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2009 Annual Report
HANDLED WITH CARE

Table of contents

  • Page 1
    HANDLED WITH CARE 2009 Annual Report

  • Page 2
    ... something we say. It's something WestJetters live every day. From the way we treat our guests to the way we treat our bottom line, handled with care is how WestJet does business. It's why we were able to look at 2009 not as a crisis, but as an opportunity to show the world what we are...

  • Page 3
    ...13 TABLE OF CONTENTS Financial overview Weathering the storm President's message Costs The WestJet care-antee Network WestJet Vacations 14 15 16 20 21 22 25 Community investment Green initiatives Future growth Fleet and guest features Route map Executive team Board of directors and corporate info

  • Page 4
    In 2009, WestJet was once again one of the most profitable airlines in North America. WestJetters care about their business - and the bottom line - and it shows in the airline's industry-leading results. 2 WestJet 2009 Annual Report

  • Page 5
    ....2% 17.88 13.98 12.10 8.54 10,672,983,797 7,957,738,384 74.6% 17.33 12.92 12.05 8.67 *2005 to 2008 numbers restated; 2007 excludes reservation system impairment of $31.9 million. WestJet 2009 Annual Report 3

  • Page 6
    ... set the stage for a difficult year to come, beginning with record oil prices and followed by financial markets crashing, bankruptcies, bailouts and a deep recession that reshaped the economic landscape. But while the economy showed weakness, WestJetters sure didn't. 4 WestJet 2009 Annual Report

  • Page 7
    ... the guests and, in doing so, the business. Staying true to running a low-cost airline, WestJetters from every department banded together to handle guests and each other with care, posting another profitable year. Suzanne, Flight Attendant; Lucy, Guest Service Ambassador WestJet 2009 Annual Report...

  • Page 8
    ..., but are not limited to, changes in government policy, exchange rates, interest rates, disruption of supplies, volatility of fuel prices, terrorism, general economic conditions, the competitive environment and other factors described in WestJet's public reports and filings, which are available...

  • Page 9
    ... on growth. We successfully balanced the slowing economy with our strategic business plans and our commitment to being high value and low cost. WestJetters handled 2009 with care, and over the next few pages I'd like to share some of the highlights of how they did it. WestJet 2009 Annual Report 7

  • Page 10
    ... no longer uses a paper-based process to track the bags on its ï¬,ights. This idea, which has been implemented, could save more than $50,000 a year. Besides eliminating printing costs, it could save even more by helping the airline move baggage more efficiently. 8 WestJet 2009 Annual Report

  • Page 11
    ... DROP. Aircraft Maintenance Engineer Derek had an idea that WestJet should implement a process to ensure it is using every last drop of oil (and other aircraft-related ï¬,uids required to service its ï¬,eet). By listening to him, WestJet will save around $31,000 a year. WestJet 2009 Annual Report 9

  • Page 12
    ... overbooking our ï¬,ights to no-charge call centre bookings to a free second checked bag, the care-antee was and is our promise to our guests that we'll continue to handle them with care every time they ï¬,y. 10 WestJet 2009 Annual Report Ashley, Onboard Operations - Flight Attendant Attila (John...

  • Page 13
    ...best I have ever taken. From the moment I stepped on board, I was welcomed by friendly and smiling faces. Captain Randolph and First Officer Jack were informative and fun in their introductions and information... wait to travel with you again." GARY - STRATHMORE, ALTA. WestJet 2009 Annual Report 11

  • Page 14
    ... top North American airlines for on-time performance (the percentage of ï¬,ights that arrive within 15 minutes of their scheduled time), completion rate (the percentage of ï¬,ights completed vs. scheduled) and baggage ratio (the number of delayed or lost baggage claims made per 1,000 guests). While...

  • Page 15
    .... We credit its successful ongoing growth to the surging popularity of our vacation packages, our increased capacity to sun destinations and the implementation of our new Softvoyage reservation system, making it easier than ever for travel agents to book with us. As we continue to leverage WestJet...

  • Page 16
    ... pediatric wards across the country, CNIB, Hope Air, KidSport Canada, Kids Help Phone, Make-A-Wish Canada, Missing Children Society of Canada, and Ronald McDonald House Charities of Canada. 14 WestJet 2009 Annual Report Jana, Manager - External Reporting, volunteer Big Sister Emily, Little Sister

  • Page 17
    ..., utilizing technologies like fuel-saving winglets and required navigational performance, allowing us to land with maximum accuracy and efficiency. But our biggest, greenest strides come from ï¬,ying one of the youngest, most fuel-efficient ï¬,eets in North America. WestJet 2009 Annual Report 15

  • Page 18
    ..., our WestJetters made it right. We are excited about the enhanced functionality of this new system, including opportunities for ancillary revenues, better revenue management control, increased guest functionality and more streamlined partnerships with other airlines. 16 WestJet 2009 Annual Report

  • Page 19
    ... and KLM. They now operate inbound interline ï¬,ights into four WestJet Canadian gateways, connecting to 11 WestJet destinations, with even more cities to come. This is only the beginning, as interline and code-share partnerships are a big part of how we plan to grow. WestJet 2009 Annual Report 17

  • Page 20
    ... your positive, friendly and ever-so-helpful attitude. You made the difference in my day." KRISTINA - LONDON, ONT. 18 WestJet 2009 Annual Report Daniel, Captain Christopher, Senior Analyst - Client Technology, IT Karen, Customer Service Agent Kelly, Customer Service Agent Zara, Sales Super Agent

  • Page 21
    ... will continue to do so because they truly care. On behalf of the Board of Directors and over 7,600 caring WestJetters, including the Executive team, thank you for your continued support of our airline. Sean Durfy President and Chief Executive Officer March 15, 2010 WestJet 2009 Annual Report 19

  • Page 22
    ... pay-per-view movies. • Guests can use web check-in, mobile check-in, self-serve check-in kiosks or counter check-in. • Guests can relax in WestJet's lounges, owned and operated by third parties, in Toronto, Calgary, Winnipeg and Vancouver (www.westjetlounges.com). • 20 WestJet 2009 Annual...

  • Page 23
    ... Abbotsford, Calgary, Charlottetown, Comox, Deer Lake, Edmonton, Fort McMurray, Grande Prairie, Halifax, Hamilton, Kamloops, Kelowna, Kitchener-Waterloo, London, Moncton, Montréal, Ottawa, Prince George, Quebec City, Regina, Saint John, Saskatoon, St. John's, Sydney, Thunder Bay, Toronto, Vancouver...

  • Page 24
    THE EXECUTIVE TEAM 22 WestJet 2009 Annual Report

  • Page 25
    ...Culture Vito Culmone Executive Vice-President, Finance and CFO Sean Durfy Outgoing President and CEO Gregg Saretsky Incoming President and CEO Dr. Hugh Dunleavy Executive Vice-President, Strategy and Planning Bob Cummings Executive Vice-President, Marketing and Sales WestJet 2009 Annual Report...

  • Page 26
    ... 'Thank you for ï¬,ying WestJet'. I have not experienced such exemplary customer service before. Well done, WestJet. You have a committed customer." TRACEY - CALGARY, ALTA. Jesse, Aircraft Maintenance Engineer Blair, Specialist - Airport Services Alex, TAC Crew Chief 24 WestJet 2009 Annual Report

  • Page 27
    ... be held at 2 p.m. (MDT) on Tuesday, May 4, 2010, at WestJet's Campus 22 Aerial Place NE Calgary, Alberta, T2E 3J1 Transfer agent and registrar CIBC Mellon Trust Company Toll free in North America: (800) 387-0825 www.cibcmellon.com Auditors KPMG LLP, Calgary, Alberta WestJet 2009 Annual Report 25

  • Page 28
    WESTJET.COM

  • Page 29
    2009 FINANCIAL REPORT 2009 Annual Report WestJet 2009 Annual Report 2

  • Page 30

  • Page 31
    ...Inside Back Cover Inside Back Cover TABLE OF CONTENTS Management's discussion and analysis of financial results 2009 Management's report to shareholders Auditors' report to shareholders Consolidated financial statements Notes to consolidated financial statements Board of directors Executive team...

  • Page 32
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS 2009 2 WestJet 2009 Annual Report

  • Page 33
    ... of fuel hedging contracts will have on our fuel costs per litre, referred to under the heading "Outlook" on page 40; our expectation of total capital expenditures for 2010, with the majority of the spending related to aircraft deposits and rotables, referred to WestJet 2009 Annual Report 3

  • Page 34
    ... to changes in crude oil and fuel pricing was based on our fuel consumption for our existing schedule and historical fuel burn, as well as a Canadian-US dollar exchange rate similar to the current market rate; • our expectation that aircraft maintenance costs will increase as our fleet ages was...

  • Page 35
    ...fuel costs per litre were based on realized jet fuel prices for January 2010 and forward curve prices for February and March 2010, as well as the exchange rate for the Canadian dollar in the first quarter similar to the current market rate; • our expectation of total capital expenditures for 2010...

  • Page 36
    ... the best balance sheets in the North American airline industry, all the while building future value through the expansion of WestJet Vacations and the implementation of our new reservation systems. Our continued commitment to growth was also demonstrated through the delivery of 10 new aircraft, our...

  • Page 37
    ... RASM (cents) CASM (cents) CASM, excluding fuel and employee profit share (cents) Fuel consumption (litres) Fuel costs per litre (dollars) Segment guests Average stage length (miles) Utilization (hours) Number of full-time equivalent employees at period end Fleet size at period end *Restated 4,412...

  • Page 38
    ...1.9 per cent over 2008. These changes were due mainly to incremental aircraft leasing and maintenance costs, lower aircraft utilization and a weaker Canadian dollar. We maintained one of the strongest balance sheets in the North American airline industry during 2009, as evidenced by our significant...

  • Page 39
    ...with 86 aircraft. With an average age of 4.4 years, we continue to operate one of the youngest ï¬,eets of any large North American commercial airline. SELECTED ANNUAL AND QUARTERLY FINANCIAL INFORMATION Annual audited financial information ($ in thousands, except per share data) 2009 2008 Restated...

  • Page 40
    ... that we expected to launch two new programs: the Frequent Guest program and a co-branded credit card with RBC and MasterCard. As a result of longer-than-expected queues in the call centre, we announced our plans to delay the launch of these programs until March 2010. 10 WestJet 2009 Annual Report

  • Page 41
    ... expiration of our previous reservation system, as well as lower costs due to the discontinuation of the sponsorship agreement with AIR MILES, which ended our sponsorship in the AIR MILES Reward Program at the end of 2008. Sales and distribution Commissions paid to travel agents and credit card fees...

  • Page 42
    ... attributable to aggressive pricing by the airline industry to stimulate air travel, and, to a lesser extent, the absence of the fuel surcharge in place during a portion of 2008. During 2009, we reduced our aircraft utilization to optimize our schedule to better match the weakened demand environment...

  • Page 43
    .... It is the number one Canadian provider of hotel rooms into Las Vegas and has been successful in the popular Mexico and Caribbean markets. The new WestJet Vacations reservation system, implemented during the third quarter of 2009, will allow WestJet Vacations to successfully expand its sales and...

  • Page 44
    ... fuel Airport operations Flight operations and navigational charges Marketing, general and administration Sales and distribution Depreciation and amortization Inï¬,ight Aircraft leasing Maintenance Employee profit share CASM, excluding fuel and employee profit share *Excludes reservation system...

  • Page 45
    ... hedging requirement. Management continuously reviews and adjusts its strategy based on market conditions and competitors' positions. During the year ended December 31, 2009, we did not enter into any new fuel derivatives. Jet fuel is not traded on an organized North American futures exchange, and...

  • Page 46
    ... portion Fair market loss on fuel derivatives not designated of earnings for the years ended December 31, 2009 and 2008. Statement presentation Aircraft fuel Gain (loss) on derivatives Gain (loss) on derivatives 2009 $ (28,411) 5,617 - $ 2008 - (7,587) (10,606) 16 WestJet 2009 Annual Report

  • Page 47
    ... exchange hedging program to offset our US-dollar-denominated aircraft lease payments on a portion of our leased aircraft. Please refer to Results of Operations - Foreign Exchange on page 19 of this MD&A for further information. Maintenance Our maintenance costs per ASM were 0.55 cents in 2009...

  • Page 48
    ... with the challenges posed by the reservation system implementation, as previously discussed; and annual market and merit increases. Salaries and benefits expense for each department is included in the respective department's operating expense line item. Employee share purchase plan (ESPP) Our ESPP...

  • Page 49
    ... net monetary assets and certain operating expenditures, mainly aircraft fuel, aircraft leasing expense, certain maintenance costs and a portion of airport operations costs. During the year ended December 31, 2009, the average US-dollar exchange rate was 1.1425 (2008 - 1.0651), with the period...

  • Page 50
    ... our US-dollar-denominated aircraft lease payments on a portion of our leased aircraft for the month of January 2010. Our foreign exchange option arrangements are not designated as hedges for accounting purposes and are recorded at fair value on the consolidated balance sheet, with changes in fair...

  • Page 51
    Key performance indicators On-time performance and completion rates are calculated based on the U.S. Department of Transportation's standards of measurement for the North American airline industry. Our bag ratio represents the number of delayed or lost baggage claims made per 1,000 guests. Twelve ...

  • Page 52
    ...accounts of the SPEs have been consolidated in the financial statements. We have entered into nine arrangements whereby we participate in fuel facility corporations, along with other airlines, to contract for fuel services at major Canadian airports. The fuel facility corporations operate on a cost...

  • Page 53
    ..., 2009. However, we subsequently purchased one of the leased 737-800 aircraft from the lessor with cash. During the year, we announced changes to our ï¬,eet plan, as summarized in the revised delivery schedule on the following page. These changes provide for a smoother aircraft delivery schedule and...

  • Page 54
    ... per annum, or a bankers acceptance rate at 2.0 per cent annual stamping fee, and is available for general corporate expenditures and working capital purposes. We are required to pay a standby fee of 15 basis points, based on the average unused portion of the line of credit for the previous quarter...

  • Page 55
    ... listed below. Management performs a risk assessment on a continual basis to ensure that significant risks related to our airline have been reviewed and assessed. Any major safety incident involving our aircraft or similar aircraft of other airlines could materially and adversely affect our service...

  • Page 56
    ..., interest rates, demographic changes, price levels, special circumstances or events occurring in the locations served, and to external factors such as foreign exchange rates and international political events. Notwithstanding our variable profit share plan, a portion of an airline's costs, such...

  • Page 57
    ... our WestJet Vacations business. The revenue accounting and Softvoyage systems are also hosted solutions. As such, we are reliant on third party performance for timely and effective completion of many of our technology initiatives. Integration of complex systems and technology presents significant...

  • Page 58
    ... expenditures, mainly aircraft fuel, aircraft leasing expense, certain maintenance costs and a portion of airport operations costs. Since our revenues are received primarily in Canadian dollars, we are exposed to ï¬,uctuations in the US-dollar exchange rate with respect to these payment obligations...

  • Page 59
    ... multi year warranties. Our maintenance costs will increase as our ï¬,eet ages and warranties expire. At December 31, 2009, 51 owned aircraft have come off warranty, with an additional 12 coming off warranty in 2010. A significant change in our unique corporate culture or guest experience could have...

  • Page 60
    ... risks arising from ï¬,uctuations in exchange rates on our US-dollar-denominated net monetary assets and our operating expenditures, mainly aircraft fuel, aircraft leasing expense, certain maintenance costs and a portion of airport operations costs. To manage our exposure, we periodically use...

  • Page 61
    ...ticket sales balance. We aim to maintain a current ratio of at least 1.00. As at December 31, 2009, our current ratio was 1.48 (2008 - 1.24). As at December 31, 2009, we have not been required to post collateral with respect to any of our outstanding derivative contracts. WestJet 2009 Annual Report...

  • Page 62
    ... guest credits. We issue future travel credits to guests for ï¬,ight changes and cancellations, as well as for gift certificates. Where appropriate, future travel credits are also issued for ï¬,ight delays, missing baggage and other inconveniences. All credits are non-refundable and expire...

  • Page 63
    ... policy has been accounted for retrospectively with restatement of the prior year. The effect of this change to our consolidated balance sheet as at December 31, 2008, and to the consolidated statement of earnings for the year ended December 31, 2008, is as follows: WestJet 2009 Annual Report...

  • Page 64
    ..., restated Basic earnings per share, reported Diluted earnings per share, reported Basic earnings per share, restated Diluted earnings per share, restated $ 2008 178,135 (88) 459 178,506 1.38 1.37 1.39 1.37 $ $ $ $ $ Business combinations In January 2009, the CICA Accounting Standards Board (AcSB...

  • Page 65
    ... and execution to changes to information systems and business processes; completion of formal authorization processes to approve recommended accounting policy changes; training programs across the Finance Department and other affected areas of the business; and addressing opening IFRS balances for...

  • Page 66
    ... relations communications strategy is currently being formulated. Analysis of control requirements is underway in conjunction with review of accounting issues and policies. Internal Audit has been involved in the project plan to integrate any ICFR requirements. 36 WestJet 2009 Annual Report

  • Page 67
    ... GAAP may meet the recognition criteria under IFRS. Maintenance costs for lease return conditions are not currently booked as a provision under Canadian GAAP. Under IFRS, it is expected that a provision will be made during the lease term for the obligation to return the aircraft at or better than...

  • Page 68
    ... from the accounting policy decisions made under other standards. (f) Share-based payments: Under IFRS 2, Share-Based Payment, awards will continue to be measured at fair value, with compensation expense under our plans recognized over the service period. For our equity-settled plans, we will...

  • Page 69
    ... Changes in internal controls over financial reporting During the quarter ended December 31, 2009, WestJet and Sabre Airline Solutions implemented our new SabreSonic reservation system as previously discussed. In conjunction with the migration to our new reservation system, a new revenue accounting...

  • Page 70
    ... on our cost structure, strengthening our balance sheet, expanding WestJet Vacations, implementing two new reservation systems and laying the groundwork for our airline partnerships and frequent guest and credit card programs were all key initiatives. As we head into 2010, we plan to leverage...

  • Page 71
    ...months of aircraft leasing expense by 7.5 to derive a present value debt equivalent. This measure is used in the calculation of adjusted debt-to-equity and adjusted net debt to EBITDAR, as defined below. Adjusted equity: The sum of share capital, contributed surplus and retained earnings, excluding...

  • Page 72
    ...) 2009 2008 Restated Change Adjusted debt-to-equity: Long-term debt (i) Obligations under capital leases (ii) Off-balance-sheet aircraft leases (iii) Adjusted debt Total shareholders' equity Add: AOCL Adjusted equity Adjusted debt-to-equity Adjusted net debt to EBITDAR: (iv) Net earnings Add...

  • Page 73
    ...earnings per share GAAP Adjusted for: Non-recurring net future income tax reduction Non-GAAP CASM, excluding fuel and employee profit share Operating expenses - GAAP Adjusted for: Aircraft fuel expense Employee profit share...(148,853) (2,297) $ 382,788 4,412,574 8.67 WestJet 2009 Annual Report 43

  • Page 74
    CONSOLIDATED FINANCIAL STATEMENTS AND NOTES FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 44 WestJet 2009 Annual Report

  • Page 75
    ... shareholders. The auditors' report outlines the scope of their examination and sets forth their opinion. Sean Durfy President and Chief Executive Officer Vito Culmone Executive Vice-President, Finance and Chief Financial Officer Calgary, Canada February 16, 2010 WestJet 2009 Annual Report 45

  • Page 76
    ... position of the Corporation as at December 31, 2009 and 2008 and the results of its operations and its cash ï¬,ows for the years then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Calgary, Canada February 16, 2010 46 WestJet 2009 Annual Report

  • Page 77
    ...: Guest revenues Charter and other revenues Expenses: Aircraft fuel Airport operations Flight operations and navigational charges Marketing, general and administration Sales and distribution Depreciation and amortization Inï¬,ight Aircraft leasing Maintenance Employee profit share Earnings from...

  • Page 78
    ...71,005 $ 3,268,702 Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities Advance ticket sales Non-refundable guest credits Current portion of long-term debt (note 7) Current portion of obligations under capital leases (note 8) $ 231,401 286,361 64,506...

  • Page 79
    ... STATEMENT OF SHAREHOLDERS' EQUITY For the years ended December 31 (Stated in thousands of Canadian dollars) 2009 2008 Restated - see note 2 Share capital: (note 10(b)) Balance, beginning of year Issuance of shares pursuant to stock option plans Stock-based compensation expense on stock...

  • Page 80
    ...dollars) 2009 2008 Restated - see note 2 Net earnings Other comprehensive income (loss), net of tax: Amortization of hedge settlements to aircraft leasing Net unrealized gain (loss) on foreign exchange derivatives under cash ï¬,ow hedge accounting... statements. 50 WestJet 2009 Annual Report

  • Page 81
    ... instruments Issuance of shares pursuant to employee share purchase plan Loss on disposal of property and equipment Stock-based compensation expense Income tax credit receivable Future income tax expense Unrealized foreign exchange loss (gain) Change in non-cash working capital (note 14(b)) $ 98...

  • Page 82
    ... itinerary changes or cancellations, excess baggage fees, buy-on-board sales and pre-reserved seating fees. Included in other revenue is revenue from expired non-refundable guest credits recognized at the time of expiry. (e) Non-refundable guest credits The Corporation issues future travel credits...

  • Page 83
    ... TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2009 and 2008 (Stated in thousands of Canadian dollars, except share and per share data) 1. (f) Summary of significant accounting policies (continued) Financial instruments A financial instrument is any contract that gives...

  • Page 84
    ... dollars, except share and per share data) 1. (f) Summary of significant accounting policies (continued) Financial instruments (continued) The Corporation will, from time to time, use various financial derivatives to reduce market risk exposure from changes in foreign exchange rates and jet fuel...

  • Page 85
    ... and per share data) 1. (j) Summary of significant accounting policies (continued) Inventory Inventories are valued at the lower of cost and net realizable value, with cost being determined on a first-in, first-out basis. The Corporation's inventory balance consists of aircraft fuel, de-icing...

  • Page 86
    ... the Corporation are accounted for as capital leases. Assets under capital leases are depreciated on a straight-line basis over the term of the lease. Rental payments under operating leases are expensed as incurred. The Corporation provides for asset retirement obligations to return leased aircraft...

  • Page 87
    ... sheet. Prior period balances were reclassified. There was no impact to current or prior year net earnings for this change. During 2009, the Corporation changed its accounting policy regarding the treatment of certain sales and distribution, and marketing costs. The Corporation now expenses these...

  • Page 88
    ...characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Corporation may from time to time purchase shares for cancellation pursuant to normal course issuer bids, issue new shares and adjust current and projected debt levels. 58 WestJet 2009 Annual Report

  • Page 89
    ... cash and cash equivalents. The Corporation defines equity as the sum of share capital, contributed surplus and retained earnings, and excludes AOCL. 2009 2008 Restated Change Adjusted debt-to-equity: Long-term debt (i) Obligations under capital leases (ii) Off-balance-sheet aircraft leases (iii...

  • Page 90
    ...CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2009 and 2008 (Stated in thousands of Canadian dollars, except share and per share data) 3. Capital management (continued) As at December 31, 2009 and 2008, the Corporation's internal targets were an adjusted debt-to-equity measure...

  • Page 91
    ... Ground property and equipment Spare engines and parts Buildings Leasehold improvements Assets under capital leases Deposits on aircraft Assets under development Cost $ 2,394,098 116,990 86,728 40,028 12,019 2,482 2,652,345 23,982 80,740 $ 2,757,067 Net book value $ 1,992,003 63,117 69,629 33...

  • Page 92
    ..., as identified in note 1, significant accounting policies, are liabilities of $1,168,907 (2008 - $1,332,859) related to the acquisition of the 52 purchased aircraft and live satellite television equipment, which are included above in the long-term debt balances. 62 WestJet 2009 Annual Report

  • Page 93
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2009 and 2008 (Stated in thousands of Canadian dollars, except share and per share data) 8. Obligations under capital leases The Corporation has entered into capital leases relating to a fuel storage facility and ground ...

  • Page 94
    ... - $6,748) for unused corporate minimum tax credits which are available for carryforward to reduce Ontario taxable income in future years. These credits will begin to expire in 2013. 10. (a) Share capital Authorized Unlimited number of common voting shares The common voting shares may be owned and...

  • Page 95
    ... to executive share unit plan Stock-based compensation expense on executive share units exercised Issued on public offering Issuance of shares pursuant to employee share purchase plan Share issue costs Tax effect of share issue costs Shares repurchased Balance, end of year Amount 2008 Number Amount...

  • Page 96
    ... dollars, except share and per share data) 10. (c) Share capital (continued) Per share amounts The following table summarizes the shares used in calculating net earnings per share: 2009 Weighted average number of shares outstanding - basic Effect of dilutive employee stock options and unit plans...

  • Page 97
    ... an estimated forfeiture rate for stock options that will not vest. Rather, the Corporation accounts for actual forfeitures as they occur. (f) Employee share purchase plan The Corporation has an employee share purchase plan (ESPP) whereby the Corporation matches every dollar contributed by each...

  • Page 98
    ... FINANCIAL STATEMENTS For the years ended December 31, 2009 and 2008 (Stated in thousands of Canadian dollars, except share and per share data) 10. (f) Share capital (continued) Employee share purchase plan (continued) For the year ended December 31, 2009, for the Corporation's matching...

  • Page 99
    ... FINANCIAL STATEMENTS For the years ended December 31, 2009 and 2008 (Stated in thousands of Canadian dollars, except share and per share data) 10. (h) Share capital (continued) 2007 restricted share units The Corporation has a cash-settled RSU plan, whereby RSUs may be issued to executive...

  • Page 100
    ..., or a bankers acceptance rate at 2.0% annual stamping fee or equivalent, and is available for general corporate expenditures and working capital purposes. The Corporation is required to pay a standby fee of 15 basis points, based on the average unused portion of the line of credit for the previous...

  • Page 101
    ... value 2009 Asset (liability) Cash and cash equivalents Accounts receivable Foreign exchange derivatives (i) Fuel derivatives (ii) Deposits (iii) Accounts payable and accrued liabilities (iv) Long-term debt (v) Obligations under capital leases (vi) Held-fortrading Derivatives Amortized cost Loans...

  • Page 102
    ...liability) Cash and cash equivalents Accounts receivable Foreign exchange derivatives (i) Fuel derivatives (ii) Deposits (iii) Accounts payable and accrued liabilities (iv) Long-term debt (v) Obligations under capital leases (vi) Held-fortrading Derivatives Amortized cost Loans and receivables Other...

  • Page 103
    ... value, as it is at a ï¬,oating market rate of interest. Obligations under capital leases: The fair value of the Corporation's capital lease obligations approximates their carrying value due to their shortterm remaining maturities or their recent inception date. WestJet 2009 Annual Report 73

  • Page 104
    .... Management continuously reviews and adjusts its strategy based on market conditions and competitors' positions. During the year ended December 31, 2009, the Corporation did not enter into any new fuel derivatives. Although jet fuel is not traded on an organized North American futures exchange...

  • Page 105
    ... that all other variables remain constant, particularly foreign exchange and interest rates. It also assumes that 100% of the change in price is considered effective under cash ï¬,ow hedge accounting. These assumptions may not be representative of actual movements. WestJet 2009 Annual Report 75

  • Page 106
    ... its operating expenditures, mainly aircraft fuel, aircraft leasing expense, certain maintenance costs and a portion of airport operations costs. During the year ended December 31, 2009, the average US-dollar exchange rate was 1.1425 (2008 - 1.0651), with the year-end exchange rate at 1.0510 (2008...

  • Page 107
    ..., the Corporation's accounts receivable are the result of tickets sold to individual guests through the use of travel agents and other airlines. Purchase limits are established for certain agents and in some cases, when deemed necessary, a letter of credit is obtained. As at December 31, 2009, $10...

  • Page 108
    ..., 2009. The analysis is based on foreign exchange and interest rates in effect at the balance sheet date, and includes both principal and interest cash ï¬,ows for long-term debt and obligations under capital leases. Total Accounts payable and accrued liabilities (i) Foreign exchange derivatives Fuel...

  • Page 109
    ...$nil) incurred on the settlement of these obligations. (v) Incentives received by the Corporation for entering into various leasing and maintenance contracts. Amounts are deferred and recognized in net earnings on a straight-line basis over the term of the contract. WestJet 2009 Annual Report 79

  • Page 110
    ... Net change in non-cash working capital from operations: Increase in accounts receivable Increase in prepaid expenses, deposits and other Increase in inventory Increase in accounts payable and accrued liabilities Increase in advance ticket sales Increase (decrease) in non-refundable guest credits...

  • Page 111
    ... be held at 2 p.m. (MDT) on Tuesday, May 4, 2010 at WestJet's Campus 22 Aerial Place NE Calgary, Alberta, T2E 3J1 Transfer agent and registrar CIBC Mellon Trust Company Toll free in North America: (800) 387-0825 www.cibcmellon.com Auditors KPMG LLP, Calgary, Alberta WestJet 2009 Annual Report 81

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    WESTJET.COM 1 WestJet 2009 Annual Report