Published on February 14th, 2016 | by Jim Lee0
WestJet reports fourth quarter slump on the back of record full-year results for 2015
The Chief Executive Officer (CEO) of Canadian low-cost carrier WestJet, Gregg Saretsky, has confirmed that his airline has held talks with Boeing and Bombardier, concerning the proposed revised delivery of new aircraft. This is part of a broader strategy to cope with Alberta’s deteriorating economy, hit hard by falling oil prices. Approximately 25% of the airline’s business originates from the region.
In total, WestJet has ten of Bombardier Dash 8-400s scheduled for delivery this year, and another two in 2017. Its regional carrier, Encore, uses the turboprops for its short-haul flights. WestJet is also in discussions with Boeing about deferring delivery of three new 737-800s, and plans to return nine leased aircraft to their owners by 2017 – the first time in the airline’s history that it has not renewed leases.
WestJet reported a fourth quarter 2015 slump on the back of this slowing Alberta economy. For the fourth quarter, the airline reported diluted earnings per share of $0.51 (around €0.33), down 27% from $0.70 (around €0.45) reported last year. These fourth quarter results include a pre-tax loss on foreign exchange of $10.1 million (around €6.48 million). This nevertheless represents WestJet’s 43rd consecutive quarter of profitability and based on the trailing twelve months, the airline achieved a return on invested capital of 15.3%, compared with the 16.1% reported in the previous quarter, and within WestJet’s target range of 13 to 16%.
Commenting on the fourth quarter results, Mr Saretsky said: “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”.
WestJet also announced its year-end results for 2015, with record full-year net earnings of $367.5 million (around €235.75 million), or $2.92 (around €1.87) per diluted share. This compares with the adjusted net earnings of $317.2 million (around €203.48 million), or $2.46 (around €1.58) per diluted share reported in the full-year 2014, up 16% and 19%, respectively. Further details are available in the accompanying tables.
WestJet sets new single-day record
On 4th January, WestJet announced that it expected to fly 74,247 passengers across its network that day, setting a new single-day record. The airline’s previous single-day record was 72,240 passengers, set on 31st July 2015, the civic holiday long weekend. “As the busy holiday travel season winds down, we thank our guests for their loyalty and support,” said Bob Cummings, WestJet Executive Vice-President, Commercial. “We also thank our more than 11,000 WestJetters for their hard work, dedication and caring service as we all work together to get our guests home safely.”
WestJet also marked another milestone during the holiday season, flying its 20 millionth guest in a single year on 27th December 2015.
WestJet celebrates its 20th anniversary
WestJet officially opened for business on 5th February 1996, but the Calgary-based carrier didn’t make its first flight until 29th February. Over the past 20 years WestJet has expanded its destination market and it provides scheduled and charter air services to 100 destinations in Canada, the United States, Mexico, Central America, the Caribbean and Europe, including its seasonal service to Dublin.
“WestJet are proud to be Canada’s highest-rated airline for customer service, powered by an award-winning culture of care and recognised as one of the country’s top employers and has more than 10,000 employees” its website states.
Through its regional airline, WestJet Encore, and with partnerships with airlines representing every major region of the world, WestJet can now offer its guests more than 150 destinations in more than 20 countries. In addition, WestJet Vacations delivers affordable, flexible travel experiences with a variety of accommodation options for an additional market segment, while members of its WestJet Rewards programme earn WestJet dollars on flights, vacation packages and more. These members can then 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.
Last year, WestJet held a one-day seat sale to celebrate its 19th anniversary, but WestJet says at least for now, nothing is planned to make this year’s milestone, a year which will see the launch of its exciting new wide-body service to London Gatwick.
Fleet changes ahead of long haul expansion
WestJet currently operates thirteen Boeing 737-600s, fifty-nine Boeing 737-700s, thirty-two Boeing 737-800s, plus four newly acquired Boeing 767-300(ER)s. There are also twenty-three Bombardier Q400s in service with WestJet Encore.
The airline’s 767s can seat up to 262 passengers and feature 24 premium class seats in a two-by-two configuration. The new aircraft are also equipped with WestJet Connect, an in-flight entertainment and wireless connectivity system.
WestJet took delivery of its first Boeing 767-300 on 27th August last year, but it had been flying the aircraft between Calgary and Toronto in order to obtain Extended-range Twin-engine Operation (ETOPS) certification. However, the airline operated its first Alberta-Hawaii flights on-board the wide-body aircraft on 10th January. WestJet currently offers seasonal service to both Honolulu and Maui from the Albertan cities of Calgary and Edmonton.
Last September, WestJet unveiled a major expansion to the United Kingdom, announcing the addition of six seasonal new routes to London’s Gatwick Airport. Beginning this May, WestJet will begin flying to Gatwick from the Canadian cities of Calgary, Edmonton, St. John’s, Toronto, Vancouver and Winnipeg. The 767 opens up major long-haul overseas possibilities for WestJet. Routes like London-Vancouver and London-Calgary wouldn’t be feasible with its shorter-range 737s, which currently operate the services from the east coast of Canada, to both Dublin and Glasgow.
Commenting at the time, Mr. Saretsky suggested an even broader expansion could be ahead noting; “ultimately these aircraft have a lot more range than anything we’ve ever flown,” adding “We can reach Asia. We can reach Latin America. We can reach even North Africa. Lots of geography coming into play. We haven’t put a timeline on it yet but you can expect future announcements.”
WestJet’s seasonal service from Dublin to St. John’s, Newfoundland ran from 1st May to 24th October last year, as the WJA16/17, with the final service for the season being operated by Boeing 737-7CT(WL), C-FWSK, which was a familiar sight in Dublin, during the season.
The service will resume on 2nd May 2016 departing the previous evening from St. John’s as WJA16 at 23:15, with a scheduled arrival in Dublin of 07:20. However, the flight time varies between 4:24 and 4:35 for the 2,041 mile (3,285 km) journey. It departs Dublin as the WJA17 at 08:40 and arrives in St John’s at 09:55. The east bound flight time varies between 4:47 and 5:03 and there is a -3.5 hour time difference between the two airports.