WestJet profit soars, names boss for Encore
By Jeffrey Jones
CALGARY, Alberta (Reuters) - WestJet Airlines Ltd (WJA.TO: Quote) flew past third-quarter profit estimates on Wednesday and moved closer to starting a regional carrier by naming a boss for the unit, lifting the shares of Canada's second-largest airline despite a broad market drop.
WestJet said earnings surged 80 percent and its load factor, a measure of how many passengers its aircraft carried compared with capacity, climbed 4.5 points to a company record 84.6 percent as capacity increased by just 2 percent.
The Calgary-based company also boosted revenues and expanded its operating margin, prompting the unexpectedly rich return.
The results were strengthened by WestJet's expansion of its network through interline agreements and new code-share partners, the latest being British Airways (ICAG.L: Quote), announced in September.
It will start up its regional unit, called WestJet Encore, next year to take on top competitor Air Canada ACa.TO and its Jazz Air CHRb.TO affiliate.
On Wednesday, it appointed Ferio Pugliese, WestJet's vice-president of people, culture and in-flight service, as president of the new operation, which will serve smaller centers with Bombardier (BBDb.TO: Quote) Q400 turboprop planes, a departure from the tried-and-true Boeing (BA.N: Quote) 737s in its mainline network.
"Everything remains on track for the planned launch in the second half of 2013 and the first set of new destinations that WestJet Encore will serve is expected to be announced in early 2013," Chief Executive Gregg Saretsky told analysts.
Despite the strong results, WestJet shares fell initially on the Toronto Stock Exchange on Wednesday, swept lower by a more than 1 percent fall in the TSX composite index in the aftermath of the re-election of U.S. President Barack Obama. But they recovered to end up 11 Canadian cents at C$18.07, having already climbed 56 percent this year. Continued...