WestJet posts 65% 2011 profit increase, to start regional carrier in 2013

WestJet 737-700. By Rob Finlayson

Canadian low-cost carrier WestJet (WS) reported a 2011 net profit of C$148.7 million ($149.3 million), up 64.9% from C$90.2 million in net income in 2010, and announced it will launch a regional turboprop airline next year.

Regarding the new regional affiliate, which will fly under its own operating certificate, WS president and CEO Gregg Saretsky told analysts and reporters, "We're trying to the degree possible to replicate the way WestJet was launched in 1996." The not-yet-named carrier will operate short-haul, low-cost flights with either Bombardier Q400s or ATR 72-600s, Saretsky said, noting that a request for proposals (RFP) will be issued to Bombardier and ATR shortly.

The new regional carrier will operate a single aircraft type, with a decision on which to order coming by mid-year. Saretsky called the establishment of the regional, on which few details were provided, "the logical next step in WestJet's evolution." He said the regional "will be accretive to [WS's] earnings" and will allow the Calgary-based LCC to expand its reach to Canadian markets that are not viable to serve with its Boeing 737NGs.

WS's 2011 revenue increased by 17.8% year-over-year to C$3.07 billion, outpacing a 16.1% rise in costs to C$2.81 billion, including a 35.8% jump in aircraft fuel expenditures to C$915.9 million. Operating profit was C$256.6 million, up 34.1%. The carrier's full-year operating margin rose 1.1 points over 2010 to 8.4%. Traffic lifted 8.2% to 16.89 billion RPMs on 8.5% growth in capacity to 21.2 billion ASMs, producing a load factor of 79.7%, down 0.2 points. Yield grew 8.9% year-over-year to C$0.182.

WS plans to take delivery of three 737NGs this year, bringing its fleet to 100 of the type by year end.