Airline achieves fourth quarter earnings per share of $0.46, an increase
of 77 per cent
Announces increase to quarterly dividend and intent to pursue a further
normal course issuer bid
CALGARY, Feb. 6, 2013 /CNW/ - WestJet (TSX: WJA) today announced its
fourth quarter and year-end results for 2012. The airline reported
fourth quarter net earnings of $60.9 million, or $0.46 per share and
full-year net earnings of $242.4 million, or $1.78 per share; up
significantly from the net earnings of $148.7 million, or $1.06 per
share, reported for 2011. These financial results mark WestJet's 31st consecutive quarter of profitability. Based on the trailing twelve
months, the airline achieved a return on invested capital of 13.7 per
cent, up from the 12.7 per cent reported last quarter.
"We are very pleased with the positive momentum generated in 2012 that
culminated with us reporting record annual earnings, record high load
factors and for the second consecutive quarter, we surpassed our return
on invested capital target of 12 per cent by achieving 13.7 per cent
for the year," said WestJet President and CEO Gregg Saretsky.
"Fundamentally our momentum is traced to the commitment and dedication
of our over 9,000 WestJetters, and I am very proud of the positive and
caring attitude they exemplify each and every day."
Operating highlights (stated in Canadian dollars)
|
|
Q4 2012
|
Q4 2011
|
Change
|
Full-Year
2012
|
Full-Year
2011
|
Change
|
|
Net earnings (millions)
| $60.9 | $35.6 |
71.3%
| $242.4 | $148.7 |
63.0%
|
|
Diluted earnings per share
| $0.46 | $0.26 |
76.9%
| $1.78 | $1.06 |
67.9%
|
|
Total revenues (millions)
| $860.6 | $781.5 |
10.1%
| $3,427.4 | $3,071.5 |
11.6%
|
|
Operating margin
|
10.6%
|
7.6%
|
3.0 pts
|
11.0%
|
8.4%
|
2.6 pts
|
|
ASMs (available seat miles) (billions)
|
5.487
|
5.329
|
3.0%
|
22.064
|
21.186
|
4.1%
|
|
RPMs (revenue passenger miles) (billions)
|
4.493
|
4.194
|
7.1%
|
18.263
|
16.891
|
8.1%
|
|
Load factor
|
81.9%
|
78.7%
|
3.2 pts
|
82.8%
|
79.7%
|
3.1 pts
|
|
Segment Guests
|
4,314,024
|
3,996,593
|
7.9%
|
17,423,352
|
16,040,682
|
8.6%
|
Yield (revenue per revenue passenger
mile) (cents)
|
19.16
|
18.64
|
2.8%
|
18.77
|
18.18
|
3.2%
|
RASM (revenue per available seat mile)
(cents)
|
15.68
|
14.67
|
6.9%
|
15.53
|
14.50
|
7.1%
|
CASM (cost per available seat mile)
(cents)
|
14.01
|
13.55
|
3.4%
|
13.83
|
13.29
|
4.1%
|
CASM, excluding fuel and employee profit
share (cents)*
|
9.32
|
9.03
|
3.2%
|
9.12
|
8.85
|
3.1%
|
*Refer to reconciliations in the accompanying tables for further
information regarding calculations.
Today, WestJet also announced its intention, upon the expiry of the
12-month period of its 2012 normal course issuer bid, to make an
application to the Toronto Stock Exchange to initiate a further normal
course issuer bid for up to 5 per cent of the currently issued and
outstanding shares. The airline also declared an increase to its
quarterly dividend from $0.08 to $0.10. "Continuing the share buy-back
program and increasing the dividend signals our confidence in the
strength of the business and our commitment to return value to
shareholders," added Gregg Saretsky.
Throughout 2012, WestJet was able to expand its virtual network with the
implementation of 13 new interline partnerships, and by evolving four
existing interline partnerships (Delta Air Lines, Korean Air, China
Eastern Airlines and British Airways) into code-share relationships,
bringing the total number of airline partnerships to thirty worldwide.
"Our positive momentum continues into 2013 as we launch WestJet Encore,
add to and evolve our airline partnerships and enhance value to more
business and leisure guests. Our introduction of fare bundles and
WestJet Plus will include options for more comfort, convenience and
flexibility to our guests," commented Gregg Saretsky.
WestJet expects moderate growth in RASM and margin expansion in the
first quarter of 2013, notwithstanding the difficult prior year
comparisons and increases in system wide capacity. For the full year
2013, the airline expects CASM, excluding fuel and employee profit
share, to increase between two to three percent year-over-year. For the
first quarter of 2013, WestJet expects fuel costs to range between
$0.94 and $0.96 per litre.
Dividend declaration
On February 5, 2013 WestJet's Board of Directors declared a cash
dividend of $0.10 per common voting share and variable voting share for
the first quarter of 2013, to be paid on March 28, 2013, to
shareholders of record on March 13, 2013. 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 information
Certain information set forth in this news release, including, without
limitation, information regarding RASM growth and margin expansion in
the first quarter of 2013, fuel costs in the first quarter of 2013,
CASM, excluding fuel and employee profit share for the full-year 2013,
initiating a normal course issuer bid and commitment to return value to
shareholders, the launch of the regional airline WestJet Encore, our
airline partnerships, fare bundles and WestJet Plus 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, the expected demand
environment, our fleet plan, forward-curve jet fuel prices for the
first quarter of 2013, and the expected exchange rate of the Canadian
dollar to the U.S. dollar in the first quarter of 2013, 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 information 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 and return on invested capital. These measures
are included to enhance the 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 reporting periods. 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 year ended December 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. The financial information
accompanying this news release was prepared in accordance with
International Financial Reporting Standards unless otherwise noted.
Management's discussion and analysis of financial results and
consolidated financial statements and notes for the year ended December 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,
February 6, 2013, at 9 a.m. MST (11 a.m. EST). President and CEO Gregg
Saretsky and Executive Vice-President of Finance and CFO Vito Culmone
will discuss WestJet's 2012 fourth quarter and year-end 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.
About WestJet
WestJet is Canada's most preferred airline, offering scheduled service
to 81 destinations in North America, Central America and the Caribbean.
Powered by an award-winning culture of care, WestJet has pioneered
low-cost flying in Canada. Recognized nationally as a top employer,
WestJet now has more than 9,000 WestJetters across Canada. Operating a
fleet of 101 Boeing Next-Generation 737 aircraft with future confirmed
deliveries for an additional 34 Boeing Next-Generation 737 aircraft
through 2018 and plans to launch a low-cost regional airline in 2013,
WestJet strives to be one of the five most successful international
airlines in the world.
Connect with WestJet on Facebook at www.facebook.com/westjet
Follow WestJet on Twitter at www.twitter.com/westjet
Subscribe to WestJet on YouTube at www.youtube.com/westjet
Consolidated Statement of Earnings
(Stated in thousands of Canadian dollars, except per share amounts)
(Unaudited)
|
|
|
|
|
| Three months ended
December 31 | Twelve months ended
December 31 |
|
| 2012 | 2011 | 2012 | 2011 |
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Guest
|
783,750
|
711,246
|
3,133,492
|
2,790,299
|
|
|
Other
|
76,890
|
70,299
|
293,917
|
281,241
|
|
|
860,640
|
781,545
|
3,427,409
|
3,071,540
|
|
Expenses:
|
|
|
|
|
|
|
Aircraft fuel
|
246,216
|
235,574
|
992,787
|
915,878
|
|
|
Airport operations
|
118,051
|
107,295
|
454,114
|
421,561
|
|
|
Flight operations and navigational charges
|
91,242
|
84,814
|
366,871
|
344,442
|
|
|
Sales and distribution
|
76,509
|
72,958
|
313,082
|
296,954
|
|
|
Marketing, general and administration
|
59,690
|
50,869
|
208,620
|
186,290
|
|
|
Depreciation and amortization
|
46,175
|
44,312
|
185,401
|
174,751
|
|
|
Aircraft leasing
|
43,729
|
41,850
|
173,412
|
165,571
|
|
|
Inflight
|
40,199
|
36,144
|
156,411
|
139,478
|
|
|
Maintenance
|
35,590
|
42,816
|
154,406
|
146,260
|
|
|
Employee profit share
|
11,639
|
5,662
|
46,585
|
23,804
|
|
|
769,040
|
722,294
|
3,051,689
|
2,814,989
|
|
Earnings from operations
|
91,600
|
59,251
|
375,720
|
256,551
|
|
|
|
|
|
|
|
Non-operating income (expense):
|
|
|
|
|
|
|
Finance income
|
4,973
|
4,383
|
18,391
|
15,987
|
|
|
Finance costs
|
(11,636)
|
(14,446)
|
(48,900)
|
(60,911)
|
|
|
Gain (loss) on foreign exchange
|
518
|
(908)
|
1,061
|
2,485
|
|
|
Gain (loss) on disposal of property and equipment
|
88
|
(43)
|
469
|
(54)
|
|
|
Loss on fuel derivatives
|
-
|
1,597
|
(6,512)
|
(6,052)
|
|
|
(6,057)
|
(9,417)
|
(35,491)
|
(48,545)
|
|
Earnings before income tax
|
85,543
|
49,834
|
340,229
|
208,006
|
|
|
|
|
|
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
Current
|
8,654
|
274
|
66,230
|
1,236
|
|
|
Deferred
|
15,945
|
13,976
|
31,607
|
58,068
|
|
|
24,599
|
14,250
|
97,837
|
59,304
|
| Net earnings |
60,944
|
35,584
|
242,392
|
148,702
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
Basic
|
0.46
|
0.26
|
1.79
|
1.06
|
|
|
Diluted
|
0.46
|
0.26
|
1.78
|
1.06
|
Consolidated Statement of Financial Position
(Stated in thousands of Canadian dollars)
(Unaudited)
|
|
|
|
|
| December 31
2012 | December 31
2011 |
| Assets |
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
1,408,199
|
1,243,605
|
|
|
Restricted cash
|
51,623
|
48,341
|
|
|
Accounts receivable
|
37,576
|
34,122
|
|
|
Prepaid expenses, deposits and other
|
101,802
|
66,936
|
|
|
Inventory
|
35,595
|
31,695
|
|
|
1,634,795
|
1,424,699
|
|
Non-current assets:
|
|
|
|
|
Property and equipment
|
1,985,599
|
1,911,227
|
|
|
Intangible assets
|
50,808
|
33,793
|
|
|
Other assets
|
75,413
|
103,959
|
|
Total assets
|
3,746,615
|
3,473,678
|
|
|
|
|
| Liabilities and shareholders' equity |
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable and accrued liabilities
|
460,003
|
307,109
|
|
|
Advance ticket sales
|
480,947
|
432,186
|
|
|
Non-refundable guest credits
|
47,859
|
43,485
|
|
|
Current portion of long-term debt
|
164,909
|
158,832
|
|
|
Current portion of maintenance provisions
|
34,135
|
245
|
|
|
1,187,853
|
941,857
|
|
Non-current liabilities:
|
|
|
|
|
Maintenance provisions
|
145,656
|
151,645
|
|
|
Long-term debt
|
574,139
|
669,880
|
|
|
Obligations under finance leases
|
-
|
3,174
|
|
|
Other liabilities
|
9,914
|
10,449
|
|
|
Deferred income tax
|
356,748
|
326,456
|
|
Total liabilities
|
2,274,310
|
2,103,461
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
Share capital
|
614,899
|
630,408
|
|
|
Equity reserves
|
69,856
|
74,184
|
|
|
Hedge reserves
|
(5,746)
|
(3,353)
|
|
|
Retained earnings
|
793,296
|
668,978
|
|
Total shareholders' equity
|
1,472,305
|
1,370,217
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
3,746,615
|
3,473,678
|
Consolidated Statement of Cash Flows
(Stated in thousands of Canadian dollars)
(Unaudited)
|
|
|
|
|
| Three months ended
December 31 | Twelve months ended
December 31 |
|
| 2012 | 2011 | 2012 | 2011 |
|
|
|
|
|
|
| Operating activities: |
|
|
|
|
|
Net earnings
|
60,944
|
35,584
|
242,392
|
148,702
|
|
Items not involving cash:
|
|
|
|
|
|
|
Depreciation and amortization
|
46,175
|
44,312
|
185,401
|
174,751
|
|
|
Change in long-term maintenance provisions
|
7,859
|
15,981
|
34,426
|
38,522
|
|
|
Change in other liabilities
|
7
|
(198)
|
(383)
|
(313)
|
|
|
Amortization of hedge settlements
|
350
|
350
|
1,400
|
1,400
|
|
|
Loss on fuel derivatives
|
-
|
(1,597)
|
6,512
|
6,052
|
|
|
(Gain) loss on disposal of property and equipment
|
(88)
|
43
|
(469)
|
54
|
|
|
Share-based payment expense
|
3,121
|
2,538
|
12,815
|
12,553
|
|
|
Deferred income tax expense
|
15,945
|
13,976
|
31,607
|
58,068
|
|
|
Finance income
|
(4,973)
|
(4,383)
|
(18,391)
|
(15,987)
|
|
|
Finance costs
|
11,636
|
14,446
|
48,900
|
60,911
|
|
|
Unrealized foreign exchange (gain) loss
|
604
|
66
|
(1,487)
|
1,453
|
|
Change in non-cash working capital
|
(48,136)
|
(32,935)
|
173,563
|
89,739
|
|
Change in restricted cash
|
(2,981)
|
(5,869)
|
(3,282)
|
(19,758)
|
|
Change in other assets
|
(1,299)
|
984
|
(6,894)
|
(4,344)
|
|
Cash taxes received (paid)
|
(219)
|
(391)
|
(950)
|
26
|
|
Cash interest received
|
4,462
|
4,057
|
17,780
|
14,631
|
|
Purchase of shares pursuant to compensation plans
|
-
|
-
|
(1,306)
|
-
|
|
|
93,407
|
86,964
|
721,634
|
566,460
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
Aircraft additions
|
(31,671)
|
(4,975)
|
(218,116)
|
(61,265)
|
|
Other property and equipment and intangible additions
|
(9,971)
|
(32,041)
|
(51,191)
|
(57,108)
|
|
|
(41,642)
|
(37,016)
|
(269,307)
|
(118,373)
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
Increase in long-term debt
|
-
|
-
|
72,995
|
-
|
|
Repayment of long-term debt
|
(41,405)
|
(62,021)
|
(162,678)
|
(199,225)
|
|
Decrease in obligations under finance leases
|
(19)
|
(18)
|
(75)
|
(108)
|
|
Shares repurchased
|
(33,193)
|
-
|
(112,065)
|
(74,570)
|
|
Dividends paid
|
(10,577)
|
(6,914)
|
(37,549)
|
(35,000)
|
|
Issuance of shares pursuant to compensation plans
|
36
|
-
|
198
|
34
|
|
Cash interest paid
|
(10,178)
|
(12,088)
|
(43,055)
|
(51,722)
|
|
Change in non-cash working capital
|
(1,458)
|
(2,345)
|
(5,825)
|
(2,084)
|
|
|
(96,794)
|
(83,386)
|
(288,054)
|
(362,675)
|
|
|
|
|
|
|
|
Cash flow from operating, investing and financing activities
|
(45,029)
|
(33,438)
|
164,273
|
85,412
|
|
Effect of foreign exchange on cash and cash equivalents
|
294
|
(576)
|
321
|
(1,123)
|
|
Net change in cash and cash equivalents
|
(44,735)
|
(34,014)
|
164,594
|
84,289
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
1,452,934
|
1,277,619
|
1,243,605
|
1,159,316
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
1,408,199
|
1,243,605
|
1,408,199
|
1,243,605
|
CASM, excluding fuel and employee profit share
(Stated in thousands of Canadian dollars, except percentage, mile and
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 December 31 | Twelve months ended December 31 |
|
| 2012 | 2011 | Change | 2012 | 2011 | Change |
| CASM, excluding fuel and employee profit share |
|
|
|
|
|
|
|
Operating expenses
|
769,040
|
722,294
|
46,746
|
3,051,689
|
2,814,989
|
236,700
|
|
Aircraft fuel expense
|
(246,216)
|
(235,574)
|
(10,642)
|
(992,787)
|
(915,878)
|
(76,909)
|
|
Employee profit share expense
|
(11,639)
|
(5,662)
|
(5,977)
|
(46,585)
|
(23,804)
|
(22,781)
|
|
Operating expenses, adjusted
|
511,185
|
481,058
|
30,127
|
2,012,317
|
1,875,307
|
137,010
|
|
ASMs
|
5,487,467,646
|
5,328,928,405
|
158,539,241
|
22,063,583,754
|
21,186,304,409
|
877,279,345
|
|
CASM, excluding above items (cents)
|
9.32
|
9.03
|
3.2%
|
9.12
|
8.85
|
3.1%
|
Return on invested capital (ROIC)
(Stated in thousands of Canadian dollars, except percentages)
(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 earnings before tax, excluding special items, finance costs
and implied interest on 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.
|
|
|
|
|
|
| 2012 | 2011 | Change |
| Return on invested capital |
|
|
|
|
Earnings before income taxes
|
340,229
|
208,006
|
132,223
|
|
Add:
|
|
|
|
|
|
Finance costs
|
48,900
|
60,911
|
(12,011)
|
|
|
Implicit interest in operating leases(i) |
91,041
|
86,925
|
4,116
|
|
|
480,170
|
355,842
|
124,328
|
|
Invested capital:
|
|
|
|
|
|
Average long-term debt(ii) |
783,880
|
927,757
|
(143,877)
|
|
|
Average obligations under finance leases(iii) |
1,625
|
3,303
|
(1,678)
|
|
|
Average shareholders' equity
|
1,421,261
|
1,337,225
|
84,036
|
|
|
Off-balance-sheet aircraft leases(iv) |
1,300,590
|
1,241,783
|
58,807
|
|
|
3,507,356
|
3,510,068
|
(2,712)
|
|
Return on invested capital
|
13.7%
|
10.1%
|
3.6 pts.
|
|
(i)
|
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.
|
|
(ii)
|
Average long-term debt includes the current portion and long-term
portion.
|
|
(iii)
|
Average obligations under finance leases include the current portion and
long-term portion.
|
|
(iv)
|
Off-balance-sheet aircraft leases are calculated by multiplying the
trailing 12 months of aircraft leasing expense by 7.5. At December 31,
2012, the trailing 12
months of aircraft leasing costs totaled $173,412 (December 31, 2011 -
$165,571).
|
|
|
SOURCE: WestJet
