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WestJet Annual Report 2015 | 25
Aircraft fuel
Three months ended December 31
2015
2014
Change
Aircraft fuel expense ($ in thousands) 182,181
243,816
(25.3%)
Aircraft fuel expense as a percent of operating expenses 22% 29% (7.0 pts)
Fuel consumption (litres)
317,477,003
300,254,948
5.7%
Fuel cost per litre (cents) 57 81 (29.6%)
Average market price for jet fuel in US dollars (per barrel)
57 101 (43.6%)
Average market price for jet fuel in Canadian dollars (per barrel)
76
114
(33.3%)
Fuel remains a significant cost representing 22 per cent of total operating expenses for the three months ended December 31,
2015 (three months ended December 31, 2014 – 29 per cent). For the three months ended December 31, 2015, aircraft fuel
expense decreased by 25.3 per cent to $182.2 million from $243.8 million primarily due to the year-over-year decrease in the
Canadian market price for jet fuel. Fuel costs per ASM for the three months ended December 31, 2015, were 2.79 cents
compared to 3.82 cents for the comparable period of 2014, a decrease of 27 per cent year over year.
Our fuel costs per litre for the three months ended December 31, 2015 decreased by 29.6 per cent to 57 cents per litre. On
average, the market price for jet fuel was US $57 per barrel in the fourth quarter of 2015 versus US $101 per barrel in the
fourth quarter of 2014, a decrease of approximately 43.6 per cent. The benefit from the lower market price of US-dollar jet
fuel on a year-over-year basis was partially offset by the weaker Canadian dollar as the average market price for jet fuel in
Canadian dollars decreased by only 33.3 per cent to $76 per barrel from $114 per barrel in the fourth quarter of 2014.
Depreciation and amortization
Depreciation and amortization expense for the three months ended December 31, 2015 was $75.2 million, a $20.5 million or
37.6 per cent increase from $54.7 million in the comparable period of 2014. Amortization expense per ASM was 1.15 cents in
the fourth quarter of 2015, representing a 33.7 per cent increase from 0.86 cents in the same period of the prior year. These
year-over-year increases are due to the overall growth in our fleet, the changing fleet mix and the impact of the devaluation
of the Canadian dollar as our aircraft purchases are denominated in US dollars. In the third quarter of 2014, we classified 10
Boeing 737 aircraft, sold to Southwest Airlines, as held-for-sale assets. Therefore while these aircraft generated ASMs prior to
their scheduled deliveries, amortization had ceased in accordance with IFRS 5 – Non-current assets held for sale, thus
reducing our comparative depreciation expense per ASM.
Maintenance
Three months ended December 31
Expense ($ in thousands)
CASM (cents)
($ in thousands)
2015 2014 Change 2015 2014 Change
Technical maintenance
28,016
17,958
56.0%
0.43
0.28
53.6%
Maintenance provision
19,144 6,969 174.7% 0.29 0.11 163.6%
Total maintenance
47,160
24,927
89.2%
0.72
0.39
84.6%
Maintenance expense for the three months ended December 31, 2015, was $47.2 million, which represents a $22.2 million or
89.2 per cent increase from $24.9 million in the comparable period of 2014. Our maintenance cost per ASM was 0.72 cents in
the fourth quarter of 2015, representing an increase of 84.6 per cent from 0.39 cents in the comparable period of the prior
year. These year-over-year increases are mainly due to the devaluation of the Canadian dollar as most maintenance costs are
denominated in US dollars and increased the number of maintenance events performed compared to the prior year. In
addition, our maintenance provision for leased aircraft increased due to changes in the projected timing and scope of
maintenance activities mainly as a result of lease extension activity throughout 2015, a write-off of approximately $4.3 million
related to certain maintenance reserves that are no longer deemed to be recoverable and the lower comparable period which
included vendor credits applied against 2014 maintenance activities as well as a maintenance reserve recovery of $1.6 million.