WestJet Airlines Ltd. (WJAVF.PK)
Q1 2010 Earnings Call
April 04, 2010 10:00 am ET
Rob McInnis - Director, IR
Gregg Saretsky - President and CEO
Vito Culmone - EVP of Finance and CFO
Ben Cherniavsky - Raymond James
Walter Spracklin - RBC Capital Markets
Cameron Doerksen - Versant Partners
Nuemeyer Allen - National Bank Financial
Doug Cooper - Paradigm Capital
Tim James - TD Newcrest
David Tyerman - Genuity Capital Markets
Andy Compart - Aviation Daily
Nicole Mordant - Reuters
CAI International Inc. Q1 2010 Earnings Call Transcript
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Good morning, ladies and gentlemen, thank you for standing by. Welcome to WestJet's first quarter 2010 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). As a reminder this conference call is being broadcast live on the internet and recorded. Your conference speakers today are Mr. Gregg Saretsky, President and Chief Executive Officer, Mr. Vito Culmone, Executive Vice-President of Finance and Chief Financial Officer, Dr. Hugh Dunleavy, Executive Vice President of Strategy and Planning. Mr. Bob Cummings, Executive Vice President of Marketing and Sales and Mr. Rob Palmer, Vice President and Controller. I will now turn the conference over to WestJet.
Thank you. Good morning ladies and gentlemen, my name is Rob McInnis I am WestJet’s Director of Investor Relations. Before turning the call over to Gregg, I’d like to read the customary cautionary language. Certain statements made in this call maybe forward-looking and subject to important risks and uncertainties. The results indicated in these statements may differ materially from actual results for a number of reasons including risk factors and uncertainties outlined in publicly filed documents. Certain material factors and assumptions were applied in coming to the results stated in the forward-looking statement.
Material risks and the material factors and assumptions implied in formulating these results and the material factors that could cause actual results to differ from the forward-looking statements are discussed in our most recently MD&A and AIF. These are publicly available on www.sedar.com. Any forward-looking statements made in this call represent expectations of WestJet at this current date and are subject to change after such date.
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 required by law.
Thanks Rob and good morning everybody and thank you for joining us today. As this is my first quarterly financial call for WestJet I would like to start by thanking WestJetters, key suppliers and the financial community for the warm welcome I have received in my new role as President and CEO. I am honored to have the opportunity to lead our team. I’d also like to give a shout out to Sean Durfy on behalf of all WestJetters for his leadership and past contributions to our great airline.
This morning I am very pleased to report strong, financial results for WestJet with the first quarter GAAP profit of $13.8 million excluding the impact of a one-time charge related to the departure of Sean Durfy. WestJet reported an adjusted net profit of $17.5 million or $0.12 per share. This is roughly in line with analysts mean net profit estimate of $0.14 per share and down from last year's adjusted net profit of $35.2 million and or $0.27 per share.
Our strong financial results for the quarter were driven by a record load factor and improved operational performance offset by an increase in the cost of fuel, rising sales and distribution expense and a small decline in yield. These results show that the relentless hard working dedication of WestJetters is continuing to drive our positive results. This is our 20th consecutive quarter of profitability and our earnings for this quarter were once among the best of North American airlines based on normalized earnings before tax.
Looking at the first quarter of 2010, we attracted more guests than in the same period last year and we are pleased to see healthy growth in our year-over-year revenue. While we continue to work the revenue side of our business, we also see additional opportunity for improvements on the cost side which I will talk about more in a moment.
We generated positive cash flows from operations and maintained one of the strongest balance sheets in the business. Given the cyclicality of our industry and its vulnerability to unpredictable events as evidenced by volcanoes in Iceland and last year's H1N1 outbreak, maintaining a strong financial position is imperative and a top priority at WestJet.
First quarter of 2010 was an interesting period for the Canadian airline industry and more specifically for WestJet. The major Canadian carriers added 1.9% domestic capacity in the quarter while the major US carriers continue to remove 2.5% of their capacity. As such the double-digit RASM improvement and the other strong indicators of our recovery that we see in the US are not nearly as prevalent in Canada. That being said, the strong load factor and improving yield trends we experienced as we move through the first quarter have continued through April and assuming trends continue we expect to start seeing year-over-year RASM improvements in the second quarter of 2010.
While Vito will dive deeper into our first quarter costs, I wanted to address the 3.9% increase in unit costs. As stated in this morning's release, CASM increases were primarily due to elevated fuel prices and higher sales and distribution costs. We did not experience the same cost relief for Jet fuel as we saw in this quarter in 2009. Of the increase in sales and distribution costs roughly 60% related to the growth of WestJet Vacations.