WestJet profit triples, but horizon cloudy
By Jeffrey Jones
CALGARY, Alberta (Reuters) - WestJet Airlines Ltd's second-quarter profit nearly tripled from last year when a onetime charge for a failed reservation system marred its results, Canada's No. 2 airline said on Wednesday.
Operating earnings, however, fell 10 percent as fuel costs surged and its planes flew slightly less full.
WestJet executives said they expect results to remain among the strongest in the struggling industry, but they warned that the carrier is not immune to high oil prices and a shaky economy.
Fuel expenses at the airline, which has stuck to its expansion plans while rivals cut capacity, accounted for 38 percent of its costs in the quarter, up from 26 percent last year.
WestJet slapped a fuel surcharge on fares during the quarter.
"At current unprecedented elevated levels, fuel prices will negatively impact our margins during the remainder of 2008," Chief Financial Officer Vito Culmone told analysts.
"Economic uncertainty in North America as well as the higher cost of air travel due to record fuel prices is deterring some guests from traveling," he said.
Chief Executive Sean Durfy said business had slowed on Eastern and Atlantic Canadian routes as well as on red-eye flights between Canadian and U.S. destinations. Western Canadian routes have stayed strong, he said. Continued...