WestJet Airlines posted a 46 percent slide in quarterly earnings Wednesday, but Canada's second-biggest carrier sees signs that a brutal air-travel slowdown is ending.
In the past six to eight weeks, declines in revenue per available seat mile, or RASM, look to have leveled off, the no-frills airline's CEO said, sending WestJet's share price higher.
"I am cautiously optimistic that (the environment) has improved," said Sean Durfy in an interview. "I think the marketplace is less sensitive to pricing and we are starting to see a pickup."
Though Durfy said the trend "might be a blip," analysts jumped on the comments as a positive sign.
"It was certainly the most optimistic outlook for the last few quarters," said Paradigm Capital analyst Doug Cooper.
"There is reason to believe that RASM will trend higher in 2010, driven by the return of the business traveller, which they are starting to see signs of," he said.
Durfy said he was pleased with the fares WestJet is getting this winter on flights to sunny destinations such as Mexico and the Caribbean. So far he couldn't link any decline in travel bookings to the H1N1 flu virus.
OTHER CODE-SHARE AGREEMENTS
Earlier, WestJet reported earnings of CAD$31.4 million (USD$29.6 million) for the three months to September 30. That's down from a profit of CAD$57.9 million on weak demand and price cuts as airlines scrambled to fill seats.
Revenue at the airline, one of the few profitable carriers in the world, fell 16.4 percent to CAD$600.6 million and RASM fell 15.5 percent.
WestJet has signed a number of memorandums of understanding with other unnamed airlines to enter into code-share agreements, Durfy said.
The Calgary, Alberta-based airline is already working toward a full code-share deal with Air France-KLM.
Glitches experienced with the launch last month of its new Sabre reservation system were hopefully behind it and shouldn't have an impact on fourth quarter results, Durfy said.
WestJet expects its capacity to increase between 2 percent and 3 percent in the fourth quarter, mostly to cross-border and other international destinations. The airline flies to 60 cities in North America and the Caribbean.
The carrier will take delivery of five aircraft in the fourth quarter, boosting its fleet to 86 by year-end.
Separately WestJet said its load factor fell 1.7 percentage points to 79.7 percent in October.
