WestJet Airlines Ltd, Canada’s second-largest carrier, reported a better-than-expected quarterly profit as it flew more passengers and expenses fell, and said it expects revenue per available seat mile to turn positive in the first quarter.
The company’s revenue per available seat mile (RASM) – an indicator of an airline’s efficiency, which is calculated by dividing its operating income by available seat miles – has fallen for seven straight quarters including the latest quarter.
The airline’s RASM fell 2.7 per cent in the third quarter and is expected to fall by a steeper 4-6 per cent in the current quarter, WestJet said in a statement on Tuesday.
WestJet said it expects cost per available seat mile (CASM), excluding fuel and employee profit share, to fall by 1-2 per cent in the fourth quarter.
The company’s adjusted CASM, a measure of how much an airline spends to fly a passenger, rose 0.3 per cent in the third quarter.
Fuel expenses, typically an airline’s largest variable cost, declined 0.3 per cent in the quarter.
Airlines have been benefiting as oil prices have remained low for more than 2 years now. However, oil prices which are now showing a slight recovery may indicate that fuel costs will rise.
WestJet estimated full-year capital expenditure of $920-million, which is at the higher end of its previous estimate of $900-million-$920-million. The company said it expects to spend $880-million-$900-million in 2017.
The airline flew 5.9 million passengers in the third quarter, an increase of 7 per cent from a year earlier. Load factor, which measures how effectively it filled seats, rose to 84 per cent from 81.8 per cent, a year earlier.
WestJet’s net earnings rose to $116-million, or 97 cents per share, in the third quarter ended Sept. 30, from $101.80-million, or 82 cents per share, a year earlier.
Analysts on average had expected a profit of 94 cents per share, according to Thomson Reuters I/B/E/S.
The Calgary-based airline’s revenue rose 7.6 per cent to $1.12-billion, slightly missing estimates of $1.13-billion.
I guess the LGW experiment isn't going as bad as people think. Stock is up 5% this morning.