January 6, 2010 / 2:24 PM / in 8 years

UPDATE 2-WestJet says December load factor sets record

* December load factor a record 81.7 pct

* Traffic climbs 8.1 pct, capacity up 7 pct

* Maintains fourth-quarter revenue forecast

* Shares gain 2.8 pct to C$13.63 on TSX (Adds stock price, analyst comments, background)

OTTAWA, Jan 6 (Reuters) - WestJet Airlines (WJA.TO), Canada’s No. 2 carrier, reported a record load factor on Wednesday, saying it flew fuller planes in December as it improved call center service after stumbling with a new reservation system.

In the travel-heavy month of December, WestJet said its load factor, or the percentage of available seats filled with paying passengers, rose to 81.7 percent from 80.9 percent in the same period last year.

Traffic, measured by revenue passenger miles, increased 8.1 percent year-over-year, and capacity, or available seat miles, rose by 7 percent.

WestJet shares rose 2.8 percent, or 37 Canadian cents, to C$13.63 on the Toronto Stock Exchange on Wednesday morning.

Versant Partners analyst Cameron Doerksen raised his stock target to C$16 from C$14 after WestJet’s numbers were announced, saying he expects traffic and unit revenue improvements through 2010.

After launching its new Sabre reservation system in mid-October, WestJet warned last month that transition problems would hurt fourth-quarter revenue. The no-frills airline maintained that forecast on Wednesday, saying it still sees a decline in revenue per seat mile of 11 percent to 13 percent from the year-prior quarter.

“We have made considerable progress in our call center service levels since our reservation system cutover in October, and we are on our way to fully restoring our high-quality service,” said Chief Executive Sean Durfy.

“Despite record loads, winter storms and increased security measures over the busy holiday period, we completed 98.3 percent of our scheduled flights in December.”

Canada announced plans on Tuesday to introduce full-body scanners at all its major international airports as it tightens security for flights to the United States after a failed attack last month on a U.S.-bound plane. [ID:nN0567863]

The government also said it was aware that the more intrusive security measures could hurt the airline industry and was talking with industry officials about the financial impact of the measures.

“The security issues that flared up over the holidays likely had an impact on WestJet as flight delays, increased checked bags, and the waiving of bag fees either increased costs or lowered potential revenue,” Versant’s Doerksen said in a note.

“We suspect that there will be some negative impact on airlines as long as the increased security measures remain an inconvenience for passengers. If the measures are not eased, there will undoubtedly be some permanent disincentive for Canadians to travel to the U.S.”

$1=$1.03 Canadian Reporting by Susan Taylor; editing by Rob Wilson

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