Westjet 2001 Annual Report Download - page 18

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2001’s growth was 57.1%, the greatest full year over
year growth rate in our history just ahead of the
previous high in 1998 of 55.1%. It was also another
year of infrastructure building, a year of transition to
new aircraft and facilities, a year of turbulence in the
competitive environment, and a year of
extraordinary change in the airline industry. We
continued to expense our growth costs in building
for the future, and despite all of the challenges of
2001, measures of financial performance fared well
and our earnings increased from the previous year.
WestJet continued to produce profits in 2001 even
with the high cost of jet fuel, and in spite of the
unprecedented impact of the events of September
11th. Diluted earnings per share grew from $0.69 in
2000 to $0.79, while net earnings rose 23% from
$30.3 million in 2000 to $37.2 million this past year.
Due to the significantly higher amortization in 2001,
on a cash flow basis WestJet generated 47.3% more
cash from operations in 2001, at $76.5 million,
compared with $51.9 million in the year previous.
Since 1997, our earnings from operations have
always exceeded 10% of revenues. In 2001, our
earnings from operations remained in the double-
digit range at 12.4%, as compared with our best
ever performance of 16.1% in 2000.
Notwithstanding the decline in percentage of
revenues, in 2001 we achieved an 11.0% increase in
earnings from operations of $59.4 million, as
compared with $53.5 million one year earlier.
Our employee profit share is based on WestJet’s
annual earnings before tax and profit share itself –
our margin. This increased 3.5% to $68.6 million in
2001 compared with $66.3 million in 2000. As a
percentage of revenues, this margin percentage
declined from 2000’s record high of 19.9% to 2001’s
14.3%. Our methodology for calculating profit
sharing is simple: We calculate the margin
percentage achieved in the profit share period, and
apply that percentage to the margin to determine
the amount for distribution among our people. Thus,
a doubling of WestJet’s margin percentage from
10% to 20% results in a four-fold increase in profit
sharing as both elements double. In 2000, almost
20% was paid to employees, or about $13.5 million
once payroll taxes were accounted for. In 2001,
with our lower margin of 14.3%, $10.3 million went
into the profit share pool.
Results of Operations
This corporation’s annual growth rate, as measured by capacity or available
seat miles (ASMs), has averaged 56% since we started flying in 1996.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Since 1997, our earnings from operations
have always exceeded 10% of revenues.