WestJet profitable despite revenue slide

A WestJet plane lands in Calgary last June. The airline will not follow Air Canada with moves to cut staff or capacity in the face of high fuel costs as its fleet and seasonal capacity shifts make such measures unnecessary, an executive with the No. 2 Canadian carrier said Tuesday.(Todd Korol/Reuters)

The soft economy took its toll on WestJet's bottom line in the first quarter as the Calgary-based airline said earnings fell almost 28 per cent from last year.

The company said it made a profit of $37.4 million, or 29 cents a share, down from $52.5 million, or 40 cents a share, a year earlier.

WestJet's revenue during the quarter slipped 3.3 per cent to $579.3 million.

Investors reacted by sending shares of WestJet up nearly seven per cent to close at $13.35 on the Toronto Stock Exchange.

WestJet 3-month TSX chart

"While the weakened economy had a negative impact on our first quarter financial results, our margins continued to be among the strongest in North America," said WestJet president and CEO Sean Durphy.

He said softening demand, aggressive competitor pricing and Easter falling in the second quarter of 2009 led to declines in revenues, while lower fuel prices helped reduce the airline's costs.

The company expects those conditions will continue into the second quarter, with air travel demand forecast to be negative due to the economy.

WestJet said it is also seeing fallout from the swine flu.

"The recent H1N1 influenza virus outbreak appears to be delaying some consumers' travel bookings; however, it is too early to determine how it will impact [revenue per available seat mile]," the company said.

WestJet is also expecting to see a continued benefit from softer fuel prices. The company said it sees its second quarter fuel costs, excluding hedging, ranging between 60 and 62 cents per litre, a drop of at least 40 per cent from the same period last year. That figure could be partially offset by a weaker Canadian dollar and slightly higher fuel transportation costs.

Separately, WestJet said its April load factor — the percentage of available seats occupied by travellers — came in at 81.2 per cent, a decrease from 82.5 per cent in the same month of 2008.