Winnipeg Free Press - PRINT EDITION

Drop in stock overshadows WestJet's earnings

  • Print
WestJet CEO Gregg Saretsky addresses airline's annual meeting in Calgary Tuesday.

JEFF MCINTOSH / THE CANADIAN PRESS Enlarge Image

WestJet CEO Gregg Saretsky addresses airline's annual meeting in Calgary Tuesday.

CALGARY -- WestJet Airlines Ltd.'s "best ever" quarterly earnings were overshadowed Tuesday by a drop in its stock, as investors worried whether the airline will be able to profitably fill its planes as it increases capacity.

Shares in the airline fell by as much as 13 per cent on the Toronto Stock Exchange but recovered to close down $1.85 or 7.5 per cent at $22.87.

The airline posted a first-quarter profit of $91.1 million, or 68 cents per share, during the first three months of 2013, up from $68.3 million, or 49 cents per share, in the same 2012 period.

The earnings beat the 63 cents per share analysts polled by Thomson Reuters had been expecting, while total revenue was up 8.6 per cent at $967.2 million, from $891 million a year ago.

However, the airline also reported its load factor -- a measure of how full its planes are flying -- fell 3.5 percentage points to 82.7 during April, compared to the same month a year earlier.

CEO Gregg Saretsky attributed the industry-wide "soft-patch" to the Easter and Passover holidays falling earlier than usual this year.

WestJet expects to grow its system-wide capacity by between nine and 10 per cent during the second quarter and by 7.5 to 8.5 per cent for the year.

"So investors are thinking, 'Well, your load factor is falling, but you've got this huge amount of capacity growth. Are you going to be able to fill that capacity profitably?' " said Robert Kokonis, president of aviation consulting firm AirTrav Inc.

Last year, the airline ran its planes too full, giving up customers it could have snagged had there been more capacity, Saretsky said. He added the capacity WestJet is bringing to the market should enable the airline to still generate a sustainable 12 per cent return on invested capital.

"We're putting a little bit of our foot to the accelerator because of the continued strong macroeconomic environment and the results that we're enjoying," he said.

Kokonis, who believes the stock market reaction was overdone, said WestJet's management has a proven track record, the Canadian economic outlook is good and the airline has partnerships with international carriers to bring more traffic into its system.

"This has created a bona fide buying opportunity because that team is taking this company in the right direction," he said.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition May 8, 2013 B4

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Blake Wheeler talks about past season

View more like this

Photo Store Gallery

  • A goose cools off Thursday in water at Omands Creek Park-See Bryksa 30 day goose challenge- Day 25– June 21, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • A young gosling flaps his wings after taking a bath in the duck pond at St Vital Park Tuesday morning- - Day 21– June 12, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

What are you most looking forward to this Easter weekend?

View Results

View Related Story

Ads by Google