Westjet 2001 Annual Report Download - page 41

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39
Outlook
Recent announcements, coupled with our already aggressive expansion
plans, will ensure 2002 is another exciting year for WestJet.
Subsequent to year end, WestJet announced that
it had entered into agreements to lease two
Boeing 737-800 aircraft for a period of seven
months commencing in May 2002. In addition to
these aircraft, WestJet has also entered
agreements to exercise two of its purchase
options for 737-700 aircraft to be delivered in
November and December of 2002, as well as a
letter of intent to acquire a second 737-700 flight
simulator. We have also taken steps to support
these expansion plans and further strengthen our
balance sheet through the planned issuance of
an additional 2.5 million common shares of the
Corporation for net proceeds of approximately
$66 million. This equity issue, which is expected
to close on or about March 7, 2002, also provides
the underwriters with an option to purchase an
additional 500,000 common shares, increasing
net proceeds to WestJet to $79 million.
Including the two recently announced aircraft, ten
Boeing 737-700 aircraft will be delivered to
WestJet in 2002, and 24 more in the three years
following for a total of 38 firmly ordered aircraft.
We also have options and purchase rights for 56
more aircraft between 2005 and 2008. Of the 10
aircraft in 2002, six will be acquired by way of
operating leases. Our first four purchased aircraft
are scheduled to be delivered in the fourth
quarter of 2002. We have the preliminary
commitment from the U.S. Government’s Export-
Import Bank for their loan guarantees to assist in
our financing a total of 26 aircraft with the ability
to apply for more for future capital commitments.
It has been our guidelines generally that one-third
of our fleet would be financed by operating
leases, one-third of the fleet paid for with debt,
and one-third owned or financed with equity. This
means that our purchased aircraft would be 50%
debt and 50% equity. The Ex-Im support is
valuable insurance as it provides financing for up
to 85% of all purchased aircraft. As this is
considerably more than our own philosophy, and
because it is backed by the U.S. Government, the
12-year term financing on our aircraft will be
relatively economical.
We intend to continue to issue shares and raise
equity at appropriate times, and to maintain our
low-cost structure, thereby continuing to increase
our equity through profitability and growth. Our
strategy with all things we do, and especially with
our capital resources and liquidity, is to remain
flexible and adaptable to the changing and
sometimes volatile airline industry environment.
MANAGEMENT’S DISCUSSION AND ANALYSIS
0%
5%
10%
15%
20%
25%
3.6%
17.3%
13.5%
20.1%
23.8%
16.9%
1996 1997 1998 1999 2000 2001
RETURN ON SHAREHOLDERS’ EQUITY