Corporate presentation CIBC Whistler Institutional Investor Conference January 21, 2010
Forwardlooking statement Certain information in this presentation and statements made during this presentation, including any question and answer session, may contain forwardlooking 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 codeshare agreements, ASM, RASM, CASM and future revenue and profits, implementation of the new reservation system, the planned reward program and branded credit card, costsaving initiatives, addition of new destinations, marketshare and business travel expansion, hedging activities and ancillary revenue expansion. Certain material factors and assumptions were applied in formulating these forwardlooking statements. These forwardlooking statements are subject to, and may be affected by, numerous risks and uncertainties which may cause WestJet s actual results may 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 (www.sedar.com). Forwardlooking statements are subject to change and WestJet does not undertake to update or revise any forwardlooking information as a result of any new information, future events or otherwise, except as required by applicable law. January 2009
Who we are Canada s lowcost, highvalue airline 86 NextGeneration 737 aircraft Serving 67 destinations in 12 countries One of the most profitable airlines in North America One of Canada s most admired corporate cultures Provide a worldclass guest experience Schedule flexibility and seasonal deployment
External environment
The Canadian economy Canada GDP growth rate 110% Canadian consumer confidence Stock market OIL Consumer Confidence Index (2002 = 100%) 105% 100% 95% 90% 85% 80% 75% 70% 65% 60% Nov07 Dec07 Jan08 Feb08 Mar08 Apr08 May08 Jun08 Jul08 Source: Conference Board of Canada Unemployment Rate (%) Aug08 Sep08 Oct08 Nov08 Dec08 Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Economic indicators 2008 6.1 2009 (f) 2010 (f) 8.3 Aug09 Sep09 Oct09 Nov09 8.5 TSX Real Disposable Income (% Change YoY) 4.2 1.5 3.4 WJA Consumer Spending (% Change YoY) 3.0 0.1 2.7 Source: Thomson Financial Source: BMO Capital Markets November 2009
Reducing risk
Areas of uncertainty: Economy Oil prices Competitive landscape Canadian dollar What have we done recently: Reducing risk where it makes sense Equity offering (~$172 million gross proceeds) Adjustments to fleet delivery plan Internal cost focus Continuing to drive our strategy for the future
Financial highlights $0.16 $0.15 $0.14 $0.13 $0.12 $0.11 Yearoveryear RASM (9.8%) (15.4%) (15.5%) Q4 2009 based on guidance estimates Cash flow from operations ($ millions) Nine months ended Sept 30, 2009 $254 Yearoveryear Change Revenue ($ millions) $1,711 (11.5%) Earnings before tax margin Net earnings ($ millions) 6.6% (3.5 pts.) $78 (42.8%) (35.4%) Fiveyear CAGR* 24% n/a 24% 19% $0.10 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Operating margin 10.2% (1.9 pts.) n/a 2008 RASM 2009 RASM 2008 numbers reclassified for current year presentation and policies. *Fiveyear CAGR as at 12 months ended December 31, 2008.
$ millions Financial security At September 30, 2009: Cash of C$962 million Current ratio of 1.44x Adjusted debt to equity ratio of 1.44x Adjusted net debt to EBITDAR of 2.17x 1000 800 600 400 200 times 6 5 4 3 2 1 0 2005 2006 2007 2008 Q3 09 Cash 0 2005 2006 2007 2008 Q3 2009 Adj. Debt/Equity Adj. net Debt/EBITDAR Note: All figures are fullyear figures, except 2009 is as of Sept 30. 2008 numbers reclassified for current year presentation and policies. Debt ratios include aircraft operating leases
Measured capacity growth and fleet expansion 30,000 Projected growth (approximately 10% per annum) 25,000 ASMs (000,000) 20,000 15,000 10,000 19% 17% 16% 18% 3% 810% 5,000 Leased 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 18 18 21 24 33 38 43 44 44 Owned 38 45 49 52 53 53 55 61 67 Total confirmed fleet 56 63 70 76 86 91 98 105 111 Net change in aircraft 10 5 7 7 6 Lease expiries 3 Net change in aircraft prior to revised schedule 10 8 7 14 6
Controlling costs Highly engaged workforce Focus on CASM reduction Hedge a portion of fuel to reduce volatility Aircraft debt repayments fixed in CAD$ for term of debt Next 12 month aircraft US$ leasing costs 60% hedged into CAD$ at September 30, 2009 High aircraft utilization rates
Lowcost philosophy generates history of positive margins Operating margins (cents per ASM) 16 14 12 10 8 6 4 2 0 6% 7% 13% 16% 11% 10% 1.7 2.2 1.9 0.9 1.3 0.7 2.7 3.3 3.4 3.5 4.7 3.2 8.3 8.7 8.7 8.9 8.5 8.5 2004 2005 2006 2007 2008 9M 2009 CASM (ex fuel) Fuel Op. Margin Consistently produce positive margins Ancillary revenue and WestJet Vacations adding to RASM Fuel accounts for about 1/3 of costs and is most variable factor All other costs being held relatively flat *2009 results as at Sept. 30, 2009. Excludes reservation system impairment of $31.9 million in 2007 and $47.6 million impairment related to retirement of 200series aircraft in 2004 2008 numbers reclassified for current year presentation and policies.
Among top financial performers in North American airline industry 250 Earnings before tax (EBT) for YTD Q3 2009 35.00% $Millions 150 50 25.00% 15.00% 5.00% 50 150 Allegiant WestJet Alaska Air Tran JetBlue Southwest Continental Delta US Airways Air Canada American United 5.00% 15.00% 25.00% EBT Margin % 250 35.00% EBT and EBT margin adjusted for special items and gains/losses on marktomarket fuel hedges (nonoperating portion). WestJet and Air Canada earnings in CAD$, all others in US$.
The flight plan
Our vision
Our business: A great guest experience and a lowcost base Our strategy is based on four pillars: People and culture Fundamental drivers of our success Guest experience and performance Uncompromised guest experience and performance builds loyalty Revenue and growth Delivering results Cost and margins Continuing our lowcost commitment
Strengthening the foundation for the future Build worldclass guest experience Enhance reservation systems Enter airline partnerships Expand nondomestic flying Continue people development Implement rewards program Focus on business traveller Grow WestJet Vacations Improve cost advantage Cultivate culture
Strengthening and expanding our trusted brand West 214 215 170 197 Ontario 151 Norm 80127 92 88 50 61 Norm 80127 86 118 119 111 111 97 88 Air Canada Air Canada Montreal Atlantic Canada Norm 80127 36 52 68 78 159 151 132 119 Norm 80127 57 108 133 153 111 99 83 84 Air Canada 2005 2006 2007 2008 Air Canada
Market share growth: Domestic 12 months ending December 31, 2009 2013 target Domestic 56% 8% 40% 50% 36% Increased frequencies and nonstops Commercial partnerships WestJet Vacations New destinations Total fleet 86 WestJet Air Canada / Jazz Other Capacityshare calculation based on data from IATASRS.
Market share growth: Transborder and international 12 months ending December 31, 2009 2013 target Transborder 53% Mexico / Caribbean 39% 13% 15% 34% Seasonaldeployment strategy New destinations and increased frequencies WestJet Vacations Point of sale U.S. Commercial partnerships 20+% 20+% Total fleet 86 46% WestJet Air Canada / Jazz Other Capacityshare calculation based on data from IATASRS. Mexico / Caribbean capacity share does not include charters.
Summary We continue to outperform the industry in North America We are a wellpositioned, lowcost and efficient carrier We have a strong brand in the market place Highly attractive combination of planned growth and strong balance sheet Attractive valuation relative to peer group
For further information: Rob McInnis Director, Investor Relations P: (403) 5397412 E: rmcinnis@westjet.com W: www.westjet.com