CALGARY, Alberta, March 4 (Reuters) - WestJet Airlines Ltd (WJA.TO) expects its revenue per seat sold to fall by 10 percent to 12 percent in the first quarter as it wrestles with the sputtering economy and brisk competition on fares, Canada's second-largest airline said on Wednesday.
In reporting its February traffic figures, WestJet said the weakness in revenue per available seat mile is being offset somewhat by the drop in fuel costs as oil prices have retreated over the past eight months.
Still, shares in WestJet sank 71 Canadian cents, or 6 percent, to C$11.24 on the Toronto Stock Exchange.
The tempered revenue outlook came against a solid showing in load factor.
"This decline reflects current economic challenges, the aggressive competitive pricing we have faced and the shift of Easter to the second quarter in 2009," Chief Executive Sean Durfy said in a statement.
WestJet said its planes flew 82.6 percent full in February, down just 0.2 percentage points from the same month in 2008 while its capacity, measured by available seat miles, increased 5.7 percent to 1.35 billion.
Revenue passenger miles rose 5.5 percent to 1.116 billion.
Versant Partners analyst Cameron Doerksen cut his price target on WestJet to C$15 from C$16 a share, but maintained a "buy" rating on the stock.
"We expect that the weaker than expected Q1 unit revenue will put some pressure on the stock in the near term and may cast a cloud of uncertainty over the air travel demand outlook for the remainder of 2009," Doerksen wrote in a research note.
UBS analyst Fadi Chamoun said near-term earnings are likely to suffer.
"Capacity redeployment into Canada in coming months, coupled with moderating demand, leads us to believe that substantial pressure on (revenue per available seat mile) will persist," he wrote.
$1=$1.27 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson