Airline achieves record full-year net earnings
of $368 million, up 16 per cent year
over year
Announces plans to increase normal course issuer bid by 2
million shares
CALGARY, Feb. 2, 2016 /CNW/ - WestJet (TSX: WJA)
today announced its fourth quarter and year-end results for 2015,
with record full-year net earnings of $367.5
million, or $2.92 per diluted
share. This compares with the adjusted net earnings1 of
$317.2 million, or $2.46 per diluted share reported in the full-year
2014, up 16 per cent and 19 per cent, respectively. For the fourth
quarter, the airline reported diluted earnings per share of
$0.51, down 27 per cent from
$0.70 reported last year. These
fourth quarter 2015 results include a pre-tax loss on foreign
exchange of $10.1 million.
This represents WestJet's 43rd consecutive quarter of
profitability and based on the trailing twelve months, the airline
achieved a return on invested capital of 15.3 per cent, compared
with the 16.1 per cent reported in the previous quarter, and within
WestJet's target range of 13 to 16 per cent.
"Today we reported the third best fourth quarter in WestJet's
history to complete a record year in 2015. Notwithstanding the
impact that recent economic weakness in Alberta has had on our results, our decision
to increase our normal course issuer bid demonstrates our
confidence in WestJet's proven business model and the financial
strength of our airline," said WestJet President and CEO
Gregg Saretsky. "My thanks go out to
our more than 11,000 WestJetters for all their hard work in driving
our continuing success as we look forward to celebrating WestJet's
20th birthday in 2016, a year which will see the launch
of our exciting new wide-body service to London Gatwick."
Operating highlights (stated in Canadian dollars)
|
|
Q4 2015
|
Q4 2014
|
Change
|
Full-year
2015
|
Full-year
2014
|
Change
|
Net earnings
(millions)
|
$63.4
|
$90.7
|
(30.1%)
|
$367.5
|
$284.0
|
29.4%
|
Adjusted net earnings
(millions)1
|
$63.4
|
$90.7
|
(30.1%)
|
$367.5
|
$317.2
|
15.9%
|
Diluted earnings per
share
|
$0.51
|
$0.70
|
(27.1%)
|
$2.92
|
$2.20
|
32.7%
|
Adjusted diluted
earnings per share1
|
$0.51
|
$0.70
|
(27.1%)
|
$2.92
|
$2.46
|
18.7%
|
Total revenues
(millions)
|
$958.7
|
$994.4
|
(3.6%)
|
$4,029.3
|
$3,976.6
|
1.3%
|
Operating
margin
|
11.8%
|
14.0%
|
(2.2 pts)
|
14.1%
|
12.0%
|
2.1 pts
|
ASMs (available seat
miles) (billions)
|
6.525
|
6.378
|
2.3%
|
26.902
|
25.584
|
5.2%
|
RPMs (revenue
passenger miles) (billions)
|
5.114
|
5.081
|
0.6%
|
21.526
|
20.829
|
3.3%
|
Load
factor
|
78.4%
|
79.7%
|
(1.3 pts)
|
80.0%
|
81.4%
|
(1.4 pts)
|
Segment
guests
|
4,893,020
|
4,826,149
|
1.4%
|
20,281,376
|
19,651,977
|
3.2%
|
Yield (revenue per
revenue passenger mile)
(cents)
|
18.75
|
19.57
|
(4.2%)
|
18.72
|
19.09
|
(1.9%)
|
RASM (revenue per
available seat mile)
(cents)
|
14.69
|
15.59
|
(5.8%)
|
14.98
|
15.54
|
(3.6%)
|
CASM (cost per
available seat mile)
(cents)
|
12.97
|
13.40
|
(3.2%)
|
12.86
|
13.68
|
(6.0%)
|
CASM, excluding fuel
and employee profit
share (cents)*
|
10.04
|
9.21
|
9.0%
|
9.46
|
9.15
|
3.4%
|
(1)
|
Full-year 2014
adjusted net earnings exclude an after-tax non-cash loss of $33.2
million recorded in the third quarter of 2014 associated with the
previously disclosed sale of 10 of WestJet's oldest Boeing 737
aircraft. Refer to reconciliations in the accompanying tables for
further information regarding calculations.
|
Normal course issuer bid
Today, WestJet also announced that the Toronto Stock Exchange has
approved WestJet's amendment to its existing normal course issuer
bid to increase the maximum number of shares the Company is
authorized to purchase from 4 million shares to 6 million shares
during the period of May 13, 2015 to
May 12, 2016.
Dividend declaration
On February 1, 2016, WestJet's Board
of Directors declared a cash dividend of $0.14 per common voting share and variable voting
share for the first quarter of 2016, to be paid on March 31, 2016, to shareholders of record on
March 16, 2016. All dividends paid by
WestJet are, pursuant to subsection 89(14) of the Income Tax Act,
designated as eligible dividends, unless indicated otherwise. An
eligible dividend paid to a Canadian resident is entitled to the
enhanced dividend tax credit.
Caution regarding forward-looking information
Certain information set forth in this news release is
forward-looking information within the meaning of applicable
Canadian securities law. By its nature, forward-looking information
is subject to numerous risks and uncertainties, some of which are
beyond the Corporation's control, including those risk factors
described in WestJet's public reports and filings which are
available under WestJet's profile at www.sedar.com. Readers are
cautioned that undue reliance should not be placed on
forward-looking information as actual results may vary materially
from the forward-looking information. WestJet does not undertake to
update, correct or revise any forward-looking information as a
result of any new information, future events or otherwise, except
as may be required by applicable law.
(1)Non-GAAP measures
This news release contains disclosure of non-GAAP performance
measures including, without limitation, adjusted net earnings,
adjusted diluted earnings per share, CASM, excluding fuel and
employee profit share and return on invested capital. These
measures are included to enhance the overall understanding of
WestJet's current financial performance and to provide an
alternative method for assessing WestJet's operating results in a
manner that is focused on the performance of WestJet's ongoing
operations, and to provide a more consistent basis for comparison
between reporting periods. These measures are not calculated in
accordance with, or an alternative to, GAAP and do not have
standardized meanings. Therefore, they may not be comparable to
similar measures provided by other entities. Readers are urged to
review the section entitled "Reconciliation of non-GAAP and
additional GAAP measures" in WestJet's management's discussion and
analysis of financial results for the year ended December 31, 2015, which is available under
WestJet's profile on SEDAR at sedar.com, for a further discussion
of such non-GAAP measures and a reconciliation of such measures to
GAAP. The financial information accompanying this news release was
prepared in accordance with International Financial Reporting
Standards unless otherwise noted.
Management's discussion and analysis of financial results and
consolidated financial statements and notes for the year ended
December 31, 2015, are available
through the Internet in the Media and Investor Relations section of
westjet.com or under WestJet's SEDAR profile at sedar.com.
Analyst conference call
WestJet will hold its quarterly analysts' conference call today,
February 2, 2016, at 8 a.m. MST (10 a.m.
EST). President and CEO Gregg
Saretsky and Executive Vice-President of Finance and CFO
Harry Taylor will discuss WestJet's
fourth quarter and year end results and answer questions from
financial analysts and members of the media. The conference call
will be available in Toronto by
calling 416-915-3239, in Vancouver
by calling 604-638-5340 and across Canada and the
United States through the toll-free telephone number
1-800-319-4610. The call can also be heard live through an Internet
webcast accessible via the Media and Investor Relations section of
westjet.com.
About WestJet
We are proud to be Canada's
highest-rated airline for customer service, powered by an
award-winning culture of care and recognized as one of the
country's top employers. We offer scheduled service to 100
destinations in North America,
Central America, the Caribbean and Europe. Through our regional airline, WestJet
Encore, and with partnerships with airlines representing every
major region of the world, we offer our guests more than 150
destinations in more than 20 countries. Leveraging WestJet's
extensive network, flight schedule and remarkable guest experience,
WestJet Vacations delivers affordable, flexible travel experiences
with a variety of accommodation options for every guest. Members of
our WestJet Rewards program earn WestJet dollars on flights,
vacation packages and more. Our members use WestJet dollars towards
the purchase of WestJet flights and vacations packages on any day,
at any time, to any WestJet destination with no blackout
periods ̶ even on seat sales. For more information
about everything WestJet, please visit westjet.com.
Recent recognition includes:
2015/2011/2008-2005 Canada's 10
Most-Admired Corporate Cultures (Waterstone Human Capital)
2015/2014/2013/2012 Canada's Most
Attractive Employer (Randstad)
2015/2014/2013/2012 Top three brands in Canada (Canadian Business magazine)
2015 Best Employers in Canada
(Aon Hewitt)
2015/2014/2013 WestJet RBC World Elite MasterCard ranked #1 in
Canada (MoneySense magazine)
2015/2014/2013 WestJet RBC World Elite MasterCard ranked #1 in the
Canada's Choice ranking
(RewardsCanada.ca)
2014 Interbrand Canada's Best Canadian Brands (rank #20)
2014 Brands of the Year (Strategy magazine)
2014 Canada's Most Preferred
Airline (Ipsos)
2014 Value Airline of the Year (Air Transport World magazine)
2014/2013/2012/2011 Highest equity score: airline, vacation package
supplier brands (Harris/Decima EquiTrend Study)
Connect with WestJet on Facebook at facebook.com/westjet
Follow WestJet on Twitter at twitter.com/westjet
Subscribe to WestJet on YouTube at youtube.com/westjet
Read the WestJet blog at blog.westjet.com
Website: www.westjet.com
Consolidated Statement of
Earnings
|
(Stated in thousands
of Canadian dollars, except per share amounts)
|
(Unaudited)
|
|
|
|
Three months ended
|
Twelve months ended
|
|
December 31
|
December 31
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Guest
|
842,546
|
884,771
|
3,557,222
|
3,599,157
|
|
Other
|
116,169
|
109,623
|
472,043
|
377,395
|
|
|
958,715
|
994,394
|
4,029,265
|
3,976,552
|
Operating
expenses:
|
|
|
|
|
|
Aircraft
fuel
|
182,181
|
243,816
|
814,498
|
1,090,330
|
|
Salaries and
benefits
|
198,310
|
184,210
|
801,715
|
724,941
|
|
Rates and
fees
|
139,534
|
128,289
|
562,745
|
520,340
|
|
Sales and
marketing
|
84,009
|
85,852
|
325,127
|
325,370
|
|
Depreciation and
amortization
|
75,237
|
54,696
|
264,921
|
226,740
|
|
Aircraft
leasing
|
41,881
|
45,546
|
174,089
|
182,450
|
|
Maintenance
|
47,160
|
24,927
|
164,305
|
126,761
|
|
Other
|
68,847
|
64,052
|
251,147
|
235,362
|
|
Employee profit
share
|
8,869
|
23,399
|
100,965
|
68,787
|
|
|
846,028
|
854,787
|
3,459,512
|
3,501,081
|
Earnings from
operations
|
112,687
|
139,607
|
569,753
|
475,471
|
|
|
|
|
|
|
Non-operating income
(expense):
|
|
|
|
|
|
Finance
income
|
3,509
|
4,721
|
15,529
|
17,070
|
|
Finance
cost
|
(12,953)
|
(14,192)
|
(53,665)
|
(51,838)
|
|
Gain (loss) on
foreign exchange
|
(10,090)
|
(2,471)
|
(10,326)
|
(2,064)
|
|
Loss on disposal of
property and equipment
|
(1,496)
|
(2,849)
|
(1,860)
|
(48,332)
|
|
Gain on
derivatives
|
971
|
-
|
827
|
-
|
|
|
(20,059)
|
(14,791)
|
(49,495)
|
(85,164)
|
Earnings before
income tax
|
92,628
|
124,816
|
520,258
|
390,307
|
|
|
|
|
|
|
Income tax expense
(recovery):
|
|
|
|
|
|
Current
|
17,873
|
28,223
|
123,939
|
114,521
|
|
Deferred
|
11,319
|
5,880
|
28,789
|
(8,171)
|
|
|
29,192
|
34,103
|
152,728
|
106,350
|
Net earnings
|
63,436
|
90,713
|
367,530
|
283,957
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
0.51
|
0.71
|
2.94
|
2.22
|
|
Diluted
|
0.51
|
0.70
|
2.92
|
2.20
|
Consolidated Statement of Financial
Position
|
(Stated in thousands
of Canadian dollars)
|
(Unaudited)
|
|
|
|
December 31
|
December 31
|
|
2015
|
2014
|
Assets
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
1,183,797
|
1,358,071
|
|
Restricted
cash
|
68,573
|
58,149
|
|
Accounts
receivable
|
82,136
|
54,950
|
|
Prepaid expenses,
deposits and other
|
131,747
|
144,192
|
|
Inventory
|
36,018
|
36,658
|
|
Assets held for
sale
|
-
|
78,306
|
|
|
1,502,271
|
1,730,326
|
Non-current
assets:
|
|
|
|
Property and
equipment
|
3,473,262
|
2,793,194
|
|
Intangible
assets
|
63,549
|
60,623
|
|
Other
assets
|
89,942
|
62,290
|
Total
assets
|
5,129,024
|
4,646,433
|
|
|
|
|
Liabilities and shareholders'
equity
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
545,438
|
415,562
|
|
Advance ticket
sales
|
620,216
|
575,781
|
|
Deferred Rewards
program
|
117,959
|
86,870
|
|
Non-refundable guest
credits
|
40,921
|
45,434
|
|
Current portion of
maintenance provisions
|
85,819
|
54,811
|
|
Current portion of
long-term debt
|
141,572
|
159,843
|
|
|
1,551,925
|
1,338,301
|
Non-current
liabilities:
|
|
|
|
Maintenance
provisions
|
243,214
|
191,768
|
|
Long-term
debt
|
1,033,261
|
1,028,820
|
|
Other
liabilities
|
13,603
|
13,150
|
|
Deferred income
tax
|
327,028
|
296,892
|
Total
liabilities
|
3,169,031
|
2,868,931
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Share
capital
|
582,796
|
603,287
|
|
Equity
reserves
|
82,713
|
75,094
|
|
Hedge
reserves
|
1,903
|
(3,179)
|
|
Retained
earnings
|
1,292,581
|
1,102,300
|
Total shareholders'
equity
|
1,959,993
|
1,777,502
|
|
|
|
|
Total liabilities and
shareholders' equity
|
5,129,024
|
4,646,433
|
Consolidated Statement of Cash
Flows
|
(Stated in thousands
of Canadian dollars)
|
(Unaudited)
|
|
|
|
Three months ended
December
31
|
Twelve months ended
December 31
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
Net
earnings
|
63,436
|
90,713
|
367,530
|
283,957
|
Items not involving
cash:
|
|
|
|
|
|
Depreciation and
amortization
|
75,237
|
54,696
|
264,921
|
226,740
|
|
Change in maintenance
provisions
|
14,483
|
(11,113)
|
35,786
|
8,413
|
|
Change in other
liabilities
|
(3,237)
|
(158)
|
(3,192)
|
(529)
|
|
Amortization of
transaction costs
|
1,093
|
1,204
|
4,503
|
5,015
|
|
Amortization of hedge
settlements
|
340
|
350
|
1,390
|
1,400
|
|
Gain on
derivatives
|
(971)
|
-
|
(827)
|
-
|
|
Loss on disposal of
property and equipment
|
1,496
|
2,849
|
1,860
|
48,332
|
|
Share-based payment
expense
|
4,379
|
4,316
|
17,254
|
18,626
|
|
Deferred income tax
expense/(recovery)
|
11,319
|
5,880
|
28,789
|
(8,171)
|
|
Unrealized foreign
exchange (gain)/loss
|
20,603
|
(2,323)
|
(938)
|
(10,634)
|
Change in non-cash
working capital
|
(12,686)
|
(588)
|
199,706
|
21,349
|
Change in restricted
cash
|
(11,259)
|
(4,293)
|
(10,424)
|
(43)
|
Change in other
assets
|
(6,780)
|
(105)
|
(15,912)
|
(6,833)
|
Purchase of shares
pursuant to compensation plans
|
(333)
|
(166)
|
(14,005)
|
(10,989)
|
|
|
157,120
|
141,262
|
876,441
|
576,633
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Aircraft
additions
|
(318,064)
|
(228,106)
|
(841,491)
|
(694,200)
|
Aircraft
disposals
|
132
|
75,597
|
83,348
|
75,655
|
Other property and
equipment and intangible additions
|
(15,714)
|
(5,506)
|
(64,789)
|
(46,586)
|
|
|
(333,646)
|
(158,015)
|
(822,932)
|
(665,131)
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Increase in long-term
debt
|
17,732
|
16,507
|
153,112
|
613,885
|
Repayment of
long-term debt
|
(42,099)
|
(41,445)
|
(171,490)
|
(308,588)
|
Shares
repurchased
|
(4,010)
|
(9,856)
|
(123,813)
|
(39,431)
|
Dividends
paid
|
(17,246)
|
(15,334)
|
(69,711)
|
(61,313)
|
Issuance of shares
pursuant to compensation plans
|
120
|
56
|
156
|
96
|
Cash interest
paid
|
(7,936)
|
(9,421)
|
(47,305)
|
(39,507)
|
Change in non-cash
working capital
|
3,755
|
2,864
|
21
|
4,866
|
|
|
(49,684)
|
(56,629)
|
(259,030)
|
170,008
|
|
|
|
|
|
|
Cash flow from
operating, investing and financing activities
|
(226,210)
|
(73,382)
|
(205,521)
|
81,510
|
Effect of foreign
exchange on cash and cash equivalents
|
(9,672)
|
6,707
|
31,247
|
20,556
|
Net change in cash
and cash equivalents
|
(235,882)
|
(66,675)
|
(174,274)
|
102,066
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
1,419,679
|
1,424,746
|
1,358,071
|
1,256,005
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
1,183,797
|
1,358,071
|
1,183,797
|
1,358,071
|
|
|
|
|
|
|
Supplemental disclosure of operating cash
flows
|
|
|
|
|
Cash interest
received
|
3,577
|
4,776
|
16,349
|
17,243
|
Cash taxes
paid
|
(25,667)
|
(10,894)
|
(114,752)
|
(204,489)
|
CASM, excluding fuel and employee profit
share
|
(Stated in thousands
of Canadian dollars, except percentage, mile and per unit
data)
|
(Unaudited)
|
|
WestJet excludes the
effects of aircraft fuel expense and employee profit share expense
to assess the operating performance of the business. Fuel expense
is excluded from operating results due to the fact that fuel prices
are impacted by a host of factors outside WestJet's control, such
as significant weather events, geopolitical tensions, refinery
capacity and global demand and supply. Excluding this expense
allows WestJet to analyze its operating results on a comparable
basis. Employee profit share expense is excluded from operating
results due to its variable nature and excluding this expense
allows greater comparability.
|
|
|
Three months ended December 31
|
Twelve months ended December 31
|
($ in
thousands)
|
2015
|
2014
|
Change
|
2015
|
2014
|
Change
|
Operating
expenses
|
846,028
|
854,787
|
(8,759)
|
3,459,512
|
3,501,081
|
(41,568)
|
Aircraft fuel
expense
|
(182,181)
|
(243,816)
|
61,635
|
(814,498)
|
(1,090,330)
|
275,832
|
Employee profit
share
|
|
|
|
|
|
|
|
expense
|
(8,869)
|
(23,399)
|
14,530
|
(100,965)
|
(68,787)
|
(32,178)
|
Operating
expenses,
|
|
|
|
|
|
|
|
adjusted
|
654,978
|
587,572
|
67,406
|
2,544,049
|
2,341,964
|
202,086
|
ASMs
|
6,524,788,975
|
6,378,247,018
|
2.3%
|
26,902,227,359
|
25,584,033,077
|
5.2%
|
CASM, excluding
above
|
|
|
|
|
|
|
|
items
(cents)
|
10.04
|
9.21
|
9.0%
|
9.46
|
9.15
|
3.4%
|
Return on invested
capital
|
(Stated in thousands
of Canadian dollars, except percentages)
|
(Unaudited)
|
|
ROIC is a measure
commonly used to assess the efficiency with which a company
allocates its capital to generate returns. Return is calculated
based on our earnings before tax, excluding special items, finance
costs and implied interest on our off-balance-sheet aircraft
leases. Invested capital includes average long-term debt, average
finance lease obligations, average shareholders' equity and
off-balance-sheet aircraft operating leases.
|
|
($ in
thousands)
|
December 31
2015
|
December 31
2014
|
Change
|
Earnings before
income taxes
|
520,258
|
390,307
|
129,951
|
|
Special
item(i)
|
-
|
45,459
|
(45,459)
|
Adjusted earnings
before income taxes
|
520,258
|
435,766
|
84,492
|
Add:
|
|
|
|
|
Finance
costs
|
53,665
|
51,838
|
1,827
|
|
Implicit interest in
operating leases(ii)
|
91,397
|
95,786
|
(4,389)
|
|
665,320
|
583,390
|
81,930
|
Invested
capital:
|
|
|
|
|
Average long-term
debt(iii)
|
1,181,748
|
1,033,529
|
148,219
|
|
Average shareholders'
equity
|
1,868,748
|
1,683,671
|
185,077
|
|
Off-balance-sheet
aircraft leases(iv)
|
1,305,668
|
1,368,375
|
(62,707)
|
|
4,356,164
|
4,085,575
|
270,589
|
Return on invested
capital
|
15.3%
|
14.3%
|
1.0 pt.
|
(i)
|
Pre-tax non-cash loss
recorded in the third quarter of 2014 associated with the sale of
10 aircraft to Southwest.
|
(ii)
|
Interest implicit in
operating leases is equal to 7.0 per cent of 7.5 times the trailing
12 months of aircraft lease expense. 7.0 per cent is a proxy and
does not necessarily represent actual for any given
period.
|
(iii)
|
Average long-term
debt includes the current portion and long-term portion.
|
(iv)
|
Off-balance-sheet
aircraft operating leases are calculated by multiplying the
trailing 12 months of aircraft leasing expense by 7.5. At December
31, 2015, the trailing 12 months of aircraft leasing expenses
totaled $174,089 (December 31, 2014 – $182,450).
|
Adjusted net earnings/Adjusted diluted earnings
per share
|
(Stated in thousands
of Canadian dollars, except percentages)
|
(Unaudited)
|
|
WestJet excludes the
effect of the after-tax non-cash loss related to the 10 aircraft
sold to Southwest being classified as held for sale in the third
quarter of 2014 from net earnings to calculate an adjusted diluted
earnings per share.
|
|
|
|
|
Twelve months ended December 31
|
($ in thousands,
except share and per share data)
|
2015
|
2014
|
Change
|
Net
earnings
|
367,530
|
283,957
|
83,573
|
Adjusted
for:
|
|
|
|
|
Special
item(i)
|
-
|
33,231
|
(33,231)
|
Adjusted net
earnings
|
367,530
|
317,188
|
50,342
|
Weighted average
number of shares outstanding - diluted
|
125,964,541
|
129,142,940
|
(3,178,399)
|
Adjusted diluted
earnings per share
|
2.92
|
2.46
|
18.7%
|
(i)
|
After-tax non-cash
loss recorded in the third quarter of 2014 associated with the sale
of 10 aircraft to Southwest.
|
SOURCE WestJet