* Profit jumps 80 percent, beating estimates
* Load factor, revenues also jump
* Pugliese named president of WestJet Encore
* Shares climb 0.6 percent amid broad market drop
By Jeffrey Jones
CALGARY, Alberta, Nov 7 WestJet Airlines Ltd
flew past third-quarter profit estimates on Wednesday
and moved closer to starting a regional carrier by naming a boss
for the unit, lifting the shares of Canada's second-largest
airline despite a broad market drop.
WestJet said earnings surged 80 percent and its load factor,
a measure of how many passengers its aircraft carried compared
with capacity, climbed 4.5 points to a company record 84.6
percent as capacity increased by just 2 percent.
The Calgary-based company also boosted revenues and expanded
its operating margin, prompting the unexpectedly rich return.
The results were strengthened by WestJet's expansion of its
network through interline agreements and new code-share
partners, the latest being British Airways, announced
It will start up its regional unit, called WestJet Encore,
next year to take on top competitor Air Canada and its
Jazz Air affiliate.
On Wednesday, it appointed Ferio Pugliese, WestJet's
vice-president of people, culture and in-flight service, as
president of the new operation, which will serve smaller centers
with Bombardier Q400 turboprop planes, a departure
from the tried-and-true Boeing 737s in its mainline
"Everything remains on track for the planned launch in the
second half of 2013 and the first set of new destinations that
WestJet Encore will serve is expected to be announced in early
2013," Chief Executive Gregg Saretsky told analysts.
Despite the strong results, WestJet shares fell initially on
the Toronto Stock Exchange on Wednesday, swept lower by a more
than 1 percent fall in the TSX composite index in the aftermath
of the re-election of U.S. President Barack Obama. But they
recovered to end up 11 Canadian cents at C$18.07, having already
climbed 56 percent this year.
"Shame on airlines and aerospace companies for releasing on
the morning after a presidential election," said Robert Kokonis,
managing director of airline consultancy AirTrav Inc.
Kokonis pointed out that WestJet's results put it among the
top three North American airlines this quarter in important
metrics, including operating margins and revenue growth.
WestJet is pushing for further growth from new
revenue-boosting initiatives such as roomier "premium economy"
seating, which means more leg room in four rows on each plane.
In the third quarter, WestJet earned C$70.6 million ($70.9
million), or 52 Canadian cents a share, up from a year-earlier
C$39.3 million, or 28 Canadian cents a share.
That handily beat the average estimate among analysts of 43
Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 12 percent to C$866.5 million. Analysts had
expected C$843.2 million.
Chief Financial Officer Vito Culmone said WestJet will add
five 737s in 2013, and it will sell and lease back three of
them. It will take delivery of seven Q400s for Encore.
WestJet's service to New York's LaGuardia airport was halted
for three days last week due to Hurricane Sandy, affecting 16
daily flights, executives said. Since then the airline has not
had problems obtaining jet fuel there, they said.