WestJet profit slips, but tops estimates as costs fall
(Reuters) - WestJet Airlines Ltd (WJA.TO: Quote), Canada's second-largest carrier, reported a forecast-beating quarterly profit as costs fell, but increased capacity, competition and Calgary floods in July dented the bottom line.
WestJet said it was hitting its three-year targets a year earlier than planned and its newly launched Encore regional carrier was flying full planes and beating expectations.
Cost per available seat mile (CASM), excluding fuel and employee profit-sharing costs, declined 1.5 percent in the third quarter ended September 30.
The company said the fall in costs would be 0.5 percent for the full year, at the low end of its summer estimate of a 0.5 percent to 1 percent decline.
It expected capacity growth to hit between 8 and 8.5 percent for 2013, while domestic capacity growth was expected to be between 4.5 and 5 percent.
The airline also said its 2013 capital spending was slightly higher than its forecast, at C$720 million, because one of its Bombardier Q400 planes would be delivered in the fourth quarter instead of the first quarter of next year.
WestJet said it was on track to save $100 million in costs by the end of 2014, partly from better fuel savings.
The company expected 2014 CASM excluding fuel and profit share to remain flat to up 1 percent. It expects 2014 capacity growth between 4 and 6 percent.
"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," BMO analyst Fadi Chamoun said in a client note. Continued...