Analysts cut WestJet forecasts

[Rebel]

FINANCIAL POST

Analysts cut WestJet forecasts
One cites end of access to Air Canada data

Paul Vieira
Financial Post

July 8, 2004

Two investment dealers yesterday cut their second-quarter profit forecasts on WestJet Airlines Ltd. by half, with one analyst connecting the airline's poor traffic results to its inability to further access an internal Air Canada website.

The investment bank reports come a day after the Calgary-based low-cost carrier reported mediocre June traffic results, although they were encouraging, compared to the disappointing numbers WestJet recorded in April and May.

WestJet passenger traffic was up in June, 25% on a year-over-year basis, based on an almost similar hike in capacity. The number of seats filled climbed slightly.

Nadi Tadros, an analyst at Desjardins Securities, cut his WestJet second-quarter profit estimate by half, to 6 cents a share from 12 cents, as well as his full-year estimate, to 39 cents from 55 cents.

While he said the airline's June traffic numbers were not as disappointing as the previous two months, it was likely at the expense of yield, or revenue generated per passenger flown. "Achieving higher load factors at the expense of weaker prices may serve just to bring us back to our starting point," Mr. Tadros said.

Meanwhile, Claude Proulx of BMO Nesbitt Burns also downgraded his profit estimates, to 8 cents from 18 cents for the second quarter, ended June 30, and to 52 cents from 66 cents for 2004.

More importantly, he is the first financial analyst to link WestJet's recent operating struggles and Air Canada's improved performance to the corporate espionage legal spat between the two companies.

WestJet is alleged to have unlawfully acquired confidential business data from an internal Air Canada Web site -- mostly passenger counts on its flights -- over a 10-month period, ending last March 19. This information, Air Canada claims, was used by its rival to challenge it on its most profitable routes by adjusting the schedule and fares based on the data.

Since March 19, Mr. Proulx said, "we note Air Canada's domestic traffic figures have improved substantially since WestJet stopped obtaining information from Air Canada, while WestJet's load factors deteriorated significantly."

Last month, Air Canada recorded year-over-year 13.6% traffic growth, and recorded a record load factor, or percentage of seats filled on its flights, of 79.4%.

Mr. Proulx said the Web site data was "potentially very valuable" and could have assisted WestJet in managing its seat inventory and price fares to obtain maximum yield.

(In court documents, WestJet has denied it used the data for commercial purposes.)

"Investors should keep in mind that WestJet's profitability may have been artificially boosted in recent quarters, which could make coming quarters very challenging," Mr. Proulx warned his clients.

(Ed Lumley, BMO Nesbitt's vice-chairman, is on the board of directors at Air Canada.)

Meanwhile, in another development, WestJet reported the stake held by foreigners, as of the end of trading on Tuesday, dropped to 20.8% -- down from 23.7% just two months ago. From June 9 to July 6, foreigners reduced their holding in the airline by a net 1.9 million shares.

© National Post 2004

[N2]

I'd still fly WJ before AC anyday!

[Panama Jack]

with one analyst connecting the airline's poor traffic results to its inability to further access an internal Air Canada website.

Since March 19, Mr. Proulx said, "we note Air Canada's domestic traffic figures have improved substantially since WestJet stopped obtaining information from Air Canada, while WestJet's load factors deteriorated significantly."

Ohhh Jesus!

[Blastor]

[Schlem]

Hey Blastor... after all the Anti-WJ threads you have started here why don't you change your nick to "Air Canada Ass Licker".

I think we can all read newspapers.

[Blastor]

Slhem just for you good buddy

Sell, sell, sell, sell, sell, sell, sell, sell, sell, sell!
Your goose is cooked! bootyshake

[Schlem]

Slhem just for you good buddy

Sell, sell, sell, sell, sell, sell, sell, sell, sell, sell!
Your goose is cooked! bootyshake

Hehe.. I have nothing to do with WJ as a matter of fact... don't fly for them or own any stock.

[Panama Jack]

Blastor´s only real crime is being Air Canada proud and posting the articles to support it (although the articles are not exactly one-sided either).

Yes, I can see how people might say that Blastor is rubbing Westjet´s noses in the mess, however, it is nothing new-- I´ve been watching it happen the other way also. Chivalry and the traits associated with gentlemen, sadly is out of style in our industry these days.

As I said before, in the end, really none of this matters, as the results will be decided by (hopefully) less passionate men.