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252006 | WestJet Annual Report
RESERVATIONS SYSTEM
In January 2007, we entered into an agreement with a service
provider to suspend the current aiRES contract in order to
negotiate an amendment to this contract for the successful
delivery of their aiRES reservation system. As at December
31, 2006, we had $31.9 million capitalized, related solely to the
aiRES project. If WestJet and the service provider can not come
to an agreement by May 31, 2007, the parties will each be in a
position to proceed with claims against each other, and there is
the potential of a one-time write-off of this amount.
On December 22, 2006, we entered into a support agreement
with a service provider, effective through December 2008. This
support agreement will provide us with a supported upgraded
version of our current Open Skies reservation and distribution
system. Further, it will provide us with the functionality required
to deliver our growth strategy and business plans during the
interim period while we seek to amend our agreement with
the service provider.
While we are committed to completing the aiRES project,
uncertainty does remain, the outcome of which may impact the
future recoverability of the project and have a signifi cant impact
on the fi nancial statements of future periods.
COMPENSATION
Our compensation philosophy is designed to align corporate
and personal success. We have implemented a compensation
plan that allows expenditures associated with labour to adjust
with the variability in our fi nancial success. Our compensation
strategy encourages employees to become owners in our
company, which inherently creates a personal vested interest
in our accomplishments. Consequently, our people have the
opportunity to improve their compensation through our profi t
sharing and employee share purchase plan.
A signifi cant component of our compensation structure is the
employee share purchase plan (ESPP), which allows employees
to participate in our company’s success. Our ESPP is embraced
by our people, as evidenced by 81% of our eligible employees
participating in this program, at the end of 2006. WestJetters
can contribute up to 20% in the ESPP, on average they currently
contribute 13% of their base wage. In order to encourage
WestJetters to participate, we match every dollar contributed by
employees to purchase our shares. Our matching expense in 2006
was $28.2 million, a 30.1% increase from 2005’s $21.7 million.
The profi t share system is a variable cost that is reduced and
adjusted in less profi table times. Conversely, in good years,
profi t share will generously reward employees. Our average
WestJetter received approximately 8.2% of their base pay as
profi t share for 2006.
GUY CHABOT
Captain
In 2006, our Super Sales Centre
was named the Best Call Centre
in the country in an airline survey
conducted by Canadian Business
Magazine.