporate Cultures (Waterstone Human Capital)
2015/2014/2013/2012 Canada's Most Attractive Employer (Randstad)
2015/2014/2013/2012 Top three brands in Canada (Canadian Business magazine)
2015 Best Employers in Canada (Aon Hewitt)
2015/2014/2013 WestJet RBC World Elite MasterCard ranked #1 in Canada (MoneySense magazine)
2015/2014/2013 WestJet RBC World Elite MasterCard ranked #1 in the Canada's Choice ranking (RewardsCanada.ca)
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)
2014/2013/2012/2011 Highest equity score: airline, vacation package supplier brands (Harris/Decima EquiTrend Study)

Connect with WestJet on Facebook at facebook.com/westjet
Follow WestJet on Twitter at twitter.com/westjet
Subscribe to WestJet on YouTube at youtube.com/westjet
Read the WestJet blog at blog.westjet.com

Website: www.westjet.com

Consolidated Statement of Earnings
(Stated in thousands of Canadian dollars, except per share amounts)
(Unaudited)

		Three months ended		Twelve months ended
		December 31		December 31
		2015	2014	2015	2014

Revenue:
	Guest	842,546	884,771	3,557,222	3,599,157
	Other	116,169	109,623	472,043	377,395
		958,715	994,394	4,029,265	3,976,552
Operating expenses:
	Aircraft fuel	182,181	243,816	814,498	1,090,330
	Salaries and benefits	198,310	184,210	801,715	724,941
	Rates and fees	139,534	128,289	562,745	520,340
	Sales and marketing	84,009	85,852	325,127	325,370
	Depreciation and amortization	75,237	54,696	264,921	226,740
	Aircraft leasing	41,881	45,546	174,089	182,450
	Maintenance	47,160	24,927	164,305	126,761
	Other	68,847	64,052	251,147	235,362
	Employee profit share	8,869	23,399	100,965	68,787
		846,028	854,787	3,459,512	3,501,081
Earnings from operations		112,687	139,607	569,753	475,471

Non-operating income (expense):
	Finance income	3,509	4,721	15,529	17,070
	Finance cost	(12,953)	(14,192)	(53,665)	(51,838)
	Gain (loss) on foreign exchange	(10,090)	(2,471)	(10,326)	(2,064)
	Loss on disposal of property and equipment	(1,496)	(2,849)	(1,860)	(48,332)
	Gain on derivatives	971	-	827	-
		(20,059)	(14,791)	(49,495)	(85,164)
Earnings before income tax		92,628	124,816	520,258	390,307

Income tax expense (recovery):
	Current	17,873	28,223	123,939	114,521
	Deferred	11,319	5,880	28,789	(8,171)
		29,192	34,103	152,728	106,350
Net earnings		63,436	90,713	367,530	283,957

Earnings per share:
	Basic	0.51	0.71	2.94	2.22
	Diluted	0.51	0.70	2.92	2.20

Consolidated Statement of Financial Position
(Stated in thousands of Canadian dollars)
(Unaudited)

		December 31	December 31
		2015	2014
Assets
Current assets:
	Cash and cash equivalents	1,183,797	1,358,071
	Restricted cash	68,573	58,149
	Accounts receivable	82,136	54,950
	Prepaid expenses, deposits and other	131,747	144,192
	Inventory	36,018	36,658
	Assets held for sale	-	78,306
		1,502,271	1,730,326
Non-current assets:
	Property and equipment	3,473,262	2,793,194
	Intangible assets	63,549	60,623
	Other assets	89,942	62,290
Total assets		5,129,024	4,646,433

Liabilities and shareholders' equity
Current liabilities:
	Accounts payable and accrued liabilities	545,438	415,562
	Advance ticket sales	620,216	575,781
	Deferred Rewards program	117,959	86,870
	Non-refundable guest credits	40,921	45,434
	Current portion of maintenance provisions	85,819	54,811
	Current portion of long-term debt	141,572	159,843
		1,551,925	1,338,301
Non-current liabilities:
	Maintenance provisions	243,214	191,768
	Long-term debt	1,033,261	1,028,820
	Other liabilities	13,603	13,150
	Deferred income tax	327,028	296,892
Total liabilities		3,169,031	2,868,931

Shareholders' equity:
	Share capital	582,796	603,287
	Equity reserves	82,713	75,094
	Hedge reserves	1,903	(3,179)
	Retained earnings	1,292,581	1,102,300
Total shareholders' equity		1,959,993	1,777,502

Total liabilities and shareholders' equity		5,129,024	4,646,433

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

		Three months ended December 31		Twelve months ended December 31
		2015	2014	2015	2014

Operating activities:
Net earnings		63,436	90,713	367,530	283,957
Items not involving cash:
	Depreciation and amortization	75,237	54,696	264,921	226,740
	Change in maintenance provisions	14,483	(11,113)	35,786	8,413
	Change in other liabilities	(3,237)	(158)	(3,192)	(529)
	Amortization of transaction costs	1,093	1,204	4,503	5,015
	Amortization of hedge settlements	340	350	1,390	1,400
	Gain on derivatives	(971)	-	(827)	-
	Loss on disposal of property and equipment	1,496	2,849	1,860	48,332
	Share-based payment expense	4,379	4,316	17,254	18,626
	Deferred income tax expense/(recovery)	11,319	5,880	28,789	(8,171)
	Unrealized foreign exchange (gain)/loss	20,603	(2,323)	(938)	(10,634)
Change in non-cash working capital		(12,686)	(588)	199,706	21,349
Change in restricted cash		(11,259)	(4,293)	(10,424)	(43)
Change in other assets		(6,780)	(105)	(15,912)	(6,833)
Purchase of shares pursuant to compensation plans		(333)	(166)	(14,005)	(10,989)
		157,120	141,262	876,441	576,633

Investing activities:
Aircraft additions		(318,064)	(228,106)	(841,491)	(694,200)
Aircraft disposals		132	75,597	83,348	75,655
Other property and equipment and intangible additions		(15,714)	(5,506)	(64,789)	(46,586)
		(333,646)	(158,015)	(822,932)	(665,131)

Financing activities:
Increase in long-term debt		17,732	16,507	153,112	613,885
Repayment of long-term debt		(42,099)	(41,445)	(171,490)	(308,588)
Shares repurchased		(4,010)	(9,856)	(123,813)	(39,431)
Dividends paid		(17,246)	(15,334)	(69,711)	(61,313)
Issuance of shares pursuant to compensation plans		120	56	156	96
Cash interest paid		(7,936)	(9,421)	(47,305)	(39,507)
Change in non-cash working capital		3,755	2,864	21	4,866
		(49,684)	(56,629)	(259,030)	170,008

Cash flow from operating, investing and financing activities		(226,210)	(73,382)	(205,521)	81,510
Effect of foreign exchange on cash and cash equivalents		(9,672)	6,707	31,247	20,556
Net change in cash and cash equivalents		(235,882)	(66,675)	(174,274)	102,066

Cash and cash equivalents, beginning of period		1,419,679	1,424,746	1,358,071	1,256,005

Cash and cash equivalents, end of period		1,183,797	1,358,071	1,183,797	1,358,071

Supplemental disclosure of operating cash flows
Cash interest received		3,577	4,776	16,349	17,243
Cash taxes paid		(25,667)	(10,894)	(114,752)	(204,489)

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 December 31			Twelve months ended December 31
($ in thousands)		2015	2014	Change	2015	2014	Change
Operating expenses		846,028	854,787	(8,759)	3,459,512	3,501,081	(41,568)
Aircraft fuel expense		(182,181)	(243,816)	61,635	(814,498)	(1,090,330)	275,832
Employee profit share
	expense	(8,869)	(23,399)	14,530	(100,965)	(68,787)	(32,178)
Operating expenses,
	adjusted	654,978	587,572	67,406	2,544,049	2,341,964	202,086
ASMs		6,524,788,975	6,378,247,018	2.3%	26,902,227,359	25,584,033,077	5.2%
CASM, excluding above
	items (cents)	10.04	9.21	9.0%	9.46	9.15	3.4%

*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.

($ in thousands)		December 31 2015	December 31 2014	Change
Earnings before income taxes		520,258	390,307	129,951
	Special item⁽ⁱ⁾	-	45,459	(45,459)
Adjusted earnings before income taxes		520,258	435,766	84,492
Add:
	Finance costs	53,665	51,838	1,827
	Implicit interest in operating leases⁽ⁱⁱ⁾	91,397	95,786	(4,389)
		665,320	583,390	81,930
Invested capital:
	Average long-term debt⁽ⁱⁱⁱ⁾	1,181,748	1,033,529	148,219
	Average shareholders' equity	1,868,748	1,683,671	185,077
	Off-balance-sheet aircraft leases^(iv)	1,305,668	1,368,375	(62,707)
		4,356,164	4,085,575	270,589
Return on invested capital		15.3%	14.3%	1.0 pt.

(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 operating leases are calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. At December 31, 2015, the trailing 12 months of aircraft leasing expenses totaled $174,089 (December 31, 2014 – $182,450).

*Adjusted net earnings/Adjusted diluted earnings per share*
(Stated in thousands of Canadian dollars, except percentages)
(Unaudited)

WestJet excludes the effect of the after-tax non-cash loss related to the 10 aircraft sold to Southwest being classified as held for sale in the third quarter of 2014 from net earnings to calculate an adjusted diluted earnings per share.


		Twelve months ended December 31
($ in thousands, except share and per share data)		2015	2014	Change
Net earnings		367,530	283,957	83,573
Adjusted for:
	Special item(i)	-	33,231	(33,231)
Adjusted net earnings		367,530	317,188	50,342
Weighted average number of shares outstanding - diluted		125,964,541	129,142,940	(3,178,399)
Adjusted diluted earnings per share		2.92	2.46	18.7%

(i)	After-tax non-cash loss recorded in the third quarter of 2014 associated with the sale of 10 aircraft to Southwest.

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