Almost there

[Blastor]

WestJet's fare strategy unnerves analysts

By Brent Jang
Thursday, February 17, 2005 - Page B17

WestJet Airlines Ltd.'s decision to play hardball on air fares is being viewed with much nervousness by industry analysts.

Yesterday, at least six analysts cut their one-year price targets following comments Tuesday by WestJet chairman Clive Beddoe that the discount carrier intends to sell thousands of more seats in the lower-end fare category.

Air Canada, Jetsgo Corp. and CanJet Airlines are battling Calgary-based WestJet for passengers, but it's Jetsgo that has been the front-. in lowering fares recently. Desjardins Securities analyst Nadi Tadros cut his one-year target on WestJet to $10.80 from $13.50, citing concerns about cheap fares and higher operating costs. On Tuesday, WestJet announced a $46.3-million loss in its fourth quarter, and also revealed that its cost per available seat mile -- a key measure of costs -- climbed to 11.7 cents from 10.7 cents. Mr. Beddoe stressed that WestJet is undergoing growing pains, including its transborder expansion into the United States, and he estimated that seat capacity could still rise 17 per cent this year.

Research Capital Corp. analyst Jacques Kavafian has been among the most bullish observers, but he reduced his one-year target to $16.50 from $20.50. He bases his new valuation on about 15.5 times his forecast WestJet earnings next year of $1.07 a share. TD Newcrest analyst Brian Morrison reduced his one-year price target to $13.50 from $14.50, saying WestJet's unit costs could fall this year, but yields may be weak.

Yield in the airline industry measures revenue per passenger mile. Still, Mr. Morrison said investors seeking to buy WestJet shares may find the $11 range to be an attractive entry point.

WestJet's much-ballyhooed, laid-back corporate culture shouldn't be taken for granted. The risk of unionization is rising, added RBC Dominion Securities Inc. analyst Nick Morton, who noted that employee profit sharing fell to $2.9-million last year from $15.9-million in 2003. WestJet (WJA-TSX) fell 26 cents to $11.90 yesterday.

[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.

So what's the backup plan at WJ?

[zzjayca]

Hey Blastor,

How's the RVSM training coming along? Do ya think your company will get it right and actually follow regulations this time?

[DA900]

Hey Blastor,

How's the RVSM training coming along? Do ya think your company will get it right and actually follow regulations this time?

Ooo wow does that ever hurt!

[Jaques Strappe]

Since when has any financial analyst ever gotten it right in Canada?

Every prediction they make is reactionary showing zero insight to the actual industries they monitor. Their so-called predictions on the fate of Air Canada, the Canadian dollar, interest rates, natural gas prices have all been way off!!!!

My dog could make the same calls these guys have been making and be just as accurate.

If you want an accurate prediction of the airline industry in Canada, call Madame Cleo. The only one you can make an educated guess about is Jetsgo and that is because M. Leblanc has been doing the same thing over and over and over, always walking away with his pockets full of cash and the employees holding the bag. It sucks but that is my prediction. And my dogs'.