WestJet third-quarter profit beats estimates as fuel costs fall

Tue Nov 3, 2015 11:51am EST
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By Allison Lampert

(Reuters) - Canada's WestJet Airlines Ltd (WJA.TO: Quote) reported a better-than-expected profit in the third quarter ended Sept. 30, helped by lower fuel costs and improved operating margins.

WestJet's fuel costs fell 27.9 percent to C$206.9 million ($157.8 million) in the quarter.

Fuel is usually an airline's largest variable cost, accounting for a third or more of operating expenses.

Calgary-based WestJet also announced it would introduce a new C$25 fee for checked bags on its international economy fares, starting in January 2016, as the airline challenges rival carrier Air Canada (AC.TO: Quote) with recently introduced flights to international destinations including Europe.

"We've made this decision that we will unbundle certain services," WestJet President and Chief Executive Gregg Saretsky told a conference call with analysts.

"We're busting up the model for long-haul flying," he added.

Net earnings in the quarter rose 95 percent to C$101.8 million, or 82 Canadian cents per share, from a year earlier.

Analysts on average had expected earnings of 75 Canadian cents per share, according to Thomson Reuters I/B/E/S.   Continued...

A Westjet Boeing 737-700 takes off at the International Airport in Calgary, Alberta, May 3, 2011.  REUTERS/Todd Korol