Westjet First Quarter Net Drops, Orders 10 787s

WestJet Airlines announced a 45 percent drop in first quarter net profit as fuel costs increased by over 40 percent.

Net earnings for the quarter to end March were CAD$48.3 million (USD$35.2 million), down from the previous year period’s CAD$87.6 million.

Revenue came in at CAD$1.11 billion in the quarter, an 8 percent increase, but expenses rose 13.7 percent to CAD$1.03 billion. Fuel was the biggest contributor to increased costs, up 41.5 percent to CAD$235.5 million.

WestJet carried 5.69 million passengers during the quarter, a 6.8 percent increase on 1Q16. RPM traffic was also up 6.8 percent on an ASM capacity increase of 5.5 percent. Load factor came in at 83 percent, a 0.9 percentage point increase.

Yield was 1.2 percent higher at 17.43 Canadian cents, with RASM (revenue per available seat mile) up 2.3 percent to 14.47 cents. Cost per available seat mile (CASM) was up 7.8 percent at 13.42 cents.

WestJet chief executive Gregg Saretsky said the airline was seeing good results from its premium economy product, growth in WestJet Rewards and penetration into the business travel segment, “all of which gives us confidence that RASM will continue to improve for the remainder of the year.”

WestJet also announced an order for 10 Boeing 787-9 aircraft to be delivered between the first quarter of 2019 and December 2021. The firm order is worth just under USD$2.3 billion at current Boeing list prices.

The purchase agreement includes options for an additional 10 787-9s to be delivered between 2020 and 2024. WestJet will use General Electric's GEnx-1B engines on the 787s.

CEO Saretsky said the order would allow the airline to “turn our attention to further growing our international presence.” WestJet’s international destinations include the Caribbean and London Gatwick in addition to US locations.

WestJet will convert 15 firm orders for Boeing 737 MAXs to options available between 2022 and 2024.