WestJet to roll out roomier seats, posts higher profit

Wed Aug 1, 2012 2:41pm EDT
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By Susan Taylor

TORONTO (Reuters) - WestJet Airlines Ltd (WJA.TO: Quote) will introduce new "premium economy" seating across its fleet in a bid to boost revenue and lure more business travelers, a departure from the Canadian carrier's roots as a low-cost challenger to Air Canada ACb.TO.

Shares of Calgary, Alberta-based WestJet fell 3.2 percent on Wednesday despite a dividend hike and record second-quarter profit, which slightly lagged estimates and disappointed investors hoping for market-beating results.

"The more important point for me is the outlook is really strong," said PI Financial analyst Chris Murray.

"The dividend increase is important. That, if anything, is a vote of confidence in where they're going and what they're doing."

Canada's No. 2 airline said third-quarter revenue per available seat mile, a key industry measure, should outpace gains of 6.1 percent in the first half of the year and margin expansion should continue for the remainder of 2012.

It bumped its dividend up to 8 Canadian cents from 6 Canadian cents a share, building on a 1 Canadian cent increase announced in the fourth quarter.

The gains will come despite higher expenses. WestJet increased its full-year cost forecast, citing higher recruitment and training expenses for its busier winter flight schedule and higher maintenance.

The carrier did not forecast the cost or benefits from its "premium economy" plan, available early next year, but said it is expected to boost revenue.   Continued...