(Reuters) - WestJet Airlines Ltd (WJA.TO), Canada's second-largest carrier, reported a better-than-expected quarterly profit as expenses fell.
Cost per available seat mile (CASM), excluding fuel and employee profit-sharing costs, declined 1.5 percent in the third quarter ended September 30.
However, the company said the fall in costs would be less for the full year at only 0.5 percent.
WestJet has identified ways to save about $100 million in costs in 2014, Chief Executive Gregg Saretsky said in a statement on Tuesday, adding that the company was hitting its three-year transformation targets a year earlier than planned.
The company did not specify the areas in which it was looking to cut costs.
"The rates of growth in costs and the supply of additional seats in 2014 are both expected to be modest," said BMO analyst Fadi Chamoun in a client note.
"To the extent that the economy and the demand environment continue to progress, even at a moderate pace, the company appears well positioned to continue to deliver robust earnings growth."
WestJet is facing increased competition as bigger rival Air Canada ACb.TO boosted capacity with the summer launch of its discount vacation airline, Rouge.
WestJet had warned in July that the roll-out of its Encore regional carrier and related fleet reconfiguration would hurt efficiency, as measured by revenue for each flown mile.
Air Canada reported strong third-quarter traffic last month and said its cost-control measures had exceeded expectations.
WestJet's revenue per available seat mile, the key measure of an airline's efficiency, fell about 4 percent in the third quarter and the company said it would remain at a similar level in the current quarter.
The low-cost airline said its load factor, a measure of how full its planes are, fell to 82.8 percent in the third quarter from 84.6 percent a year earlier.
Net income dropped to C$65.1 million, or 50 Canadian cents per share, in the quarter from C$70.6 million, or 52 Canadian cents per share, a year earlier.
Analysts on average had expected earnings of 48 Canadian cents, according to Thomson Reuters I/B/E/S.
Revenue grew nearly 7 percent to C$924.8 million ($888.5 million), but was slightly below the average analyst estimate of C$925.6 million.
WestJet shares, which have risen about 26 percent in the last three months, were little changed in early morning trading, up just 2 Canadian cents at C$27.28 on the Toronto Stock Exchange.
($1 = 1.04 Canadian dollars)
Reporting by Susan Taylor and Swetha Gopinath; Additional reporting by Solarina Ho; Editing by Joyjeet Das and Kirti Pandey and Chizu Nomiyama