WestJet Airlines first-quarter earnings have beaten analyst estimates. The low cost carrier posted a first-quarter profit of C$48.2 million or 34 Canadian cents a share. This is well ahead of a restated C$2.4 million or 2 Canadian cents earned a year earlier.
Revenue increased by almost 25% to C$772.4 million, and operating margin of 10.3% was up from 3.9% a year earlier.
The Calgary-based low-cost air carrier, reported revenue per available seat mile rose 12.1% due to yield improvement and slight load-factor growth; while costs per available seat mile rose 4.5%. Although when excluding fuel and employee profit sharing, cost per seat mile fell 3.3%.
WestJet’s fuel costs were up 23% in the latest quarter to 85 Canadian cents a litre, which is slightly higher than the airline’s expectations of 82 Canadian cents and 84 Canadian cents a liter. WestJet expects fuel costs to range between 95 Canadian cents and 98 Canadian cents a litre for the second quarter of this year.
WestJet was able to offset the rising cost of fuel through fare rises which is has increased five times this year. "We’ve been pleased with the strength of consumer demand and the marketability to absorb the fare increases we put in place," WestJet Chief Executive Gregg Saretsky said.
Saretsky expects the airline to increase second-quarter capacity by 3-4% in its bid to gain market share in the eastern triangle between Toronto, Ottawa and Montreal. New daily flights between Toronto and Montreal and nine daily flights between Toronto and Ottawa are now being offered by the airline.