EXPANDING OUR REACH DAHLMAN ROSE & CO, GLOBAL TRANSPORTATION CONFERENCE

Transcription

1 EXPANDING OUR REACH DAHLMAN ROSE & CO, GLOBAL TRANSPORTATION CONFERENCE September 5, 2012

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 information, as defined under applicable Canadian securities legislation. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information. We can give no assurance that any of the events anticipated will transpire or occur or, if any of them do, what benefits or costs we will derive from them. By its nature, forward-looking information is subject to numerous risks 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 and external sources, and additional risk factors discussed in other documents we file from time to time with 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 are updated quarterly and, except as required by law, we do not undertake to update any other forwardlooking information. September

3 WESTJET S TRACK RECORD OF PROFITABILITY SINCE INCEPTION Net Earnings (millions of dollars) Note: figures reported in Canadian GAAP up to 2009 with restatements is restated under IFRS 3

4 GOAL TO GENERATE SUSTAINABLE 12% ROIC Return on Invested Capital* Goal Note: calculated under IFRS; 2009 & prior are calculated under Canadian GAAP * Based on trailing 12 month basis 4

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7 GROWTH AND STRONG FINANCIAL PERFORMANCE CONTINUES

8 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 '11 8

9 PRICING POWER MOMENTUM 100% 90% 80% 70% 60% 50% Q Q Q Q Q Q Q Q Q Load Factor % Q Yield (cents) Load Factor % Yield (cents)

10 COSTS REMAIN UNDER CONTROL cents per ASM YTD Q CASM (ex fuel and profit share) Profit Share Fuel Op. Margin *IFRS basis Excludes reservation system impairment of $31.9 million in 2007

11 MEASURED GROWTH FLEXIBLE FLEET PLAN Committed Fleet Cumulative Lease Extension Options 11

12 Q400 NEXTGEN FLEET PLAN ALSO BUILDS IN FLEXIBILITY Q400 NextGen Committed Fleet Cumulative Purchase Options 12

13 OPERATING HIGHLIGHTS YTD Q Record First Half Net Earnings - up 50% YTD Q YTD Q Change Net earnings (millions) $110.8 $ % Diluted earnings per share $0.81 $ % Total revenues (millions) $1,700.2 $1, % RASM (revenue per available seat mile) (cents) CASM, excluding fuel and employee profit share (cents) % % Fuel costs per litre (dollars) $0.94 $ % Operating Margin 10.4% 8.7% 1.7 pts. 13

14 ANCILLARY REVENUE GROWTH 9 Ancillary revenue per guest 8 $ YTD Q

15 PREMIUM ECONOMY SEATING Reconfiguration expected to be complete by end of 2012 Guest seats Before After Before After Before After Economy Premium Economy 15

16 YTD Q ADJUSTED EBT MARGIN WESTJET RANKS 4th BEHIND LEADING NORTH AMERICAN PEERS 20% 15% Adjusted EBT Margin 10% 5% 9.4% 0% -5% Allegiant Spirit Alaska WestJet JetBlue Southwest US Airways Delta United Air Canada 16 YTD Q adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market hedge gains/losses)

17 BUILDING ON OUR CAPABILITIES

18 AIRLINE PARTNERSHIPS EXPANDING OUR NETWORK Strategically selecting carriers in each major world region Seamless access to more destinations International travel options for the business traveller Selective approach keeps costs in line 18

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

20 INTRODUCTION OF SERVICE TO LAGUARDIA BUILDS ON THE EASTERN TRIANGLE STRATEGY Weekday Toronto to LaGuardia Weekday LaGuardia to Toronto 7:00 6:30 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. 20

21 THE REGIONAL OPPORTUNITY

22 MARKET OPPORTUNITIES REGIONAL (50+ seats) = $2.1B DOMESTIC + TRANSBORDER 22 Source: Internal estimates using public capacity and traffic information

23 SIGNIFICANT DOMESTIC OPPORTUNITY AC AND PARTNERS SERVE DOUBLE THE CANADIAN DESTINATIONS vs WESTJET Calgary Deer Lake Edmonton Ft. McMurray Gander Halifax Kelowna Montreal Ottawa Winnipeg Regina Saskatoon St. Johns Toronto Vancouver Victoria Whitehorse Baie Comeau Bathurst Calgary Castlegar Charlottetown Cranbrook Deer Lake Edmonton Fredericton Ft. McMurray Ft. St. John Gander Gaspe Goose Bay Grande Prairie Halifax Iles De La Madeleine Kamloops Kelowna Kingston Lethbridge London Medicine Hat Moncton Mont Joli Montreal Nanaimo North Bay Ottawa Penticton Prince George Prince Rupert Quebec Regina Rouyn-Noranda Saguenay Sandspit Sarnia Saskatoon Sault Ste. Marie Sept-Iles Smithers St. John St. Johns Sudbury Sydney Terrace Thunder Bay Timmins Toronto Toronto-City Val D'Or Vancouver Victoria Wabush Whitehorse Windsor Winnipeg Yellowknife Abbotsford Calgary Charlottetown Comox Deer Lake Edmonton Ft. McMurray Grande Prairie Halifax Hamilton Kamloops Kelowna Kitchener London Moncton Montreal Ottawa Prince George Quebec Regina Saskatoon St. Johns Sydney Thunder Bay Toronto Vancouver Victoria Windsor Winnipeg Yellowknife 23

24 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 New destinations Join the dots Schedule improvements Description Flights to/from new destinations not currently served by the WestJet network Flights between existing destinations not currently flown by WestJet 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 24

25 CRITICAL SUCCESS FACTORS REMAIN THE SAME FOR A REGIONAL AIRLINE Guest experience and low cost Guest experience and culture Consistent WestJet guest experience Consistent WestJet values Maintain caring culture Engaged workforce 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 25

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

27 CAPITAL STRUCTURE - EXCESS CASH HAS BEEN USED TO LOWER LONG TERM DEBT & BUY BACK STOCK At June 30, 2012: - Cash of C$1,264 million - Cash to TTM of revenues ratio of 39% - Adjusted net debt to EBITDAR of 1.30x $ millions Q Cash Adj. net Debt/EBITDAR Adj. Debt/Equity times Initiated a quarterly dividend in November Increased to $0.06 from $0.05 in February Increased to $0.08 from $0.06 in August 2012 Normal Course Issuer Bid - Completed prior NCIB on August 9, 2011 for $106 million or $14.59 per share - TSX approved 6.9 million share bid or ~ 5%, announced on February 8, Repurchased 4.6 million shares YTD Q for $68.7 million or $15.06 per share *2010 and 2011 presented under IFRS. Note: All figures are full-year figures based on trailing twelve months. Debt ratios include aircraft operating leases. 27

28 RELATIVE LIQUIDITY & LEVERAGE RATIOS June 30, % 40% 39% Liquidity Cash / LTM Revenue 30% 20% 10% 0% Allegiant WestJet Alaska United Air Canada US Airways Southwest JetBlue Delta 6 Leverage Adj. Net Debt / EBITDAR N/A Allegiant Alaska WestJet Southwest Delta United US Airways Air Canada JetBlue

29 GUIDANCE Q3/12 FY 2012 RASM CASM (ex fuel & profit share) Fuel cost per litre Moderately stronger than growth in the first half of 2012 In line with increase in the second quarter of 2012 $0.90 $0.92 (based on $123USD jet/barrel and 1.02 FX) Up % Tax Rate 28% 30% Capital Expenditures $25 $30M $270 $280M System capacity Up % Up % Domestic capacity Down % Flat to down 1.0% 29

30 SUMMARY - WHY INVEST IN WESTJET Earnings margins are consistently among the top tier in the industry Proven track record of profitable growth 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 Committed to generating value and returning value to shareholders 30

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