Westjet, Man what's going on......

[wanpaku]

I recently heard about a huge loss due to the retiring of the 200s. Is that the only reason for the $40 000 000+ loss this past quarter, or are they struggling elsewhere? (I believe I read that their loss would have been around 17 000 000 if they didn't retire the 200 fleet) Hopefully this isn't going to be a huge setback.

Go-WESTJET-Go!!!!!

What does this do to the potential new recruits?

[talkinghead]

direct-enter

http://www.avcanada.ca/forums2/viewforum.php?f=36

[Pajock]

Wanpaku, I wouldn't worry too much about this. There's no denying it was a bad quarter. The loss due to the write down on the 200's will mean a gain in 2005-06. The company has just decided to slow the expansion down for 05. Westjet will still acquire 16 737-NG aircraft in 2005. There will still be hiring, although not as much as in the past. The hit was coming sooner or later, it just came sooner. US destinations are doing very well, and the charter deal with Transat is a gold mine!! It's looking as though that business is only going to increase. Having said all that, nobody can predict the future, but don't read too much into one bad quarter after 8+ years of profits!!

[Blastor]

Stars & Dogs

A selection of this week's winners and losers

By JOHN HEINZL compiled by JOHN HEINZL
Saturday, February 19, 2005 - Page B8

WestJet (Dog)

$11.82, down 93 cents

WJA - TSX

Sure ways to lose money:

*Leave your wallet sticking out of your back pocket in New Orleans
*Agree to help a Nigerian diplomat spirit $20-million (U.S.) out of the country
*Invest in anything connected to the airline industry.

[hz2p]

This is a very common accounting trick, er, practice ... declare all your impending losses in one quarter.

Get all the bad news out of the way - no one really cares if you lose $1,000,000 or $10,000,000 - then your next quarter looks really good, and the execs get their bonuses.

Various companies have been nailed for "cookie jar" accounting over the years, including Microsoft - playing games with the timing of income and expenses. It's very tempting.

Pilots really need to learn more about economics, marketing, finance and accounting. If you don't know the rules, you're never going to learn to play the game very well.

[Swamp Donkey]

Ahhhh man....you mean that Nigerian Diplomat still hasn't got his money out?

I sent him enough!!

[lawndart]

My understanding of the -200 write down was that it wasn't a "write off", but a write down.
They had them valued on the books as worth as much revenue as they could generate over the course of their useful lives. Now that they are getting rid of them, the value had to be written down to what they are actually worth on the market. So if they can't sell them, or get what they are asking for them, there will be another write down later.
Just my understanding from the conference call about the Q4 results.

[Blastor]

About that news release:

WestJet Announces 2004 Year-End and Fourth Quarter Results

CALGARY, ALBERTA, February 15, 2005. WestJet (TSX:WJA) today announced its unaudited fourth quarter and December 31, 2004 year-end financial results.

Total revenue for the fourth quarter increased to $273.7 million from $230.2 million in the same period in 2003. Revenue for the year was $1.06 billion compared with $863.6 million in 2003. Expenses for the fourth quarter amounted to $339.5 million, up from $202.3 million in the fourth quarter of 2003.

For full-year 2004, expenses were up to $1.07 billion from $749.1
million in 2003.

The Company has elected to replace early its fleet of 737-200 aircraft, which necessitated incurring a $47.6 million write-down of these assets due to their shortened revenue life.

The cumulative effect of the accelerated replacement program and the weak operating environment has led to the airline reporting a net loss for the quarter of $46.3 million compared with net earnings of $12.8 million in the same period in 2003.

For the year ended December 31, 2004, the airline reported a net loss of $17.2 million, down from net earnings of $60.5 million in 2003.

Excluding the write-down, WestJet estimates it would have incurred a
loss for the fourth quarter of $14.9 million and achieved net earnings for full-year 2004 of $18.4 million.

WestJet's loss from operations in the fourth quarter of 2004 including the write-down was $65.8 million compared with earnings from operations of $27.9 million during the same period in 2003. The airline's loss from operations in 2004 including the write-down was $9.9 million compared with earnings from operations of $114.5 million in 2003.

WestJet reported a fourth quarter 2004 diluted loss per share, including the write-down, of 37 cents compared to diluted earnings of 10 cents per share during the fourth quarter of 2003. The airline reported a diluted loss per share for the year, including the write-down, of 14 cents, down from diluted earnings per share of 52 cents for full-year 2003.

WestJet's unit costs, excluding the $47.6 million write-down in the fourth quarter of 2004, increased compared with fourth quarter 2003 to 11.7 cents per available seat mile (ASM) from 10.7 cents per ASM. The airline's costs in 2004 were higher than in 2003, with cost per ASM rising to 11.4 cents from 10.9 cents in 2003.

Unexpected and extremely high fuel prices were one of the elements that
significantly impacted WestJet's costs throughout 2004. The cost of fuel represents the airline's second largest single expense and increased 18.9% over 2003 on an available seat mile basis. Compounding the impact of the high price of fuel was the higher operating cost environment as a result of increasing landing, terminal and airport improvement fees.

WestJet flew 1.68 billion revenue passenger miles (RPMs) in the fourth
quarter of 2004, compared with 1.33 billion RPMs during the same quarter in 2003, and flew 6.28 billion RPMs in 2004, up from 4.85 billion RPMs in 2003.

Capacity, as measured by available seat miles, increased in the fourth
quarter of 2004 to 2.49 billion ASMs, up from 1.89 billion ASMs in the fourth quarter of 2003. In 2004, capacity was up to 8.96 billion ASMs compared to 6.87 billion ASMs during the same period in 2003.

WestJet's load factor decreased 2.8-percentage points in the fourth quarter of 2004 to 67.5% from 70.3% during the same period in 2003. This was due to declines in October and November's load factors as a result of problems associated with the airline's revenue management system; however, this trend was reversed in December as the majority of these issues were resolved with a load factor of 74.7% compared with 73.6% in December 2003. As a result of stronger load factors earlier in 2004, the airline's load factor remained relatively stable year over year. Load factor for full-year 2004 reached 70.0% compared with 70.6% in 2003.

Yield, or revenue per revenue passenger mile, decreased to 16.3 cents in the fourth quarter of 2004 compared with 17.3 cents in the fourth quarter of 2003.

In 2004, yield decreased to 16.9 cents compared with 17.8 cents in 2003. WestJet's average stage length grew from 684.7 miles in the fourth quarter of 2003 to 788.3 miles in the fourth quarter of 2004.

Clive Beddoe, WestJet's CEO, said today: "We are obviously disappointed with our financial performance in the fourth quarter of 2004, as well as our performance during the rest of the year. This was an extremely challenging year for our airline and for our industry as a whole as we had to deal with record high fuel prices, rising operating costs and fierce competition.

"We have made the decision to accelerate the replacement of our 18 Boeing 737-200 aircraft such that they will all be replaced within the next 12 months by 16 Next-Generation aircraft in order to further our objective to be the lowest-cost airline in North America.

"By pursuing the early replacement of our 737-200 fleet, we incurred a $47.6 million write-down, however the result should bring about annualized savings to WestJet of approximately $30 million as our Next-Generation 737s are 30% more fuel efficient relative to their older counterparts and incur much lower maintenance costs.

In addition to these advantages, we will gain crewing efficiencies as all of our pilots will be able to fly each of these variants of the 737 due to their common cockpit configuration and maintenance will be simplified as they each utilize the same parts and engines.

"Unfortunately, this year we also suffered through some internal growing pains as we outgrew our revenue and inventory management system. This prevented us from adjusting our fares with demand and displaying our seat inventory accurately.

This impacted our load factors throughout the last quarter of 2004 and required the redeployment of extensive resources in developing and implementing new systems in these areas. Although our revenue management troubles are largely behind us, they impacted October and November bookings by a total of approximately $15 to $20 million for the two months.

Our aggressive launch of transborder service into these markets was also impacted by the fact that we focused much of our efforts on Florida during the worst hurricane season in 30 years. Losses on our transborder markets amounted to approximately $4.5 million in the fourth quarter, but the economics of 80% of these routes are now showing positive results. As I have said in the past, we will make decisions that are best for the long-term health of our airline, not merely for short-term profitability. Despite the risks that were associated with our move into these transborder markets, we are confident that this was the right decision for our airline and we are
comfortable with the gains we are seeing on these routes in the first quarter of 2005.

"Our partnership with BMO and AIR MILES continues to grow as the number of WestJet-branded credit cards increases in the marketplace and more Canadians are seeing the benefits that this card provides to enhance their ability to earn points and fly for free sooner to all of WestJet's destinations.

"We were very pleased to launch our first aircraft equipped with live seatback satellite television in July 2004, and by December 31, 2004 we had equipped 14 aircraft with this unique product. Our installation program remains on track and we expect the remaining aircraft in our fleet to be outfitted with this technology by late April 2005.

"Many of the cost challenges faced by the industry in 2004 will continue through the year ahead. High fuel prices will undoubtedly continue to be a challenge; however, I am confident that WestJet's growth and fleet strategy will put us in an optimal position to deal with this new reality. Being able to operate with the lowest and sustainable costs continues to be the most important factor that will determine the success of our airline in the future."

The airline operates a fleet of 56 aircraft (38 –700 & 18 –200)

WestJet Airlines Ltd. Consolidated Financial Statements
December 31, 2004 (Unaudited)

WestJet Airlines Ltd. Consolidated Balance Sheets
December 31, 2004 and December 31, 2003
(Stated in Thousands of Dollars)

December 31, December 31, 2004 2003 (unaudited)

Assets

Current assets:

Cash and cash equivalents $ 148,532 $ 241,384
Accounts receivable 12,814 11,781
Income taxes recoverable 2,854 -
Prepaid expenses and deposits 25,493 19,928
Inventory 5,382 3,764
195,075 276,857

Property and equipment 1,601,546 1,140,226
Other assets 80,733 59,775 $ 1,877,354 $ 1,476,858

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 91,885 $ 82,822
Income taxes payable - 9,820
Advance ticket sales 81,991 58,086
Non-refundable guest credits 26,704 21,718
Current portion of long-term debt 97,305 59,334
Current portion of obligations under capital
lease 6,564 6,297 304,449 238,077
Long-term debt (note 4) 905,631 589,531
Obligations under capital lease (note 8(b)) - 7,015
Long-term liabilities (note 5) 10,000 -
Future income tax 67,382 61,423
1,287,462 896,046

Shareholders' equity:
Share capital (note 7(a)) 390,469 376,081
Contributed surplus 21,977 -
Retained earnings 177,446 204,731
589,892 580,812
Subsequent events (note
Commitments and contingencies (note
$ 1,877,354 $ 1,476,858

WestJet Airlines Ltd.
Consolidated Statements of Earnings (loss) and Retained Earnings
For the periods ended December 31, 2004 and 2003 (Unaudited)
(Stated in Thousands of Dollars, Except Per Share Data)

Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003

Revenues:

Guest
revenues $ 240,353 $ 210,282 $ 933,407 $ 794,450
Charter and
other 32,258 18,296 119,332 65,146
Interest
Income 1,123 1,582 5,251 4,003 273,734 230,160 1,057,990 863,599


Expenses:

Aircraft fuel 75,941 40,634 241,473 155,756
Airport operations 49,885 34,785 173,397 122,066
Flight operations and navigational charges 41,070 29,568 148,396 104,955
Amortization (note 3) 69,576 16,793 126,338 63,208
Sales and marketing 21,616 16,158 83,948 57,871
Maintenance 21,194 17,939 78,283 75,718
General and administration 18,169 12,399 62,882 46,105
Interest expense 13,073 8,304 44,109 24,915
Inflight 12,188 9,048 43,705 32,146
Aircraft leasing 9,701 10,349 41,239 44,179
Customer service 7,099 6,333 24,119 22,213
339,512 202,310 1,067,889 749,132

Earnings

loss) from operations (65,778) 27,850 (9,899) 114,467
Non-operating income

(expense):
Loss on foreign exchange (2,587) (1,801) (3,224) (1,848)
Gain on disposal of property and equipment 86 195 63 631
2,501) (1,606) (3,161) (1,217)
Employee profit share (note 9) (2,923) 2,719 2,916 15,855

Earnings

before income taxes (65,356) 23,525 (15,976) 97,395
Income tax expense (reduction):
Current 595 1,610 (4,771) 11,264
Future (19,682) 9,152 5,963 25,592 (19,087) 10,762 1,192 36,856

Net earnings

(loss) (46,269) 12,763 (17,168) 60,539
Retained earnings, beginning of period 223,715 191,968 204,731 144,192
Change in accounting policy (note 7(d)) - - (10,117) -

Retained earnings, end of period $ 177,446 $ 204,731 $ 177,446 $ 204,731

Earnings (loss) per share (note 7(C)):
Basic $ (0.37) $ 0.10 $ (0.14) $ 0.52
Diluted $ (0.37) $ 0.10 $ (0.14) $ 0.52

Operating highlights:

(1) Write-down of $47,577,000 related to 200-series fleet write-down has been excluded from per-unit costs.

Available seat miles 2,488,669,459 1,890,673,957 8,963,103,389 6,871,715,636

Revenue passenger miles 1,679,756,695 1,328,797,919 6,277,332,668 4,852,506,652

Load factor 67.5% 70.3% 70.0% 70.6%

Revenue per passenger mile (cents) 16.3 17.3 16.9 17.8
Revenue per available seat mile (cents) 11.0 12.2 11.8 12.6
Cost per passenger mile (cents)(1) 17.4 15.2 16.3 15.4
Cost per seat mile (cents)(1) 11.7 10.7 11.4 10.9
Fuel consumption (litres) 134,660,725 109,368,908 490,782,605 397,613,173
Fuel cost/litre (cents) 56.4 37.2 49.2 39.2

Segment guests 2,092,910 1,856,066 7,835,677 6,978,815
Average stage length 788.3 684.7 760.1 656.7
Number of full time equivalent employees at quarter end 4,024 3,396 4,024 3,396
Fleet size at quarter end 54 44 54 44

WestJet Airlines Ltd.
Consolidated Statements of Cash Flows
For the periods ended December 31, 2004 and 2003
(Unaudited) (Stated in Thousands of Dollars)

Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003

Cash flows from (used in):
Operating activities:
Net earnings (loss) $(46,269) $ 12,763 $(17,168) $ 60,539

Items not involving cash:
Amortization 69,576 16,793 126,338 63,208
Gain on disposal of property
and equipment (86) (195) (63) (631)
Stock-based compensation expense 3,436 - 12,305 -
Issued from treasury stock - 1 - 3,063
Future income tax expense (19,682) 9,152 5,963 25,592

6,975 38,514 127,375 151,771
(Increase) decrease in non-cash working capital (1,404) (21,410) 16,697 40,646 5,571 17,104 144,072 192,417

Financing activities:

Repayment of long-term debt (22,989) (13,311) (75,819) (49,158)
Increase in long-term debt 40,955 80,680 429,890 466,353
Decrease in obligations under capital lease (1,555) (1,559) (6,381) (6,498)
Increase in long-term liabilities - - 10,000 -
Share issuance costs - (6,242) (10) (6,297)
Increase in other assets (2,149) (10,146) (23,711) (25,101)
Issuance of common shares (1) 153,931 13,949 165,545
14,261 203,353 347,918 544,844

Investing activities:

Aircraft additions (90,967) (118,082) (546,242) (564,130)
Other property and equipment
additions (8,321) (7,448) (41,545) (34,249)
Other property and equipment
disposals 103 606 2,945 2,092 (99,185) (124,924) (584,842) (596,287)

Increase (decrease) in cash (79,353) 95,533 (92,852) 140,974
Cash, beginning of period 227,885 145,851 241,384 100,410

Cash, end of period $148,532 $241,384 $148,532 $241,384

Cash interest and taxes paid during the 12 months ended December 31,
2004 were $42,346,000 (2003 - $21,938,000) and $7,903,000 (2003 -
$9,426,000) respectively.

As at December 31, 2004 cash and cash equivalents include US $4,251,000 (2003 - $nil) of restricted cash.

WestJet Airlines Ltd. Notes to Consolidated Financial Statements
For the periods ended December 31, 2004 and 2003 (Unaudited)

(Tabular Dollar Amounts are Stated in Thousands, Except Per Share Data)
The interim consolidated financial statements of WestJet Airlines Ltd.
("WestJet" or "the Corporation") have been prepared by management in
accordance with accounting principles generally accepted in Canada. The
interim consolidated financial statements have been prepared following
the same accounting policies and methods of computation as the
consolidated financial statements for the fiscal year ended December 31, 2003, except as disclosed below. The disclosures provided below are
incremental to those included with the annual consolidated financial
statements. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto in the Corporation's annual report for the year ended December 31, 2003.

The Corporation's business is seasonal in nature, with the highest
activity in the summer (third quarter) and the lowest activity in the
winter (first quarter) due to the high number of leisure travellers and
their preference to travel during the summer months.

1. Comparative figures:
Certain prior period balances have been reclassified to conform to
current period's presentation.

2. Maintenance costs:
Maintenance and repairs, including major overhauls are charged to
operating expenses as they are incurred.

3. Property and equipment:

December 31, 2004 Accumulated Net book
Cost Depreciation value

Aircraft - 700 series $ 1,282,308 $ 46,180 $ 1,236,128
Aircraft - 200 series 142,657 121,182 21,475
Ground property and equipment 109,334 34,586 74,748
Spare engines and parts - 700 series 52,641 4,777 47,864
Buildings 39,636 2,840 36,796
Aircraft under capital lease 31,304 26,781 4,523
Spare engines and parts - 200 series 24,397 16,523 7,874
Leasehold improvements 5,655 3,104 2,551

1,687,932 255,973 1,431,959
Deposits on aircraft 156,943 - 156,943
Assets under construction 12,644 - 12,644

$ 1,857,519 $ 255,973 $ 1,601,546

December 31, 2003 Accumulated Net book
Cost Depreciation value

Aircraft - 700 series $ 758,135 $ 17,265 $ 740,870
Aircraft - 200 series 152,487 70,424 82,063
Ground property and equipment 93,636 22,524 71,112
Spare engines and parts - 700 series 36,754 2,518 34,236
Buildings 39,474 1,852 37,622
Aircraft under capital lease 31,135 17,221 13,914
Spare engines and parts - 200 series 26,376 11,634 14,742
Leasehold improvements 5,055 2,377 2,678
1,143,052 145,815 997,237
Deposits on aircraft 141,640 - 141,640
Assets under construction 1,349 - 1,349
$ 1,286,041 $ 145,815 $ 1,140,226

The Corporation made the decision to accelerate the retirement dates
of its older Boeing 737-200 aircraft to have all 200-series aircraft
retired by the end of 2005 rather than in 2008 as planned under the
previous schedule. As a result of the accelerated retirement dates on
the 200-series aircraft, the Corporation evaluated the recoverability
of the aircraft and the related rotable parts and equipment, and the
200-series simulator (the "200-series assets"). This analysis
indicated the estimated undiscounted future cash flows generated by
these 200-series assets on a specific asset basis were less than
their carrying values.

As a result, the carrying values of the 200-series assets were reduced to fair market value and the resulting impairment loss of $47,577,000 was included in amortization expense.

Management estimated fair market value using third-party appraisals
and recent sales and leasing transactions with consideration made for
the currently available market for 200-series assets.
During the year, interest costs of $3,675,000 (2003 - $4,666,000)
were capitalized to Aircraft - 700 series.

4. Long-term debt:

December 31 December 31
2004 2003

$1,053,530,000 in 26 individual term loans, amortized on a straight-line basis over a 12-year term, repayable in quarterly principle instalments ranging from $768,000 to $955,000, guaranteed by the Ex-Im Bank, secured by 26 700-series aircraft, and maturing in 2014 through 2016. Twenty-five of these facilities include fixed rate weighted average interest at 5.46%.

The remaining facility totalling $40,372,000 bears a floating interest rate at the Canadian LIBOR rate plus 0.08% (effective interest rate of 2.84% as at December 31, 2004) until the first scheduled repayment date in February 2005,

after such time the interest rate on the loan will be fixed at a rate of 5.92% for the remaining term of the loan $ 954,674 $ 600,047 $26,000,000 in two individual term loans, repayable in monthly instalments ranging from $106,000 to $156,000 including floating interest at the bank's prime rate plus 0.88% with an effective interest rate of 5.13% as at December 31, 2004, with varying maturities ranging between July 2008 and July 2013, secured by two Next-Generation flight simulators and cross-collateralized by one 200-series aircraft 21,684 23,751 $12,000,000 term loan repayable in monthly instalments of $108,000 including interest at 9.03%, maturing April 2011,

secured by the Calgary hangar facility 11,075 11,360 $22,073,000 in six individual term loans, repayable in monthly instalments ranging from $25,000 to $87,000 including fixed rate weighted average interest at 8.43% all maturing in October 2005, secured by three 200-series aircraft 5,301 9,390 $4,550,000 term loan repayable in monthly instalments of $50,000 including floating interest at the bank's prime rate plus
0.50%, with an effective interest rate of 4.75% as at December 31, 2004,

maturing April 2013, secured by the Calgary hangar facility 3,899 4,317 $6,939,000 in 11 individual term loans, amortized on a straight line basis over a five year term, repayable in monthly principal instalments ranging from $29,000 to $33,000 including floating interest at the Canadian LIBOR rate plus 0.08%, with a weighted average effective interest rate of 2.78%, maturing in 2009, guaranteed by the Ex-Im Bank and secured by certain 700-series aircraft 6,303 - 1,002,936 648,865 Less current portion 97,305 59,334 $ 905,631 $ 589,531

Future scheduled repayments of long-term debt are as follows:

2005 $ 97,305
2006 92,163
2007 92,332
2008 97,625
2009 91,027
2010 and thereafter 532,484

$ 1,002,936

5. Long-term liabilities
The Corporation recorded $10,000,000 (2003 - $Nil) of unearned
revenue related to the tri-branded credit card for future net retail
sales. The unearned revenue will be drawn down commencing in May 2005 under this five-year agreement.

6. Financial instruments:
(a) Foreign exchange risk management
At December 31, 2004, the Corporation had US dollar cash and cash
equivalents totalling US $28,440,000 (2003 - $29,942,000).

(b) Financing agreement
The Corporation had an agreement with Ontario Teachers' Pension
Plan Board ("Ontario Teachers") for the right to require Ontario
Teachers to purchase up to $100,000,000 of common shares, which
expired on August 29, 2004 and was extended to September 10,
2004. The Corporation elected not to exercise the financing
agreement and has included the 1% annual standby fee in general
and administration expenses for the year ended December 31, 2004.

7. Share capital:
(a) Issued:

Three Months Ended Twelve Months Ended
December 31, 2004 December 31, 2004

Number Amount Number Amount

Common shares:

Balance, beginning
of period 125,447,836 $ 390,465 123,882,490 $ 376,081
Exercise of options 49,571 - 1,611,721 13,949
Stock-based compensation - 445
Issued on rounding of stock split - - 3,196 -
Share issuance costs - (10)
Tax benefit of issue costs 4 4
Balance, end of period 125,497,407 $ 390,469 125,497,407 $ 390,469

Three Months Ended Twelve Months Ended
December 31, 2003 December 31, 2003

Number Amount Number Amount

Common shares:
Balance, beginning
of period 114,180,078 $ 226,205 112,349,414 $ 211,564
Exercise of options 423,411 3,920 1,672,007 12,472
Common share issue 9,279,000 150,011 9,279,000 150,011
Common shares issued from treasury - - 582,069 6,125
Share issuance costs - (6,242) - (6,297)
Tax benefit of issue costs - 2,187 - 2,206
Balance, end of period 123,882,489 $ 376,081 123,882,490 $ 376,081

On May 7, 2004, the common shares of the Corporation were split
on a three-for-two basis. All number of shares and per share
amounts has been restated to reflect the stock split.

(b) Stock option plan:
Changes in the number of options, with their weighted average exercise
prices, are summarized below:

Three Months Ended Twelve Months Ended
December 31, 2004 December 31, 2004

Weighted Weighted
Number average Number average of exercise of exercise
Options price Options price

Stock options outstanding, beginning of period 10,918,889 $ 12.32 9,809,753 $ 10.78

Issued 23,198 11.35 2,927,875 15.73
Exercised (251,682) 9.79 (1,959,002) 9.42
Cancelled (8,323) 16.02 (96,544) 12.83

Stock options outstanding, end of period 10,682,082 $ 12.37 10,682,082 $ 12.37

Exercisable, end of period 4,694,357 $ 10.88 4,694,357 $ 10.88

Three Months Ended Twelve Months Ended
December 31, 2003 December 31, 2003

Weighted Weighted
Number average Number average
of exercise of exercise Options price Options price

Stock options outstanding,
beginning of period 10,238,355 $ 10.71 8,713,782 $ 9.99
Issued 1,268 18.41 2,905,688 11.21
Exercised (423,411) 9.26 (1,672,006) 7.49
Cancelled (6,459) 12.39 (137,711) 10.63
Stock options outstanding,
end of period 9,809,753 $ 10.78 9,809,753 $ 10.78

Exercisable, end of
period 1,384,362 $ 9.10 1,384,362 $ 9.10

At the Annual General Meeting held in April 2004, Shareholders
approved the new 2004 stock option plan and an amendment to the 2003
stock option plan. The terms of the approved plans allow the holders
of vested options a cashless settlement alternative whereby the
option holder can either (a) elect to receive shares by delivering
cash to the Corporation in the amount of the options or (b) elect to
receive a number of shares equivalent to the market value of the
options over the exercise price. For the three months ended December
31, 2004, option holders exercised 251,682 options on a cashless
settlement basis and received 49,571 shares. For the twelve months
ended December 31, 2004, option holders exercised 449,635 options on
a cashless settlement basis and received 102,354 shares.

(c) Per share amounts:
The following table summarizes the common shares used in
calculating net earnings per common share:

Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003

Weighted average number of common shares
outstanding - basic 125,465,352 122,305,707 125,071,208 115,470,464
Effect of dilutive employee stock options - 4,013,976 - 1,984,846

Weighted average number of common shares
outstanding - diluted 125,465,352 126,319,683 125,071,208 117,455,310

For the year ended December 31, 2004 a total of 10,682,082 options were not included in the calculation of dilutive common shares as the result would be anti-dilutive.

(d) Stock-based compensation
On January 1, 2004 the Corporation changed its accounting policy
related to stock options granted on or after January 1, 2002.
Under the new policy, the Corporation determines the fair value
of stock options on their grant date and records this amount as
compensation expense over the period that the stock options vest,
with a corresponding increase to contributed surplus.

The Corporation has retroactively adopted the changes, without
restatement of prior periods, on January 1, 2004 which resulted
in retained earnings decreasing by $10,117,000 and an offsetting
entry to contributed surplus. As new options are granted, the fair value of these options will be expensed over the vesting period, with an offsetting entry to contributed surplus. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Upon the exercise of stock options, consideration
received together with amounts previously recorded in contributed
surplus is recorded as an increase in share capital.

Employee stock option compensation expense is included in flight operations and general and administration expenses totalled $3,436,000 million and $12,305,000 for the three and 12 months ended December 31, 2004 respectively related to the vesting during 2004 of the outstanding stock options issued on or after January 1, 2002 to officers and certain employees of the Corporation.

The fair market value of options granted during the three months ended December 31, 2004 and the weighted average assumptions used in their determination are as follows:

Fair market value per option $ 3.84
Risk free interest rate 3.62%
Expected stock price volatility 40%
Expected life of options 3.5 years

8. Commitments and contingencies:

(a) Aircraft:
The Corporation has committed to purchase eight 737-600's and
five 737-700's Next-Generation aircraft for delivery between 2005
and 2006. Subsequent to December 31, 2004, the Corporation
entered into agreements with an independent third party to lease three 737-700 aircraft to be delivered during January to March 2005 for an eight-year term in US dollars. The Corporation also entered into arrangements to lease five 737-800 aircraft to be delivered during April to June 2005 for a term of 10 years in US dollars with another independent third party.

These obligations have been included in note 8(b). The remaining estimated amounts to be paid in deposits and purchase prices in US dollars relating to the purchases of the remaining aircraft, LiveTV systems and winglets are 2005 - $239,987,000 and 2006 - $155,978,000.

The Corporation also has an agreement to purchase a Next-Generation flight simulator and fixed-based trainer. The obligations in Canadian dollars are 2005 - $13,002,000 and 2006 - $1,456,000.

(b) Leasehold commitments:

The Corporation has entered into operating leases and agreements
for aircraft, buildings, computer hardware and software licenses,
satellite programming, and capital leases relating to aircraft.
The obligations are as follows:

Capital Operating
Leases Leases

2005 $ 6,984 $ 81,992
2006 - 87,118
2007 - 85,434
2008 - 84,991
2009 - 82,706
2010 and thereafter - 416,166

Total lease payments 6,984 $ 838,407

Less imputed interest at 8.09% (420)

Net minimum lease payments 6,564 Less current portion of obligations
under capital lease (6,564)

Obligations under capital lease $ -

The Corporation's capital leases are denominated in US dollars. The obligations in 2005 is US $5,800,000. Included in operating leases are US dollar operating leases primarily related to aircraft.

The obligations of these operating leases in US dollars are 2005 - $58,312,000, 2006 - $66,776,000, 2007 - $66,711,000, 2008 - $66,711,000, 2009 - $66,711,000, 2010 and thereafter - $330,083,000.

(c) Contingencies:
A Fresh as Amended Statement of Claim was filed by Air Canada and
ZIP Air Inc. in the Ontario Superior Court on December 23, 2004
against the Corporation, two officers, two employees, two former
officers, and one former employee (the "Defendants"). The
principal allegations are that the Defendants unlawfully obtained
confidential flight load and load factor information from Air
Canada's employee travel website and, as a result, the Plaintiffs
have suffered damages and the Defendants have benefited from
having access to the alleged confidential information. The
Plaintiffs are seeking damages, aggregating $220 million, but the
Plaintiffs have provided no details or evidence to substantiate
their damages claim. A Statement of Claim was also filed by Jetsgo Corporation in the Ontario Superior Court on October 15, 2004 against the Corporation, an officer, and a former officer (the "defendants").
The principal allegations are that the defendants conspired
together to unlawfully obtain Jetsgo's proprietary information
and to use this proprietary information to harm Jetsgo and
benefit WestJet. The Plaintiff is seeking damages, in an amount
to be determined plus $50 million, but the Plaintiff has provided
no details or evidence to substantiate its claim.

Based on the results to date of (i) an internal investigation,
(ii) advice from independent industry experts, and (iii) crossexaminations of witnesses in the Air Canada proceedings,
management believes the amounts claimed are substantially without
merit. The amount of loss, if any, to the Corporation as a result
of these two claims cannot be reasonably estimated. The defence
and investigation of these claims are continuing. The Corporation is party to other legal proceedings and claims that arise during the ordinary course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material effect upon the Corporation's financial position, results of operations or cash flows.

9. Employee profit share provision:
The provision for employee profit share is estimated based on actual
year-to-date earnings results. The actual employee profit share
amount is to be determined by the Board of Directors based on audited
financial results at the completion of the financial year.

http://www.westjet.com

[KAG]

and the reward for the longest quote goes too.....

[co-joe]

Indeed KAG,

Yeah my feelings were that WJ knew they were gonna loose some cash this year so they rolled as much debt into one piece of bad news as possible to get it out of the way. Classic GAAP tactic. Makes perfect sense if you think about it. I'd bet money Q2 will be back to sunshine, and smiles, warm and fuzzy eh?

[Torn]

F*<k Westjet. All you idiots that are part of their cult. Its time to get over it. And... Blastor do you think people actually read all that nonsence? If we were that curious to go find that junk we'd do a search ourselves. Be a little more productive and quit wasteing your time making such ridiculous posts.

[wanpaku]

Torn....I guess the interview didn't go as you wanted. Behavioural interviews are a b i t c h. They tend to get to the nuts and bolts of a person to see exactly what makes them tic. I mean tick. Oh well. Good luck next year dude.

I'll say it again, only louder this time.......


GO-WESTJET-GO

[FamilyGuy]

What is wrong with Blators post???

Someone actually posts a factual piece of info from which you can read and make your own semi-informed opinion and you slag them for it??? Are the big words a problem for you??? Do you prefer the usual BS uninformed speculative crap based on rumours and drunken bar room banter????

WJ's losses are far from over. Until they get rid of the -200's they are going to pay for the extra fuel burn big time. If any "other" additional costs pop up in the next little while it could be a rough couple of months/quarters.