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Cowen Securities 6 th Annual Global Transportation Conference June - PowerPoint PPT Presentation

Cowen Securities 6 th Annual Global Transportation Conference June 11, 2013 CAUTION REGARDING FORWARD-LOOKING INFORMATION Certain statements set forth in this presentation and statements made during this presentation, including, without


  1. Cowen Securities 6 th Annual Global Transportation Conference June 11, 2013

  2. CAUTION REGARDING FORWARD-LOOKING INFORMATION Certain statements set forth in this presentation and statements made during this presentation, including, without limitation, information respecting WestJet’s company-wide business transformation initiative, the future growth of the company, our fleet expansion and modernization plans, aircraft delivery positions, potential interline and code-share agreements and their expected benefits, the further development of our fare bundle selections, market expansion opportunities, the launch and operation of WestJet Encore and the communities it will serve and the guidance provided for the second quarter of 2013 and the full year 2013 are forward-looking statements within the meaning of applicable Canadian securities laws. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond WestJet’s control. Readers are cautioned that undue reliance should not be placed on forward-looking statements as actual results may vary materially from the forward-looking statements due to a number of factors including, without limitation, changes in consumer demand, energy prices, aircraft deliveries, general economic conditions, competitive environment, regulatory developments, environment factors, ability to effectively implement and maintain critical systems and other factors and risks described in WestJet’s public reports and filings which are available under WestJet’s profile at www.sedar.com. Any forward-looking statements contained in this presentation represent WestJet’s expectations as of the date of this presentation and are subject to change after such date. WestJet does not undertake to update, correct or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by law. June 2013 2

  3. WESTJET’S TRACK RECORD OF PROFITABILITY SINCE INCEPTION Net Earnings (millions of dollars) 250 200 150 100 50 0 -50 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Reported in Canadian GAAP up to 2009 with 2005-2008 restatements. 2010 - 2012 reported under IFRS. 3

  4. WESTJET’S GOAL TO GENERATE 12% RETURN ON INVESTED CAPITAL Return on Invested Capital* 15% 14.3% 14% 13% Sustainable Goal 12% goal 11% 10% 9% 8% 7% 6% 5% 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Note: 2010-13 presented under IFRS; 2009 and prior presented under previous Canadian GAAP. * Based on trailing 12 month basis before tax . 4

  5. WESTJET A PROFITABLE GROWTH STORY Guests (thousands) Available Seat Miles (millions) 20,000 25,000 18,000 20,000 16,000 14,000 12,000 15,000 10,000 8,000 10,000 6,000 4,000 5,000 2,000 0 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Revenues ($ millions) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 5

  6. 6

  7. 77

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  9. GROWTH AND STRONG FINANCIAL PERFORMANCE CONTINUES

  10. OPERATING HIGHLIGHTS – Q1 2013 Record earnings reported in the first quarter 2013 ������� ������� ������ ����������������������� $91.1 $68.3 33.3% ��������������������������� $0.68 $0.49 38.8% ������������������������� $967.2 $891.0 8.6% ���������������������������� 16.03 15.66 2.4% ������������������ ������������������������������ 0.93 0.95 (2.1%) ������� ��!�"�������������#��� 8.94 8.95 (0.1%) ���"���������������� Earnings before tax margin 13.0% 10.7% 2.3 pts 10

  11. FIRST QUARTER 2013 – ADJUSTED EBT MARGIN WESTJET RANKS 3rd AMONG LEADING NORTH AMERICAN PEERS 20% 18.5% 14.4% 15% 13.0% 10% 5.2% 5% 2.1% 1.8% 1.6% 1.0% 0% (2.1%) -5% (3.8%) (7.4%) -10% Allegiant Spirit WestJet Alaska Southwest JetBlue US Airways Delta American Air Canada United First Quarter 2013 adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market hedge gains/losses) 11

  12. COSTS REMAIN UNDER CONTROL 18 16 2.2 1.7 14 1.7 1.2 2.2 1.0 cents per ASM 1.2 12 4.5 4.5 4.3 4.7 3.5 3.5 3.2 10 8 6 9.1 8.9 8.8 8.9 8.6 8.5 8.3 4 2 0 2007 2008 2009 2010 2011 2012 Q1 2013 CASM (ex fuel and profit share) Profit Share Fuel Op. Margin *IFRS basis Excludes reservation system impairment of $31.9 million in 2007 12

  13. BUSINESS TRANSFORMATION INITIATIVE • Target to reduce costs by $100 million over the next 36 months • Undertake a longer term initiative to ensure our unit costs are competitive with low cost North American airlines Four key focus areas: Aircraft utilization and channel Productivity efficiency Non-Operational People Expenses 13

  14. MODERNIZING OUR FLEET - CREATING VALUE • Selling 10 of our oldest Boeing 737- 700s in 2014 & 2015 • Buying 10 new Boeing 737- 800s in 2014-15 • Deferring delivery of five 737-700s from 2014-15, to 2016-17 • Transaction creates value: • Lowers CASM by effectively adding incremental capacity • Benefits associated with a younger fleet • Accelerates our move towards more optimal fleet mix • Allows new planes to be financed in a low interest rate environment • Assists transition to our long-term in-flight entertainment connectivity strategy once finalized • Maintains Fleet flexibility 14

  15. MEASURED GROWTH - 737 FLEXIBLE FLEET PLAN INCLUDING MODERNIZING TRANSACTION 135 140 132 130 124 120 33 29 113 108 23 110 3 15 100 90 80 105 105 103 102 101 100 98 70 60 50 2012 2013 2014 2015 2016 2017 2018 737 Committed Fleet Cumulative Lease Extension Options 15

  16. Q400 NEXTGEN FLEET PLAN ALSO BUILDS IN FLEXIBILITY 50 45 43 40 34 25 23 30 25 14 5 20 10 20 20 20 20 16 7 0 2013 2014 2015 2016 2017 2018 Q400 NextGen Committed Fleet Cumulative Purchase Options 16

  17. BUILDING ON OUR CAPABILITIES

  18. AIRLINE PARTNERSHIPS EXPANDING OUR NETWORK • Strategically selecting carriers in each major world region • Seamless access to more destinations • International travel options for the business traveller • Selective approach keeps costs in line 18

  19. ENRICHING MORE LIVES ACROSS SEGMENTS � /�������� &������ � ����������������� ������������������ !������������������ ����� ��� ���" $�%�"���������� ����"���������� (����"���������� #��"���� $������ &�������'$������ &������� ������������������# ����� $�%����"�������������������������� $�% "�������������������������� (������"����%������������� "�� ������#�������������������"��� ������� &�������������"��� �����&��� �����"��� ������������������ �����"����� ����#���������������"���#�"�� ���� ��"�� "�� #��"� �����"���������%����������"���)�� ��� ,�������������"�� ������# ���� ,������.��%������ �%�������� ����%*�������������!�+�#�"���%���� �������������-�����������! ���������""!�,���������� ����� $��$�"����� #�������! "�� ������#������������������������ ��������%��-�����! 19

  20. PLUS FARE SEATING Reconfiguration was completed end of Q1 2013 174 170 24 150 136 130 119 24 Guest seats 110 166 24 150 136 90 119 112 95 70 50 737-600 737-600 737-700 737-700 737-800 737-800 Before After Before After Before After Economy Plus 20

  21. OUR PLUS SEATING WITH EXTENDED LEGROOM 21

  22. WESTJET ENCORE

  23. MARKET OPPORTUNITIES REGIONAL (50+ seats) = $2.1B – DOMESTIC + TRANSBORDER ������%�&���������"������"��"����$�'������$����(��������))�����)�������� 23

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