expanding our reach - book flights and vacation … · expanding our reach may 18, 2012 ... fuel...
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FORWARD-LOOKING STATEMENT
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Certain information in this presentation and statements made during this presentation, including anyquestion and answer session, may contain “forward-looking information”, as defined under applicableCanadian securities legislation. Our actual results, performance or achievements could differmaterially from those expressed in, or implied by, this forward-looking information. We can give noassurance that any of the events anticipated will transpire or occur or, if any of them do, what benefitsor costs we will derive from them. By its nature, forward-looking information is subject to numerousrisks and uncertainties including, but not limited to, the impact of general economic conditions,changing domestic and international airline industry conditions, volatility of fuel prices, terrorism,pandemics, currency fluctuations, interest rates, competition from other airline industry participants(including new entrants, capacity fluctuations and the pricing environment), labour matters,government regulations, stock market volatility, the ability to access sufficient capital from internal andexternal sources, and additional risk factors discussed in other documents we file from time to timewith securities regulatory authorities, which are available on SEDAR at sedar.com or, upon request,without charge from us.
Our assumptions and estimates relating to the forward-looking information referred to above areupdated quarterly and, except as required by law, we do not undertake to update any other forward-looking information.
May 2012
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WESTJET’S TRACK RECORD OF PROFITABILITYSINCE INCEPTION
Net Earnings (millions of dollars)
Note: figures reported in Canadian GAAP up to 2009 with 2005-2008 restatements. 2010 is restated under IFRS
-20
20
60
100
140
180
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
4
WESTJET’S GOAL TO GENERATE 12% ROIC
Return on Invested Capital*
Note: 2010-2011 calculated under IFRS; 2009 & prior are calculated under Canadian GAAP
* Based on trailing 12 month basis
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
2005 2006 2007 2008 2009 2010 2011 Q1 2012
Goal
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WESTJET A GROWTH STORY
Revenue (millions of dollars) Available Seat Miles (millions)
0
5,000
10,000
15,000
20,000
25,000
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
0
500
1,000
1,500
2,000
2,500
3,000
3,500
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
9Yield for 2008 & 2009 based on CGAAP, while 2010 & 2011 based on IFRS. Difference between CGAAP and IFRS not expected to be material as difference in 2010 is only 0.01 – 0.02 cents.
PRICING POWER RETURNS
10
12
14
16
18
20
50%
60%
70%
80%
90%
100%
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Yiel
d (c
ents
)
Load
Fac
tor %
Load Factor % Yield (cents)
10
2012-2010 reported on IFRS basis; 2009-2007 reported under Canadian GAAP. 2007 excludes reservation system impairment of $31.9 million.
COSTS REMAIN UNDER CONTROL
8.6 8.3 8.5 8.8 8.9 9.0
3.5 4.7 3.2 3.5 4.3 4.6
2.2 1.7 1.2 1.0
1.2 1.9
0
2
4
6
8
10
12
14
16
18
2007 2008 2009 2010 2011 Q1 2012
cent
s pe
r A
SM
CASM (ex fuel and profit share) Profit Share Fuel Op. Margin
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MEASURED GROWTH WITH FLEXIBLE FLEET PLAN
91 97 100 105 106 103 103 103 102
15 23 29 33
50
60
70
80
90
100
110
120
130
140
2010 2011 2012 2013 2014 2015 2016 2017 2018
Cumulative Lease Extension Options
109118
126132 135
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OPERATING HIGHLIGHTS – Q1 2012
Q1 2012 Q1 2011 Change
Net earnings (millions) $68.3 $48.2 41.6%
Diluted earnings per share $0.49 $0.34 44.1%
Total revenues (millions) $891.0 $772.4 15.3%
RASM (revenue per available seat mile) (cents)
15.66 14.77 6.0%
Fuel costs per litre (dollars) $0.95 $0.85 11.8%
CASM, excluding fuel and employee profit share (cents)
8.95 8.91 0.4%
Record First Quarter Net Earnings - up 42%
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ANCILLARY REVENUE GROWTH
$8.39
4
5
6
7
8
9
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Ancillary revenue per guest
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Q1 2012 adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market hedge gains/losses)
Q1 2012 – ADJUSTED EBT MARGINWESTJET RANKS 3rd BEHIND LEADING NORTH AMERICAN PEE RS
14.5 %
12.7 %
10.9 %
4.5 % 4.0 %
(0.4)% (0.7)% (0.7)%
(3.3)%
(5.7)%
-10%
-5%
0%
5%
10%
15%
20%
Alle
gian
t
Spir
it
Wes
tJet
Ala
ska
JetB
lue
Del
ta
US
Air
way
s
Sou
thw
est
Un
ited
Air
Can
ada
• Strategically selecting carriers in each major world region
• Seamless access to more destinations
• International travel options for the business traveller
• Innovative approach to code-share
• Selective approach keeps costs in line
AIRLINE PARTNERSHIPS EXPANDING OUR NETWORK
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17
Expanded schedule
Toronto to Montreal
Montreal to Toronto
Depart Arrive Depart Arrive
0700 0810 0700 0815
0800 0910 0800 0915
0900 1010 0900 1015
1200 1310 1200 1315
1400 1510 1400 1515
1600 1710 1600 1715
1700 1810 1700 1815
1800 1910 1800 1915
1930 2040 1900 2015
2230 2340 2030 2145
Toronto to Ottawa
Ottawa to Toronto
Depart Arrive Depart Arrive
0700 0800 0700 0759
0800 0900 0800 0859
0900 1000 0930 1029
1200 1300 1200 1259
1400 1500 1400 1459
1600 1700 1600 1659
1730 1830 1700 1759
1830 1930 1800 1859
2230 2330 1930 2029
ENHANCED EASTERN TRIANGLE SCHEDULEIMPROVED VALUE FOR BUSINESS TRAVELERS
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INTRODUCTION OF SERVICE TO LAGUARDIABUILDS ON THE EASTERN TRIANGLE STRATEGY
Weekday Toronto to LaGuardia
Weekday LaGuardia to Toronto
7:00 6:55
9:30 7:55
12:30 9:30
14:30 12:00
16:00 14:55
17:30 16:45
19:30 18:30
20:30 19:50
Through our partnership with Delta, WestJet is able to operate with optimal slot times
MARKET OPPORTUNITIESREGIONAL (50+ seats) = $2.1B – DOMESTIC + TRANSBORDE R
Source: Internal estimates using public capacity and traffic information20
SIGNIFICANT DOMESTIC OPPORTUNITYAC AND PARTNERS SERVE DOUBLE THE CANADIAN DESTINATI ONS vs WESTJET
CalgaryDeer LakeEdmontonFt. McMurrayGanderHalifaxKelownaMontreal
OttawaReginaSaskatoonSt. JohnsTorontoVancouverVictoriaWhitehorse
Winnipeg
Baie ComeauBathurstCalgaryCastlegarCharlottetownCranbrookDeer LakeEdmontonFrederictonFt. McMurrayFt. St. JohnGanderGaspeGoose BayGrande PrairieHalifaxIles De La MadeleineKamloopsKelownaKingstonLethbridgeLondonMedicine HatMonctonMont JoliMontrealNanaimoNorth BayOttawa
PentictonPrince GeorgePrince RupertQuebecReginaRouyn-NorandaSaguenaySandspitSarniaSaskatoonSault Ste. MarieSept-IlesSmithersSt. JohnSt. JohnsSudburySydneyTerraceThunder BayTimminsTorontoToronto-CityVal D'OrVancouverVictoriaWabushWhitehorseWindsorWinnipegYellowknife
AbbotsfordCalgaryCharlottetownComoxDeer LakeEdmontonFt. McMurrayGrande PrairieHalifaxHamiltonKamloopsKelownaKitchenerLondonMoncton
MontrealOttawaPrince GeorgeQuebecReginaSaskatoonSt. JohnsSydneyThunder BayTorontoVancouverVictoriaWindsorWinnipegYellowknife
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WESTJET’S REGIONAL AIRLINE AT MATURITY
• Organizational structure: wholly owned subsidiary
• Fleet size: up to 45 x 78-seat Q400 turboprop aircraft
• Network and schedule
• National operation (Eastern and Western)
• Domestic and transborder operations
Type of flying Description
New destinationsFlights to/from new destinations not currently served by the WestJet network
Join the dotsFlights between existing destinations not currently flown by WestJet
Schedule improvements
Flights on some existing short-haul routes that benefit from increased frequency and higher load factors; B737 flying will be redeployed to maximize the network
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CRITICAL SUCCESS FACTORS REMAIN THE SAME FOR A REGIONAL AIRLINE
Low cost
• Obtain meaningful and sustainable cost advantage vs. regional competitors
• Low fares to stimulate demand and steal traffic
• Expand low-fare high-value proposition to new markets
Guest experience and culture
• Consistent WestJet guest experience
• Consistent WestJet values
• Maintain caring culture
• Engaged workforce
Guest experience and low cost
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*2010 and 2011 presented under IFRS.Note: All figures are full-year figures based on trailing twelve months.Debt ratios include aircraft operating leases.
At March 31, 2012:- Cash of C$1,401 million- Cash to TTM of revenues ratio of 44%- Adjusted net debt to EBITDAR of 1.13x
Initiated a quarterly dividend in November 2010- Increased to $0.06 from $0.05 in February 2012
Normal Course Issuer Bid- Completed prior NCIB on August 9, 2011 for $106 million or $14.59 per share- TSX approved 6,914,330 share bid or ~ 5%, announced on February 8, 2012. - Repurchased 1,351,930 shares in Q1 2012 for $18.8 million or $13.92 per share
CAPITAL STRUCTURE -EXCESS CASH HAS BEEN USED TOLOWER LONG TERM DEBT & BUY BACK STOCK
0
200
400
600
800
1000
1200
1400
1600
2005 2006 2007 2008 2009 2010 2011 Q12012
$ m
illio
ns
0
1
2
3
4
5
6
times
Cash Adj. net Debt/EBITDAR Adj. Debt/Equity
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RELATIVE LIQUIDITY & LEVERAGE RATIOS – March 31, 201 2Liquidity
Leverage
44%
0%
10%
20%
30%
40%
50%
WestJet Allegiant JetBlue Alaska Southwest United Air
Canada
US
Airways
Delta
Cash
/ L
TM R
even
ue
N/A
1.13
0
2
4
6
Allegiant WestJet Southwest Alaska Delta United Air
Canada
JetBlue US
Airways
Ad
j. N
et D
ebt
/ EB
ITD
AR
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GUIDANCE *
Q2/12 FY 2012
RASMSlightly moderated pace as
compared to Q1 2012 growth
CASM (ex fuel & profit share) Up 4.5 - 5.0% Up 1.5 - 2.5%
Fuel cost per litre$0.95 - $0.97
(based on $135USD jet/barrel and 1.00 FX)
Tax Rate 28% - 30%
Capital Expenditures $75 - $80M $165 - $175M
System capacity Up 2.0 – 3.0% Up ~ 4.0%
Domestic capacity Down 0.5 – 1.5% Up 0.5 – 1.0%
* Guidance excludes any possible impacts from the launch of a low cost regional airline
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• Earnings margins are consistently among the top tier in the industry
• Proven track record of profitable growth
• Well-positioned, low-cost and efficient carrier
• Award winning culture and highly engaged workforce
• Strong brand in the market place and expanding airline partnerships
• Attractive combination of planned growth and a strong balance sheet
SUMMARY - WHY INVEST IN WESTJET
For further information:Hugh HarleyDirector, Investor RelationsP: (403) 539-7594E: [email protected]: www.westjet.com