News Releases

WestJet reports first quarter net earnings record

Airline achieves net earnings of $68 million, up 42 per cent
WestJet selects Bombardier Q400 NextGen aircraft for new regional airline

CALGARY, May 1, 2012 /CNW/ - WestJet (TSX: WJA) today announced its first quarter results for 2012. The airline reported record first quarter net earnings of $68.3 million, or $0.49 per diluted share; up from the net earnings of $48.2 million, or $0.34 per diluted share, reported in the first quarter of 2011. This represents WestJet's 28^th consecutive quarter of profitability. WestJet's operating cash flow per share for the first quarter of 2012 was $1.87, an increase of 31 per cent year over year. Based on the trailing twelve months, the airline achieved a return on invested capital of 10.8 per cent, up from the 10.1 per cent reported last quarter.

"We are extremely pleased with the record first quarter results and our margin expansion as revenue growth outpaced elevated fuel costs. We achieved our highest first quarter load factor, improved the overall yield and made good progress towards our return on invested capital target," said WestJet President and CEO Gregg Saretsky. "I thank WestJetters for their contributions to these great results and for providing that remarkable guest experience which helps distinguish us as Canada's preferred airline."

Today, WestJet also announced it has selected the Bombardier Q400 NextGen as the aircraft for its new, low-cost regional airline that is expected to launch as early as the second half of 2013. "This aircraft selection marks another significant milestone for WestJet as we enter into what we know will be a successful, long-lasting relationship with Bombardier, another great Canadian company," noted Gregg Saretsky.

Operating highlights (stated in Canadian dollars)
	Q1 2012	Q1 2011	Change
Net earnings (millions)	$68.3	$48.2	41.6%
Diluted earnings per share	$0.49	$0.34	44.1%
Total revenues (millions)	$891.0	$772.4	15.3%
Operating margin	11.9%	10.3%	1.6 pts.
Operating cash flow per share*	$1.87	$1.43	30.8%
ASMs (available seat miles) (billions)	5.690	5.230	8.8%
RPMs (revenue passenger miles) (billions)	4.721	4.290	10.0%
Load factor	83.0%	82.0%	1.0 pts.
Segment guests	4,230,415	3,899,108	8.5%
Yield (revenue per revenue passenger mile) (cents)	18.87	18.00	4.8%
RASM (revenue per available seat mile) (cents)	15.66	14.77	6.0%
CASM (cost per available seat mile)(cents)	13.80	13.24	4.2%
CASM, excluding fuel and employee profit share (cents)*	8.95	8.91	0.4%

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

"Revenue growth exceeded our expectations this quarter and contributions to the top-line increase are coming from the ongoing improvement in our business offering, our airline partnership strategy, the strength of WestJet Vacations and increases in ancillary revenue," commented Gregg Saretsky. WestJet achieved its highest ancillary revenue per guest of $8.39 this quarter which lifted the net earnings per guest to approximately sixteen dollars. The airline expects RASM growth to continue into the second quarter, but at a slightly moderated pace than the RASM growth achieved in the first quarter of 2012.

WestJet now projects its 2012 full-year CASM, excluding fuel and employee profit share will be up 1.5 to 2.5 per cent. This is mainly attributable to higher revenue-related expenditures resulting from an improved revenue outlook and increased airport operation costs resulting from an increase in operations at higher cost airports such as New York City, Chicago and Toronto. For the second quarter of 2012, the airline projects its fuel costs will range between $0.95 and $0.97 per litre.

Dividend declaration
WestJet's Board of Directors declared a cash dividend of $0.06 per common voting share and variable voting share for the second quarter of 2012, to be paid on June 29, 2012, to shareholders of record on June 13, 2012. All dividends paid by WestJet are, pursuant to subsection 89(14) of the Income Tax Act, designated as eligible dividends, unless indicated otherwise. An eligible dividend paid to a Canadian resident is entitled to the enhanced dividend tax credit.

Caution regarding forward-looking statements
Certain information set forth in this news release, including, without limitation, the information regarding the launch of the regional airline in the second half of 2013, RASM growth in the second quarter of 2012, fuel costs in the second quarter of 2012 and CASM, excluding fuel and employee profit share, for the full-year is forward-looking information within the meaning of applicable Canadian securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond WestJet's control. The forward-looking information contained in this news release is based on WestJet's current budget, forecasts and strategy, our fleet plan, realized jet fuel prices for April 2012 and forward-curve prices for May and June 2012, the expected exchange rate of the Canadian dollar to the U.S. dollar in the second quarter of 2012, along with available implementation plans, agreements and bookings, but may vary due to factors including, but not limited to, changes in consumer demand, changes in fuel prices, delays in aircraft delivery, changes in guest demand, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems and other factors and risks described in WestJet's public reports and filings which are available under WestJet's profile at www.sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking statements as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.

This news release contains disclosure respecting non-GAAP performance measures including, without limitation, CASM, excluding fuel and employee profit share, operating cash flow per share, return on invested capital and net earnings per guest. These measures are included to enhance overall understanding of WestJet's current financial performance and to provide an alternative method for assessing WestJet's operating results in a manner that is focused on the performance of WestJet's ongoing operations, and to provide a more consistent basis for comparison between quarters. These measures are not 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, 2012, which is available under WestJet's profile on SEDAR at www.sedar.com, for a further discussion of such non-GAAP measures and a reconciliation of such measures to GAAP.

Management's discussion and analysis of financial results and condensed consolidated interim financial statements and notes for the three months ended March 31, 2012, are available through the Internet in the Media and Investor Relations section of www.westjet.com or under WestJet's SEDAR profile at www.sedar.com.

Analyst conference call
WestJet will hold its quarterly analysts' conference call today, May 1, 2012, 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 2012 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 www.westjet.com.

Annual general meeting (AGM)
WestJet will hold its AGM at 2 p.m. MDT (4 p.m. EDT) today on May 1, 2012 at WestJet's Calgary Campus at 22 Aerial Place NE. The AGM webcast will be available live in the Media and Investor Relations section of www.westjet.com.

About WestJet
WestJet is Canada's preferred airline, offering scheduled service throughout its 76-city North American and Caribbean network. Inducted into Canada's Most Admired Corporate Cultures Hall of Fame and named one of Canada's best employers, WestJet pioneered low-cost flying in Canada. Named a J.D. Power 2011 Customer Service Champion, WestJet offers increased legroom and leather seats on its modern fleet of 98 Boeing Next-Generation 737 aircraft. With future confirmed deliveries for an additional 37 aircraft through 2018, WestJet strives to be one of the five most successful international airlines in the world.

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Condensed Consolidated Statement of Earnings
For the three months ended March 31
(Stated in thousands of Canadian dollars, except share and per share amounts)
(Unaudited)


		2012	2011

Revenues:
	Guest	802,286	688,588
	Other	88,664	83,834
		890,950	772,422
Expenses:
	Aircraft fuel	262,072	218,963
	Airport operations	113,806	109,151
	Flight operations and navigational charges	91,784	84,097
	Sales and distribution	87,096	76,822
	Marketing, general and administration	48,129	47,816
	Aircraft leasing	46,327	40,713
	Depreciation and amortization	45,144	43,307
	Inflight	39,073	33,499
	Maintenance	37,727	30,622
	Employee profit share	14,134	7,592
		785,292	692,582
Earnings from operations		105,658	79,840

Non-operating income (expense):
	Finance income	4,340	3,931
	Finance costs	(12,737)	(16,198)
	Gain on foreign exchange	1,286	1,499
	Gain (loss) on disposal of property and equipment	19	(7)
	Loss on derivatives	(3,450)	(2,257)
		(10,542)	(13,032)
Earnings before income tax		95,116	66,808

Income tax expense (recovery):
	Current	28,999	581
	Deferred	(2,204)	17,978
		26,795	18,559
Net earnings		68,321	48,249

Earnings per share:
	Basic	0.50	0.34
	Diluted	0.49	0.34

Weighted average number of shares outstanding - basic		137,773,920	142,308,050
Weighted average number of shares outstanding - diluted		138,189,084	143,141,454

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


		March 31	December 31
		2012	2011
Assets
Current assets:
	Cash and cash equivalents	1,400,812	1,243,605
	Restricted cash	47,300	48,341
	Accounts receivable	31,460	34,122
	Prepaid expenses, deposits and other	55,276	66,936
	Inventory	31,680	31,695
		1,566,528	1,424,699
Non-current assets:
	Property and equipment	1,921,182	1,911,227
	Intangible assets	35,923	33,793
	Other assets	104,557	103,959
	Total assets	3,628,190	3,473,678

Liabilities and shareholders' equity
Current liabilities:
	Accounts payable and accrued liabilities	401,435	307,279
	Advance ticket sales	451,995	432,186
	Non-refundable guest credits	44,065	43,485
	Current portion of long-term debt	161,919	158,832
	Current portion of obligations under finance leases	76	75
		1,059,490	941,857
Non-current liabilities:
	Maintenance provisions	156,811	151,645
	Long-term debt	662,466	669,880
	Obligations under finance leases	3,155	3,174
	Other liabilities	9,830	10,449
	Deferred income tax	323,645	326,456
Total liabilities		2,215,397	2,103,461

Shareholders' equity:
	Share capital	627,018	630,408
	Equity reserves	74,100	74,184
	Hedge reserves	(4,742)	(3,353)
	Retained earnings	716,417	668,978
Total shareholders' equity		1,412,793	1,370,217

Total liabilities and shareholders' equity		3,628,190	3,473,678

Condensed Consolidated Statement of Cash Flows
For the three months ended March 31
(Stated in thousands of Canadian dollars)
(Unaudited)


		2012	2011

Operating activities:
Net earnings		68,321	48,249
Items not involving cash:
	Depreciation and amortization	45,144	43,307
	Change in long-term maintenance provisions	7,827	6,698
	Change in other liabilities	(199)	(209)
	Amortization of hedge settlements	350	350
	Loss on derivative instruments	3,450	2,257
	(Gain) loss on disposal of property and equipment	(19)	7
	Share-based payment expense	2,691	3,369
	Deferred income tax expense (recovery)	(2,204)	17,978
	Finance income	(4,340)	(3,931)
	Finance cost	12,737	16,198
	Unrealized foreign exchange (gain) loss	(505)	432
	Change in non-cash working capital	121,229	77,887
Change in restricted cash		1,041	(8,746)
Change in other assets		(1,541)	(2,300)
Cash taxes paid		(407)	(371)
Cash interest received		4,591	2,910
		258,166	204,085

Investing activities:
Aircraft additions		(43,764)	(43,140)
Other property and equipment and intangible additions		(12,480)	(9,380)
		(56,244)	(52,520)

Financing activities:
Increase in long-term debt		35,303	-
Repayment of long-term debt		(39,631)	(41,283)
Decrease in obligations under finance leases		(19)	(54)
Shares repurchased		(18,821)	(28,297)
Dividends paid		(8,226)	(14,205)
Cash interest paid		(11,271)	(14,024)
Change in non-cash working capital		(1,465)	3,979
		(44,130)	(93,884)

Cash flow from operating, investing and financing activities		157,792	57,681
Effect of foreign exchange on cash and cash equivalents		(585)	(1,910)
Net change in cash and cash equivalents		157,207	55,771

Cash and cash equivalents, beginning of period		1,243,605	1,159,316

Cash and cash equivalents, end of period		1,400,812	1,215,087

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

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


	Three months ended March 31
	2012	2011
CASM, excluding fuel and employee profit share
Operating expenses	785,292	692,582
Aircraft fuel expense	(262,072)	(218,963)
Employee profit share expense	(14,134)	(7,592)
Operating expenses, adjusted	509,086	466,027
ASMs	5,689,651,965	5,230,276,750
CASM, excluding above items (cents)	8.95	8.91

Return on invested capital (ROIC)
(Stated in thousands of Canadian dollars, except per unit data)
(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, except percentage amounts)		March 31, 2012	December 31, 2011
Return on invested capital⁽ⁱ⁾
Earnings before income taxes		236,314	208,006
Add:
	Finance costs	57,450	60,911
	Implicit interest in operating leases⁽ⁱⁱ⁾	89,872	86,925
		383,636	355,842
Invested capital:
	Average long-term debt⁽ⁱⁱⁱ⁾	904,639	927,757
	Average obligations under finance leases^(iv)	3,268	3,303
	Average shareholders' equity	1,368,275	1,337,225
	Off-balance-sheet aircraft leases^(v)	1,283,888	1,241,783
		3,560,070	3,510,068
Return on invested capital		10.8%	10.1%

(i)	The trailing 12 months are used in the calculation of ROIC.
(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)	Average capital lease obligations include the current portion and long-term portion.
(v)	Off-balance-sheet aircraft leases are calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. At March 31, 2012, the trailing 12 months of aircraft leasing costs totalled $171,185 (December 31, 2011 - $165,571).

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

Net earnings divided by the number of segment guests.


	Three months ended March 31
	2012	2011
Net earnings per guest
Net earnings	68,321	48,249
Segment guests	4,230,415	3,899,108
Net earnings per guests	16.15	12.37

Operating cash flow per share
(Stated in thousands of Canadian dollars, except per unit data)
(Unaudited)

Cash flow from operations divided by the diluted weighted average number of shares outstanding.


	Three months ended March 31
	2012	2011
Operating cash flow per share
Cash flow from operating activities	258,166	204,085
Weighted average number of shares outstanding - diluted	138,189,084	143,141,454
Diluted operating cash flow per share	1.87	1.43

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