WestJet flies more people farther, and earns less

WestJet three-month chart

Canada's second-biggest airline, WestJet, saw its revenues grow 18.5 per cent in the July-September quarter while its profit shrank 28.1 per cent due to "a combination of higher fuel costs and the beginning of a more challenging environment for demand."

And WestJet saw its load factor — the percentage of seats filled by paying passengers — slip 2.3 percentage points in October to 75.8 per cent as it flew more people farther in the teeth of a worldwide financial crisis.

Available seat miles increased 12.9 per cent while revenue passenger miles increased 9.5 per cent. The optimal range for the load factor is 78 to 82 per cent, the airline said Monday as it reported the operating and financial figures.

WestJet's share price closed at $10.13, down 52 cents, on the Toronto Stock Exchange.

Its profit for the third quarter was $54.7 million or 42 cents a share on revenue of $718.4 million. A year earlier, profit was $76.1 million or 58 cents on revenue of $606.2 million.

Its expansion strategy contrasts with Air Canada's moves to retrench. The bigger airline reported plans in June to eliminate 2,000 jobs and trim capacity on many routes.

Putting a bright face on the situation, CEO Sean Durfy said WestJet's financial results rank among the best reported so far for the third quarter by any airline anywhere.

"Nine months into what can be described as an unpredictable year with fluctuating oil prices, financial turmoil and economic uncertainty, we continued our growth in a purposeful and profitable manner," he said in a statement. "During this time of global credit crisis, we are comfortable with our cash position of over $800 million."

Fuel was the airline's biggest expense, making up almost 40 per cent of third-quarter operating costs, but management is "extremely pleased" with the airline's progress in cutting non-fuel costs and achieving economies of scale, he said.

WestJet expects to increase capacity by five per cent in 2009, down from a previously announced eight per cent, because a strike at Boeing has delayed aircraft deliveries, the airline said.