STAYING TRUE. Scotia Capital Transportation & Aerospace Conference. November 15, 2011

Transcription

1 STAYING TRUE Scotia Capital Transportation & Aerospace Conference November 15, 2011

2 FORWARD-LOOKING STATEMENT Certain information in this presentation and statements made during this presentation, including any question and answer session, may contain forward-looking statements, including but not limited to, those regarding projected economic indicators, future expansion plans for WestJet and WestJet Vacations Inc. (WVI), capacity growth, fleet expansion, potential interline and code-share agreements, ASM, RASM, CASM and future revenue and profits, implementation of the new reservation system, the reward program and co-branded credit card, cost-saving initiatives, addition of new destinations, market-share and business travel expansion, hedging activities and ancillary revenue expansion. Certain material factors and assumptions were applied in formulating these forward-looking statements. These forward-looking statements are subject to, and may be affected by, numerous risks and uncertainties which may cause WestJet s actual results to differ materially from a conclusion, forecast or projection expressed in or implied by such statements. Factors that could cause or contribute to these differences include, but are not limited to: changes in government policy, exchange rates, interest rates, disruption of supplies, volatility of fuel prices, terrorism, general economic conditions, the competitive environment and other factors described in WestJet s public reports and filings which are available under WestJet s profile on SEDAR ( Forward-looking statements are subject to change and WestJet does not undertake to update or revise any forward-looking information as a result of any new information, future events or otherwise, except as required by applicable law. November

3 WESTJET S STRATEGY WORKING SINCE DAY ONE WestJet Vacations People and Culture Single fleet type Rewards program Revenue and Growth Costs and Margins Cost efficiency Business traveller Guest Experience and Performance Risk management 3

4 GROWTH AND STRONG FINANCIAL PERFORMANCE CONTINUES

5 GROWING DESTINATIONS WestJet Destinations Served* 80 Domestic Transborder Mexico Caribbean *Destinations Served at Year-End 5

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7 WESTJET A GROWTH STORY Revenue (millions of dollars) Available Seat Miles (millions) 3,500 25,000 3,000 20,000 2,500 2,000 15,000 1,500 10,000 1, ,000 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11* 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 * 2011 analyst consensus based on reports as of November 10,

8 TRACK RECORD OF PROFITABILITY SINCE INCEPTION Net Earnings (millions of dollars) '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 8 Note: figures reported in Canadian GAAP with restatements

9 OUR GROWTH CONTINUES % 70% 60% 50% 40% 30% 20% 10% 0% Q Q Q Q Q Q Q Q Miles (billions) Q Load Factor % ASMs RPMs Load Factor %

10 PRICING POWER 100% 20 Load Factor % 90% 80% 70% 60% Yield (cents) 50% 10 Q Q Q Q Q Q Q Q Q Q Q Q Q Load Factor % Yield (cents) 10 Yield 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 cents.

11 MEASURED GROWTH WITH FLEXIBLE FLEET PLAN Cumulative Lease Extension Options 11

12 COST EFFICIENCY REMOVING COSTS WHERE POSSIBLE 85.00% 80.00% 75.00% 70.00% 65.00% 60.00% S outhwe st W e stjet* US Airway s A m erica n J etb lue A ir Cana da* A lask a De lta Un ited Cost efficiencies have led to low break-even load factor Cost efficiencies are driven by: - High utilization of aircraft - High employee productivity - Single-fleet efficiencies - Self service - Ownership culture - Disciplined focus on expenditures 2010 Load Factor 2010 Break-even Load Factor 12 * WJ & AC restated to IFRS. Under CGAAP WJ 72.3% and AC 78.6% Source: Internal estimates, company reports

13 COSTS REMAIN UNDER CONTROL 16 cents per ASM * YTD Q3 2011* CASM (ex fuel) Fuel Op. Margin *IFRS basis Excludes reservation system impairment of $31.9 million in 2007

14 OPERATING HIGHLIGHTS 9 MONTHS ENDED SEPT 30 Year-todate 2011 Year-todate 2010* Change Net earnings (millions) $113.1 $ % Diluted earnings per share $0.80 $ % Total revenues (millions) $2,290.0 $1, % RASM (revenue per available seat mile) (cents) CASM (cost per available seat mile) (cents) % % Fuel costs per litre (dollars) $0.88 $ % CASM, excluding fuel and employee profit share (cents) (0.1%) Operating Cash Flow (millions) $447.5 $ % *Financial information has been restated in accordance with IFRS. 14

15 YTD Q ADJUSTED EBT MARGIN WESTJET RANKS 3rd BEHIND LEADING NORTH AMERICAN PEERS 15% 10% 7.1 % Adjusted EBT Margin 5% 0% -5% -10% Alaska Allegiant WestJet United Southwest JetBlue Delta US Airways Air Canada American 15 YTD Q adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market hedge gains/losses)

16 16 YTD Q RASM YOY CHANGE WESTJET ACHIEVING STRONG RASM GROWTH 20% 15% 10% 9.5% 5% 0% RASM change YoY Allegiant JetBlue WestJet United Delta US Airways American Southwest Alaska Air Canada

17 BUILDING ON OUR CAPABILITIES

18 WESTJET VACATIONS LEVERAGING OUR STRENGTHS IN A NEW MARKETPLACE One of the fastest growing vacation operators in Canada Large market opportunity available to capture Integrated approach with WestJet taps multiple demand streams Competitive advantage with flexible product combinations and scheduled service to all destinations allowing more booking options 18

19 AIRLINE PARTNERSHIPS 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

20 REWARDS PROGRAM CREATING FURTHER LOYALTY Frequent Guest Program Appeals to high frequency traveller and also mass market: Simple and transparent Aims to capture additional highyielding guests Start earning WestJet dollars with first flight flown or vacation package taken Credit card Appeals to the mass market: Simple and transparent Fully accretive to WestJet Strong partnership with RBC for awareness Two types of cards; different earning power 20

21 ENHANCED EASTERN TRIANGLE SCHEDULE IMPROVED VALUE FOR BUSINESS TRAVELERS Expanded schedule Toronto to Montreal Montreal to Toronto Toronto to Ottawa Ottawa to Toronto Summer 2011 Summer 2011 Depart Arrive Depart Arrive Summer 2011 Summer 2011 Depart Arrive Depart Arrive

22 WE HAVE THE FINANCIAL STRENGTH TO PUT OUR STRATEGY INTO ACTION

23 CAPITAL STRUCTURE At September 30, 2011: - Cash of C$1,320 million - Cash to TTM of revenues ratio of 44% - Working Capital ratio of 1.49x - Adjusted debt to equity ratio of 1.56x - Adjusted net debt to EBITDAR of 1.31x $ millions times Initiated a quarterly dividend ($0.05 per share) * Q3 2011* Normal Course Issuer Bid - Purchase on open market and cancel - TSX approved 7,264,820 share bid or ~ 5% - Completed on August 9, 2011 for total price of $106 million or $14.57 per share Cash Adj. net Debt/EBITDAR Adj. Debt/Equity *2010 and 2011 presented under IFRS. Note: All figures are full-year figures based on trailing twelve months. Debt ratios include aircraft operating leases. 23

24 RELATIVE LIQUIDITY & LEVERAGE RATIOS - SEPTEMBER 30, % 44% 40% Liquidity Cash / LTM Revenue 30% 20% 10% 0% WestJet Allegiant Alaska JetBlue Southwest United American Air Canada US Airways Delta 8 Leverage Adj. Net Debt / EBITDAR Allegiant Alaska WestJet Southwest United Air Canada Delta JetBlue US Airways American

25 25 WJA TRADING IN LINE WITH THE S&P/TSX 20% 10% 0% -10% -20% -30% -40% WJA S&P XAL 4-Jan-11 4-Feb-11 4-Mar-11 4-Apr-11 4-May-11 4-Jun-11 4-Jul-11 4-Aug-11 4-Sep-11 4-Oct-11 4-Nov-11 WJA S&P/TSX XAL

26 GUIDANCE Q4/11 FY 2011 FY 2012 RASM Comparable growth to Q3/11 Maintenance CASM Up 3-5% CASM (ex fuel & profit share) Fuel cost per litre $ $0.93 (based on $124USD jet/barrel and 1.02 FX) Up ~ 1% Flat to up 1% Tax Rate 29% - 30% 28% - 30% Capital Expenditures $95 -$105M $165-$175M System capacity Up 5-6% Up ~ 8% Up 4-5% Domestic capacity Up 2-3% Up ~2% Up 0.5 1% 26

27 WHY INVEST IN WESTJET 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 27

28 For further information: Hugh Harley Director, Investor Relations P: (403) E: W: