WestJet earnings slide but worst could be over

By Nicole Mordant

VANCOUVER, British Columbia (Reuters) - WestJet Airlines Ltd (WJA.TO: Quote) posted a 46 percent slide in quarterly earnings on Wednesday, but Canada's second-biggest carrier sees signs that a brutal air-travel slowdown is ending.

In the past six to eight weeks, declines in revenue per available seat mile, or RASM, a key industry benchmark, look to have leveled off, the no-frills airline's chief executive said, sending WestJet's share price higher.

"I am cautiously optimistic that (the environment) has improved," said Sean Durfy in an interview. "I think the marketplace is less sensitive to pricing and we are starting to see a pickup."

Though Durfy said the trend "might be a blip," analysts jumped on the comments as a positive sign.

"It was certainly the most optimistic outlook for the last few quarters," said Paradigm Capital analyst Doug Cooper.

"There is reason to believe that RASM will trend higher in 2010, driven by the return of the business traveler, which they are starting to see signs of," he said.

Durfy said he was pleased with the fares WestJet is getting this winter on flights to sunny destinations like Mexico and the Caribbean. So far he couldn't link any decline in travel bookings to the H1N1 flu virus.

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