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Westjet 1St Quarter

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WestJet reveals share buyback plan as profit falls short

‎Today, ‎May ‎06, ‎2014, ‏‎1 hour ago | Scott DeveauGo to full article

WestJet Airlines Ltd. reported first-quarter results Tuesday that fell from a year ago and, stripping out a one-time tax gain, came below expectations.

The Calgary-based carrier also announced a plan to buy back up to 2 million of its shares, or roughly 1.6% of its outstanding common shares, over the next 12 months, valued at nearly $50-million based on Monday’s close price of $24.97 a share.

WestJet said it earned $89.3-million, or 69 cents a share, down 2% from $91.1-million, or 68 cents a share, it reported for the same period a year ago as its cost crept up. Those gains, however, included a one-time tax gain of roughly 12 cents a share, which when removed reduced WestJet’s adjusted earnings per share to 57 cents.

Analysts were expecting earnings of 63 cents a share, according to Bloomberg estimates.

“We had a very strong start to 2014, as we achieved our second best ever first quarter earnings, recorded our 36th consecutive quarter of profitability,” said Gregg Saretsky, WestJet chief executive, in a statement.

Revenue for the quarter improved 7.7% to $1.04-billion compared to $967-million a year ago. The increase in sales was due to a slight increase in prices and big bump in ancillary revenues during the quarter, up 37% year-over-year to $51-milllion, primarily due to the introduction of its premium economy seating, pre-reserved seating fees, and increased penetration of its WestJet RBC MasterCard program, the company said.

But at the same time, WestJet’s operating expenses were up 9% during the quarter compared to a year ago due to increased capacity, the weak loonie, and other expenses. Unit costs, as measured by cost per available seat mile, excluding fuel, increased 3.8% during the quarter while fuel expenses increased 5%, it said.

The airline said its load factor – or average amount of seats filled on its planes by paying customers – fell 1.2% after its traffic increases of 6.4% failed to keep pace with its capacity increases of 8%.

“We suspect that the stock could come under modest pressure today due to the weaker [first quarter] results and [second quarter] guidance,” said Fadi Chamoun, BMO Capital Markets analyst.

WestJet News Release can be viewed at: http://www.newswire.ca/en/story/1350011/westjet-reports-first-quarter-net-earnings-of-89-million
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Here's some more, then.

Only Spirit and Allegiant out performed WJ in operating margin in 1Q 2014 WJ's margin was 1% pt higher than Alaska's, and more than double Delta's and AAG's.

Only Spirit had a lower BELF than WJ in 1Q.

When March and April are combined to deal with the impact of a very late Easter, WJ's growth rate over the period was higher than AC's.

Interestingly, WJ flew more ASM's (and RPM's), in March or April 2014 than they did in the peak summer of 2013. On the other hand, AC flew less than 90% of the ASM's they operated in peak summer 2013 in March or April.

If you drill down into the numbers, it is pretty clear AC took advantage of the unique Double Dip Spring Break + Easter Break that occurred this year. Kudos to AC for making use of parked tails to do so.

WJ flies its fleet full out pretty much all the time so was not in a position to wheel more aircraft out of the barn in April.

Next year, Easter is in the first week of April and will revert to be part of most Spring Breaks. What happened in 2014 won't be repeated in 2015.

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