Westjet 2005 Annual Report Download - page 7

2005 WESTJET ANNUAL REPORT
5
PRESIDENT’S MESSAGE
TO SHAREHOLDERS
THIS PAST YEAR has been very significant for WestJet
as we accomplished a number of very major
achievements over these 12 months.
We not only grew our airline by some 19% on a capacity
basis, but were also able to increase our yields and load
factors at the same time in both the quarter and on a
year-over-year basis. The most encouraging part of our
performance in this respect is the rate of increase that we
achieved in our yields, which grew by only 1.2% in the first
nine months of the year but by 12.3% in the fourth quarter.
This was a huge accomplishment, particularly when
one considers all the other challenges we faced at the
beginning of 2005.
We began the year in an extremely difficult environment
with fuel costs escalating to new highs every month.
Furthermore, we had committed to a significant growth
strategy for our company as a result of decisions we had
made prior to these increases. Consequently, we had to
develop a series of alternative plans for 2005 depending
on how the competitive landscape unfolded and had to
modify those plans on a number of separate occasions as
a competitor failed and the price of fuel continued its
upward trend.
Consequently our team has been challenged in ways
that they have never experienced before and have done a
wonderful job in adapting to these changing circumstances.
The most significant of these has been the challenge of
evolving our fleet into what is now the most modern in North
America. During the year, we accelerated the retirement
of our older 737-200s and disposed of 13 of these aircraft
by year-end, replacing them with our new deliveries of
Boeing Next-Generation 737s. Not only did we achieve this
seamlessly, but we were also able to install fuel-saving
winglets on each of the 700-series and 800-series aircraft
and equip them with live satellite television systems while
still growing our airline.
Throughout 2005, we successfully maintained our
controllable cost of operations on an ASM basis at 2.4 cents
year over year by the continued use of technology, and
expect to maintain this trend into 2006. We are particularly
pleased with this accomplishment despite increases in
salaries and benefits. Further cost reductions will also
flow from finally reaching our goal of flying only one type
of aircraft, which was achieved in early January 2006.
The operational advantages that will flow from this will
progressively be felt during the first quarter of this year as
we complete our pilot transitions and disposition process
of these older assets. We built our company around these
wonderful aircraft and would have kept them flying for
several years more had the price of fuel not more than
doubled in this last year.
It should be noted that throughout all of this turmoil
in our industry we grew our gross revenues by almost
$337 million – a pace which represents a record for us
even though we have had much larger growth of capacity
in prior years.
WestJet Boeing Next-Generation 737-700 aircraft