WestJet has announced third quarter results for 2009. The airline reported net earnings of $31.4 million or 24 cents per diluted share; this compared to the third quarter of 2008 net earnings of $57.9 million or 45 cents per diluted share.
"We are extremely happy to have once again turned a difficult economic period into another profitable quarter," said WestJet President and CEO Sean Durfy. "For more than a year now, economic instability has been eroding consumer confidence. The third quarter saw continued scrutiny from price-sensitive Canadians, resulting in airlines stimulating demand through aggressive pricing. Regardless, we believe we will produce margins that are among the best in North America. Our success this quarter, and every quarter, is a direct result of the efforts and abilities of WestJetters who are committed to ensuring guests receive the best value for their hard-earned dollars."
"In the past six to eight weeks, we have seen indications that RASM declines have levelled off, and we are seeing signs of improvement from what we were previously experiencing," said Durfy. "While it is still too early to predict the strength or speed of a potential recovery, we feel optimistic about the future and the continued success of our airline."
WestJet reported an operating margin of 12.8%, compared to 14.0% in the third quarter of 2008. WestJet’s third quarter 2009 pre-tax margin was 8.3%, compared to 11.5% in the same 2008 period.
"Relief from significantly lower fuel costs, compared to the same period in 2008, considerably off-set our drop in revenue," added Sean Durfy. "Our ability to successfully stimulate demand while keeping our controllable costs in line played an important part in our strong margins."
WestJet also announced October traffic results with a load factor of 77.3%, a year-over-year improvement of 1.5 percentage points. Revenue passenger miles (RPM) increased 0.3% year over year, and capacity, measured in available seat miles (ASM), declined 1.8% over the same period.
"We are encouraged by our year-over-year improvements in October’s load factor and RPMs," said Durfy. "I want to thank our WestJetters for their continued hard work in implementing our new reservation system and launching our new destinations this month."
"Recently, we have been seeing more strength in both our business and sun destination bookings," commented Durfy. "Of our 11 new southern destinations, nine have already launched and the remaining two will launch in December. We are pleased with the early bookings for these and all of our sun destinations. This shows the continued strength of our WestJet Vacations business and the value proposition we bring to our guests."
"Throughout the quarter, we remained committed to our strategy," stated Sean Durfy. "The recent successful cutover to our new reservation system was a major milestone for our airline. This transition from our old system to our new system has been difficult on our guests and our people. We are extremely appreciative of our guests, who have shown tremendous loyalty and patience, as we implement changes that will enhance the benefits we can provide. We offer a heartfelt apology for this inconvenience and assure you that we will be back to our high standards of excellent service very soon. Our new reservation system provides the capabilities necessary to properly support our growing business and deliver on key strategic initiatives like attracting more business travellers, increasing ancillary revenue and enabling airline partnerships. Completing a project of this magnitude was no small feat, and it wouldn’t have been possible without our hard-working team of WestJetters who are extremely invested in the success of our airline."
In the third quarter, WestJet revised its aircraft delivery schedule and completed an equity offering that brought the airline’s cash balance to $961.6 million. "The challenges that we encountered leading up to the end of the third quarter are creating a lot of uncertainty around the remainder of 2009 and into 2010," explained Sean Durfy. "We smoothed our aircraft delivery schedule, enhanced flexibility around our fleet and capacity, and added 14 more aircraft to our future growth plans. Our equity offering strengthened our balance sheet and provided an additional level of comfort for meeting our future growth commitments."
Throughout the remainder of the year, WestJet will implement its Frequent Guest Program and co-branded credit card program; continue to grow its vacations business, which is already seeing year-to-date revenue improvements of over 80 per cent; and take delivery of an additional five aircraft for an end-of-year fleet size of 86.
"Capacity for the fourth quarter is expected to increase two to three per cent, with all new capacity being deployed into our transborder and international markets," said Sean Durfy. "We have enhanced our winter schedule with 10 new sun destinations, and bookings for WestJet Vacations remain strong."