EXPANDING OUR REACH DAHLMAN ROSE & CO, GLOBAL TRANSPORTATION CONFERENCE September 5, 2012
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 2012 2
WESTJET S TRACK RECORD OF PROFITABILITY SINCE INCEPTION Net Earnings (millions of dollars) Note: figures reported in Canadian GAAP up to 2009 with 2005-2008 restatements. 2010 is restated under IFRS 3
GOAL TO GENERATE SUSTAINABLE 12% ROIC Return on Invested Capital* Goal Note: 2010-2011 calculated under IFRS; 2009 & prior are calculated under Canadian GAAP * Based on trailing 12 month basis 4
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GROWTH AND STRONG FINANCIAL PERFORMANCE CONTINUES
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 1,000 500 5,000 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
PRICING POWER MOMENTUM 100% 90% 80% 70% 60% 50% 9 20 18 16 14 12 10 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Load Factor % Q2 2012 Yield (cents) Load Factor % Yield (cents)
COSTS REMAIN UNDER CONTROL cents per ASM 18 16 14 12 10 8 6 4 2 0 2.2 1.7 3.5 4.7 1.2 3.2 3.5 4.3 4.6 8.6 8.3 8.5 8.8 8.9 9.0 2007 2008 2009 2010 2011 YTD Q2 2012 CASM (ex fuel and profit share) Profit Share Fuel Op. Margin 1.0 1.2 1.6 10 *IFRS basis Excludes reservation system impairment of $31.9 million in 2007
MEASURED GROWTH - 737 FLEXIBLE FLEET PLAN 140 130 120 110 100 90 80 70 60 50 135 132 126 118 109 15 23 29 33 97 100 105 106 103 103 103 102 2011 2012 2013 2014 2015 2016 2017 2018 737 Committed Fleet Cumulative Lease Extension Options 11
Q400 NEXTGEN FLEET PLAN ALSO BUILDS IN FLEXIBILITY 50 43 45 40 30 25 34 14 23 25 20 16 7 10 0 14 18 20 20 20 7 2013 2014 2015 2016 2017 2018 Q400 NextGen Committed Fleet Cumulative Purchase Options 12
OPERATING HIGHLIGHTS YTD Q2 2012 Record First Half Net Earnings - up 50% YTD Q2 2012 YTD Q2 2011 Change Net earnings (millions) $110.8 $73.9 50.0% Diluted earnings per share $0.81 $0.52 55.8% Total revenues (millions) $1,700.2 $1,514.7 12.2% RASM (revenue per available seat mile) (cents) CASM, excluding fuel and employee profit share (cents) 15.35 14.47 6.1% 9.03 8.81 2.5% Fuel costs per litre (dollars) $0.94 $0.88 6.8% Operating Margin 10.4% 8.7% 1.7 pts. 13
ANCILLARY REVENUE GROWTH 9 Ancillary revenue per guest 8 $8.10 7 6 5 4 2006 2007 2008 2009 2010 2011 YTD Q2 2012 14
PREMIUM ECONOMY SEATING Reconfiguration expected to be complete by end of 2012 Guest seats 190 170 150 130 110 90 70 119 24 119 95 136 24 136 112 174 24 166 150 50 737-600 Before 737-600 After 737-700 Before 737-700 After 737-800 Before 737-800 After Economy Premium Economy 15
YTD Q2 2012 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 Q2 2012 adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market hedge gains/losses)
BUILDING ON OUR CAPABILITIES
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
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 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 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 19
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
THE REGIONAL OPPORTUNITY
MARKET OPPORTUNITIES REGIONAL (50+ seats) = $2.1B DOMESTIC + TRANSBORDER 22 Source: Internal estimates using public capacity and traffic information
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
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
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
WE HAVE THE FINANCIAL STRENGTH TO PUT OUR STRATEGY INTO ACTION
CAPITAL STRUCTURE - EXCESS CASH HAS BEEN USED TO LOWER LONG TERM DEBT & BUY BACK STOCK 1400 1200 1000 6 5 4 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 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 Q2 2012 Cash Adj. net Debt/EBITDAR Adj. Debt/Equity 3 2 1 0 times Initiated a quarterly dividend in November 2010 - Increased to $0.06 from $0.05 in February 2012 - 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, 2012. - Repurchased 4.6 million shares YTD Q2 2012 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
RELATIVE LIQUIDITY & LEVERAGE RATIOS June 30, 2012 50% 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 4 2 1.30 28 0 N/A Allegiant Alaska WestJet Southwest Delta United US Airways Air Canada JetBlue
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 3.0 3.5% Tax Rate 28% 30% Capital Expenditures $25 $30M $270 $280M System capacity Up 2.0 3.0% Up 3.5 4.0% Domestic capacity Down 1.0 2.0% Flat to down 1.0% 29
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
For further information: Hugh Harley Director, Investor Relations P: (403) 539-7594 E: hharley@westjet.com W: www.westjet.com