August Load Factor (Westjet 88.9%, Porter 74.5%)

[CanadaEH]

WestJet reported its highest load factor – or average amount of seats filled on its planes – in its 16 year history last month of 88.9%, up 5.6 percentage points from a year ago.

Those gains were made on the back of a 9.2% increase in traffic while its capacity only increased by 2.3% during the month compared to a year ago.

“The demand environment remains strong and we are seeing a growing contribution from our airline code-shares and interline partnerships,” said Gregg Saretsky, WestJet chief executive, said in a statement.

Meanwhile, Porter also said it hit its highest load factor ever too during the month of August.

The Toronto Island-based carrier reported a load factor of 74.5%, up 5.8 percentage points year over year, on the back of a 21% increase in traffic and a 12% increase in capacity.

“This is the best month we’ve had in nearly six years of operating,” said Robert Deluce, Porter chief executive. “It’s a reflection of the strong passenger experience, brand and customer service that Porter is known for.”

Cameron Doerksen, National Bank Financial analyst, said he typically doesn’t adjust his guidance until the third month of the quarter. But the August traffic results from both airlines suggests his this third quarter earning estimates for WestJet might be a little conservative at 43¢ a share.

Consensus sits at about 39¢ a share, he noted.

“WestJet’s numbers are boosted by the ongoing maturation of its code-share and interline partnerships, a trend that is set to continue through 2013 and beyond,” he said in a note to clients. “Furthermore, we expect WestJet’s yields to be boosted by the introduction of its premium economy product in 2013.”

He has a $22 price target on WestJet and an outperform rating on the stock.

Air Canada is expected to release its own results for August later Thursday.

[Thebean]

WestJet reported its highest load factor – or average amount of seats filled on its planes – in its 16 year history last month of 88.9%, up 5.6 percentage points from a year ago.

Those gains were made on the back of a 9.2% increase in traffic while its capacity only increased by 2.3% during the month compared to a year ago.

“The demand environment remains strong and we are seeing a growing contribution from our airline code-shares and interline partnerships,” said Gregg Saretsky, WestJet chief executive, said in a statement.

Meanwhile, Porter also said it hit its highest load factor ever too during the month of August.

The Toronto Island-based carrier reported a load factor of 74.5%, up 5.8 percentage points year over year, on the back of a 21% increase in traffic and a 12% increase in capacity.

“This is the best month we’ve had in nearly six years of operating,” said Robert Deluce, Porter chief executive. “It’s a reflection of the strong passenger experience, brand and customer service that Porter is known for.”

Cameron Doerksen, National Bank Financial analyst, said he typically doesn’t adjust his guidance until the third month of the quarter. But the August traffic results from both airlines suggests his this third quarter earning estimates for WestJet might be a little conservative at 43¢ a share.

Consensus sits at about 39¢ a share, he noted.

I'm thinking along the lines of 46 cents a share in 3Q, assuming 2% asm growth in Sept and a modest 77% l/f. Margins will easily be in the double digits.

[internet]

One has to think that running the airline at 89% puts some strain on the system?

[Say Altitude]

Speaking of strain for WJA it would be which pockets to stuff all the cash in whereas with AC it's why they still can't make money.....just sayin'.......

[Thebean]

As has been said before, a duck with a chair on it's back can make money in the airline business in July and August and during another 80 days scattered throughout the year.

It's the other 225 days a year that are the problem for most other airlines...

[melcrothers]

^{That's an amazing load factor, but from spending a lot of years around the bellies of aircraft - was there any sort of negative blip to On Time Performance?}

^{I recall that when PW hit over 82% load factor - our OTP would drop from mid 90%'s to mid 80%'s. AT Canadian, the impact was even higher because of containerized baggage handling. Just wondering if it has an impact with WJ?}

^Thanks.

[dagger]

As has been said before, a duck with a chair on it's back can make money in the airline business in July and August and during another 80 days scattered throughout the year.

It's the other 225 days a year that are the problem for most other airlines...

Indeed, Air Canada probably made money with these August numbers.

http://www.newswire.ca/en/story/1031867/air-canada-reports-record-august-load-factor

Now on to winter, everybody.

[dagger]

Of interest to me that AC who does overbook made a record system load factor of 87.9 per cent,

But Westjet who doesn't overbook achieved 88.9. Guess it all depends upon your market mix and how much of your sales is in NonRefendable tickets.

I'm not sure what your point is, but perhaps using a smaller font would help.

If you look at the breakdown, Europe was a bit slow for AC. We all know why. So maybe there weren't many overbooked flights there. On the other hand, the Pacific l/f was 93%, so maybe there were overbooked flights there.

[Seeker]

I am amazed that Westjet, who does not overbook, can achieve such a high load factor but I am guessing it is because most of their sales are the "non refundable" type.

I think it probably has more to do with the fact that leisure travellers rarely change their plans while business travellers often change their plans.

[thor]

It's only a minimal charge to change a ticket ~ $50 plus the difference in fare....if there's a seat.

[Homerun]

Westjet doesn't sell a refundable ticket. That's why they don't overbook.

[FA@AC]

Indeed, Air Canada probably made money with these August numbers.

Not as much as it should have. They ran a costly gong show of an operation all summer long.

[boestar]

Air Canada has fairly consistantly produced record load factors month after month for over a year. Of course it should be making money. However the back end costs are just too high so unless the market would bear a significant increase in ticket price it isnt going to happen. The only thing AC can do to create profit is to shrink the workforce. It is obvious that everyone wants a raise but that would be counterintuitive to producing a profit. Back in 1992 AC realized that the only way to get back to profitability was to chop heads, so they did. Alot of heads (I was one of them). It allowed the airline to re jig itself and work back to profitability (so to speak) It was 3 years to get it back on track and we were all back to work.

I am not saying that no one should get a raise I AM saying that the herd needs to be thinned substantially with a coresponding increase in efficiencies. Sure the individual may see more work on his or her plate but that is why you are at work....to work. 50% efficiency levels are not sustainable today (or any day for that matter). You can grimble and groan about already working too hard and there is too much to do and too little time but for the most part the data does not support that argument.

Work Smarter not harder and be part of the solution to reduce costs in the back end and then the front end will pay you back.

I know many of you guys and gals will say "We gave and gave and gave and got nothing back" Well you did give (as did I in 1992 I gave up 100%) Well yes you gave back AFTER several years of "good times" Those Good times were not sustainable after 2001 for all the known reasons. something had to give. It was the difference between making less or making nothing. Which would you choose? Some or nothing? in times with high unemployment I think some was the wiser choice and still is.

My advice to all at this point is to try and make AC the best airline and work efficiently. If thats not your style and you would rather bitch and complain and drag everyone else down then Quit and go to wherever you think the grass is greener. Everyone will be better off. Soon you will realize that the grass everywhere is just a different shade of brown.

[deicer]

Good Day Boestar

I don't think anyone really will argue with you about the cuts.

Where the arguement starts, and it was written in the papers, is when you bring up that the cuts should start at the top.

AC is way overpopulated with management.

Less is more with regards to them. The place runs smoother when they are all off at their 'meetings' and not around to interfere.

JMHO...

[rudder]

AC management vs AC employees is like the Republicans vs the Democrats in the US - completely different views of the world and ZERO cooperation in achieving mutual goals (since there are no mutual goals). The US cannot survive or thrive under that paradigm and neither can AC.

[boestar]

You are correct rudder. And that rift keeps growing.

[Thebean]

Indeed, Air Canada probably made money with these August numbers.

http://www.newswire....ust-load-factor

Now on to winter, everybody.

AC's 3Q 2011 BELF was 80.78%, so it's a pretty safe bet they made good money with August's 88% l/f.

WJ's 3Q 2011 BELF was 73.25%, so with loads of 89%, they simply printed cash. That's reflected in the current price of WJA which, at around $17.50, is finally approaching the same value today as it was 5 years ago, and a market cap of $2.4b.

[cata]

WJ's 3Q 2011 BELF was 73.25%, so with loads of 89%, they simply printed cash. That's reflected in the current price of WJA which, at around $17.50, is finally approaching the same value today as it was 5 years ago, and a market cap of $2.4b.

They made $5.50 last 5 years why is that never added to the share price(market cap), this is shareholder's equity now, they will continue adding $2/share or more every year now. PEG ratio is 0.35, forward P/E under 10, amazing fundamentals and growth. 2013/14/15 earnings and will skyrocket, the premiun economy will add minimum $0.25/share in 2013 alone then they got regional expansion, westjet vacation,etc, who knows maybe takover with all the cash they got. Assuming the worst case scenario, similar to 08/09, today it's much stronger company and instead of making $0.65/share the'd easily make over $1/share. Why is this company so undervalued, today and looking ahead where the company will be in 1, 3 or 5 years. This should be easily $25 -30 stock, even then the PEG ratio would be below 1.

[internet]

I think the biggest "risk" to WJ going forward is some dingbat with a couple bucks and a fleet of old jets charging half as much and screwing with the duopoly's pricing - Jetsgo style.

[airt]

WJ's 3Q 2011 BELF was 73.25%, so with loads of 89%, they simply printed cash. That's reflected in the current price of WJA which, at around $17.50, is finally approaching the same value today as it was 5 years ago, and a market cap of $2.4b.

They made $5.50 last 5 years why is that never added to the share price(market cap), this is shareholder's equity now, they will continue adding $2/share or more every year now. PEG ratio is 0.35, forward P/E under 10, amazing fundamentals and growth. 2013/14/15 earnings and will skyrocket, the premiun economy will add minimum $0.25/share in 2013 alone then they got regional expansion, westjet vacation,etc, who knows maybe takover with all the cash they got. Assuming the worst case scenario, similar to 08/09, today it's much stronger company and instead of making $0.65/share the'd easily make over $1/share. Why is this company so undervalued, today and looking ahead where the company will be in 1, 3 or 5 years. This should be easily $25 -30 stock, even then the PEG ratio would be below 1.

In 2007 WJA peaked at a little over $23/share. That was with oil at $140/barrel. Oil has been well below $100 for the last 6 months. WestJet is a much larger company with many more revenue streams than it had in 07. It pays a dividend. It is starting a Regional division that will most likely be very successful. It will not stop there.

17.50 is not even close to where this stock was in 07 and despite the growth and improvements since then , the stock continues to be undervalued by the investment community. The standard comeback is , "but it's an airline stock". How many quarters of profitability and dividend increases will it take before investors wake up to the fact that this IS NOT just another airline and that there is a ton of growth to come?

Takeover? Maybe. Companies that are badly undervalued don't stay that way forever.

[better4me]

In 2007 WJA peaked at a little over $23/share. That was with oil at $140/barrel. Oil has been well below $100 for the last 6 months. WestJet is a much larger company with many more revenue streams than it had in 07. It pays a dividend. It is starting a Regional division that will most likely be very successful. It will not stop there.

17.50 is not even close to where this stock was in 07 and despite the growth and improvements since then , the stock continues to be undervalued by the investment community. The standard comeback is , "but it's an airline stock". How many quarters of profitability and dividend increases will it take before investors wake up to the fact that this IS NOT just another airline and that there is a ton of growth to come?

Takeover? Maybe. Companies that are badly undervalued don't stay that way forever.

Who would takeover WestJet? Serious question, start comming up with a list of viable scenarios where the shareholders get a significant return on capital. Competition Act and foreign investment in airlines regulations prevent them from being taken over by a competitor or another entity with existing knowledge. Same foreign investment rules prevent a hedge fund from taking them over.

The only way to push up the ROI is for a very significant and prolonged dividend. WJA-T is on the right track wrt dividend but they need sustained multi year divident performance to justify a higher stock valuation.

Another significant factor is the pilots contract includes significant devaluation of the stock, to get a higher stock price the pilots must be all cash proposition or have the company buy the required stock from the current inventory. This will prevent the float from continually increasing.

Finally there is no certainty in the growth plan, actually a lot of uncertainty. WS has never been in the regional market and its somewhat unproven that regional is a sucessful within LCC environment. Premum economy could also be unsucessful (again WS and the Canadian market as a whole have never experienced a premium economy type product.

[Spinnaker]

Many of us buy, and sell the stock... like me last week at 16.50... oops. Anyway, they did have a buy back program that I think is on hold but can be reimplemented at any time. Durfy was a likeable guy but he what I didn't like was that he flooded the market with WJA shares to stockpile cash. This while the market was heading down. It takes a while to get that value back in to the stock, a stock that is still one volcano, infectious disease, or terrorist attack away from taking a hit. Airlines are still fragile so it takes time to trust them, hopefully dividends or dividend increases will take away the swings over time.

"Another significant factor is the pilots contract includes significant devaluation of the stock, to get a higher stock price the pilots must be all cash proposition or have the company buy the required stock from the current inventory. This will prevent the float from continually increasing"

[airt]

Who would takeover WestJet? Serious question, start comming up with a list of viable scenarios where the shareholders get a significant return on capital. Competition Act and foreign investment in airlines regulations prevent them from being taken over by a competitor or another entity with existing knowledge. Same foreign investment rules prevent a hedge fund from taking them over.

The only way to push up the ROI is for a very significant and prolonged dividend. WJA-T is on the right track wrt dividend but they need sustained multi year divident performance to justify a higher stock valuation.

Another significant factor is the pilots contract includes significant devaluation of the stock, to get a higher stock price the pilots must be all cash proposition or have the company buy the required stock from the current inventory. This will prevent the float from continually increasing.

Finally there is no certainty in the growth plan, actually a lot of uncertainty. WS has never been in the regional market and its somewhat unproven that regional is a sucessful within LCC environment. Premum economy could also be unsucessful (again WS and the Canadian market as a whole have never experienced a premium economy type product.

As I said , maybe. I was only commenting on cata's comment. I don't see it happening either , but you never know.

Interesting that all the behind the scenes action to lower the foreign ownership requirements has died since AC is back on it's feet again. There is no doubt that the government was preparing for a worst case scenario (CCAA 2) just before Vlad showed up.

I would disagree on the growth picture. WestJet has done nothing but grow for the last 16 years. Possibly a few bumps in the road ahead but I think we will see more of the same.

[Homerun]

What is Westjet's total share float now compared to 2007? You can't look at only the share price when determining if it's being fairly valued or not.