November 5, 2013 / 11:49 AM / 5 years ago

WestJet Airlines profit tops estimates as costs fall

(Reuters) - WestJet Airlines Ltd (WJA.TO), Canada’s second-largest carrier, reported a better-than-expected quarterly profit as expenses fell.

A West Jet Boeing 737-600 aircraft arrives at Vancouver International Airport in Richmond, British Columbia February 9, 2011. REUTERS/Andy Clark

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.

The company did not specify the areas in which it was looking to cut costs.

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 closed at C$27.30 on Monday on the Toronto Stock Exchange. The stock has risen about 26 percent in the three months to Monday’s close.

($1 = 1.04 Canadian dollars)

Reporting by Susan Taylor and Swetha Gopinath; Editing by Joyjeet Das and Kirti Pandey

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