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Expanding Our Reach
WestJet Annual Report 2011

Table of contents

  • Page 1
    Expanding Our Reach WestJet Annual Report 2011

  • Page 2
    ...business Financial highlights Expanding our reach Airline partnerships Business traveller WestJet Rewards WestJet Vacations Adding convenience Social media Giving back Responsible growth Meet our team Corporate information Management's discussion and analysis of financial results Management's report...

  • Page 3
    ...84 per cent of our eligible WestJetters participate in our employee share purchase plan and we take pride in the shared ownership of our airline. Our caring culture and low-cost fundamentals will remain the keys to success at WestJet as we continue to expand our reach. WestJet Annual Report 2011 3

  • Page 4
    ... introduce new service to Chicago's O'Hare International Airport with flights between Chicago and Vancouver and between Chicago and Calgary. Our frequent guest program - WestJet Rewards - continues to mature and now guests can earn WestJet dollars through our code-share flights with Delta Air Lines...

  • Page 5
    ...currently have service between them. We believe the short-haul aircraft, combined with WestJet's strong balance sheet and low-cost structure, will allow us to strengthen our domestic network and act as a catalyst for the continued profitable growth of our 737 fleet going forward. Strong 2011 results...

  • Page 6
    ... in accordance with the International Financial Reporting Standards (IFRS) and the 2009 results and prior are reported under Canadian GAAP. " 2007 (Millions) 2008 2009 2010 2011 2007 2008 2009 2010 2011 Available seat miles Segment guests (Thousands) WestJet Annual Report 2011 6

  • Page 7
    ...,340 11,739,063,003 80.7% 18.12 14.62 12.58 8.79 *The 2011 & 2010 results are presented in accordance with the International Financial Reporting Standards (IFRS) and the 2009 results and prior are reported under Canadian Generally Accepted Accounting Principles GAAP. WestJet Annual Report 2011 7

  • Page 8
    .... Our airline partnership strategy is allowing us to connect with global guest traffic and bring more guests to WestJet's network. Business travellers are also benefiting from an expanding network and improved service offerings on key business routes. Our rewards program is growing and the vacations...

  • Page 9
    ... guests to WestJet. " In 2011, WestJet's airline partnerships expanded as we launched 10 interline and three new code-sharing agreements. We have continued this determined pace in early 2012 by adding additional interline arrangements and welcoming Delta Air Lines as our fifth code-share partner...

  • Page 10
    ..., a maturing guest rewards program, upcoming service to New York's LaGuardia airport and other future plans, we will continue to improve the value we provide for business travellers. See president's message for cautionary note regarding forward-looking statements. " WestJet Annual Report 2011 10

  • Page 11
    ... of earning and redeeming for travel with WestJet. In 2011, we removed the minimum annual spend requirement and expanded the program so all guests have the opportunity to earn WestJet dollars with their first WestJet flight flown or WestJet Vacations package purchased. WestJet RBC MasterCard holders...

  • Page 12
    ... opportunity to book flights and vacations through a simple and consistent website. The revamped vacations site is one of the best in class with features such as destination and hotel guides, destination maps, guest reviews and an improved online booking process. " WestJet Annual Report 2011 12

  • Page 13
    ... new forms of payment including Visa Debit and the Universal Air Travel Plan, which is a corporate travel payment network used by airlines and travel agencies around the world. In our call centre, we introduced interactive voice response technology so guests have the option of changing a reservation...

  • Page 14
    ... have a WestJet YouTube channel featuring promotional videos and some lighthearted clips that represent our fun, caring culture. This social media presence allows us to make meaningful connections with guests, and potential guests, even when they are not travelling. In 2011, our Facebook fans and...

  • Page 15
    ...investment program. One of those charities, Hope Air, recently celebrated 25 years of arranging free air transportation for Canadians in need who require non-emergency medical care outside their communities. In 15 years of support, WestJet has donated approximately 7,500 flights to Hope Air. In 2011...

  • Page 16
    ..., guests and employees. Growing responsibly is about balancing business objectives with the environment and the needs of the communities we serve. In 2011, we published a Responsible Growth review as a precursor to a corporate social responsibility report, which we plan to complete in 2012 using the...

  • Page 17
    Meet our team Welcome to our WestJet family. " WestJetters live our culture of caring and consistently welcome our guests as valued members of the WestJet family. As owners, they are a cost-conscious group who know the importance of doing the small things right. Since inception, our employee ...

  • Page 18
    ... Stock exchange listing Shares in WestJet stock are publicly traded on the Toronto Stock Exchange under the symbols WJA and WJA.A. Investor relations contact information Phone: 1-877-493-7853 Email: [email protected] WestJet headquarters 22 Aerial Place NE Calgary, Alberta T2E 3J1 Phone...

  • Page 19
    Management's Discussion and Analysis of Financial Results 2011

  • Page 20
    ... and aircraft rent (EBITDAR) ratios; return on invested capital (ROIC); free cash flow; and diluted operating cash flow per share. Definitions Various terms used throughout this MD&A are defined at page 57 under the title "Definition of key operating indicators". â", WestJet Annual Report 2011 20

  • Page 21
    ... travellers with unique service guarantees and added frequencies in key business markets. We returned approximately $110 million to our shareholders through our dividend and share buy-back programs in 2011. Our 12 month ROIC was 10.1 per cent at year-end which was an improvement of 1.9 points...

  • Page 22
    ... Calgary and Honolulu and Maui, and between Edmonton and Maui achieved by leasing a Boeing 757-200 from Thomas Cook U.K. In July 2011, we released our winter 2011-2012 flight schedule which included new non-stop seasonal service to popular sun destinations from Kelowna, London, Thunder Bay, Victoria...

  • Page 23
    ... and share buy-back programs in 2011. Our capital expenditures of $118.4 million is greater than the previously communicated range of between $95 and $105 million as result of the successful bid of US $17.6 million for the eight slot pairs at New York's LaGuardia airport. Our current ratio, defined...

  • Page 24
    ...diluted earnings per share of $0.26. Furthermore, our fourth quarter traffic results confirmed that our continued capacity growth was absorbed by the market. On December 23, 2011, we achieved a new single-day record of approximately 53,000 guests flown. Quarterly financial and operational highlights...

  • Page 25
    Management's Discussion and Analysis of Financial Results 2011 Three months ended December 31 2011 2010 Change Operational highlights ASMs RPMs Load factor Yield (cents) RASM (cents) CASM (cents) CASM, excluding fuel and employee profit share (cents) Fuel consumption (litres) Fuel costs per litre (...

  • Page 26
    Management's Discussion and Analysis of Financial Results 2011 Expenses CASM (cents) Aircraft fuel Airport operations Flight operations and navigational charges Sales and distribution Marketing, general and administration Depreciation and amortization Maintenance Aircraft leasing Inflight Employee ...

  • Page 27
    ... and Analysis of Financial Results 2011 charge for the decrease in discount rates and a $1.8 non-cash charge for a change in cycle timing and cost on our leased engine overhauls. The remaining increase in maintenance expense is a direct result of increased salaries and routine maintenance events as...

  • Page 28
    ...03 per guest during 2010. These increases were mainly attributable to our second checked bag fee which was introduced in the first quarter of 2011 as well as an increase in volume of pre-reserved seating and excess baggage fees charged. Expenses CASM (cents) Aircraft fuel Airport operations Flight...

  • Page 29
    ... the risk of sudden and substantial movements in fuel prices causing volatility in our earnings and cash flows. Management continuously reviews our strategy based on market conditions and competitors' positions. We do not hold or use any derivative instruments for speculative purposes. Financial...

  • Page 30
    ... WTI WTI Year Q1 Q2 Q3 Q4 2012 2012 2012 2012 Instrument Call Call Call Call options options options options Notional volumes (bbl.) 420,000 430,000 520,000 240,000 WTI average call price ($CAD/bbl.) 117 112 109 115 Upon proper qualification, we account for our fuel derivatives as cash flow hedges...

  • Page 31
    ... in our financial results and accomplishments. ($ in thousands) Salaries and benefits Employee share purchase plan Employee profit share Share-based payment plans Presentation on the statement of earnings: Airport operations Flight operations and navigational charges Sales and distribution Marketing...

  • Page 32
    ... non-executive employees. Our equity-settled share-based payments are measured at the fair value of the instrument granted and recognized as compensation expense with a corresponding increase in equity reserves on a straight-line basis over the related service period based on the number of awards...

  • Page 33
    ... time, is a key factor in measuring our guest experience. The completion rate indicator represents the percentage of flights completed from flights originally scheduled. Our bag ratio represents the number of delayed or lost baggage claims made per 1,000 guests. â", WestJet Annual Report 2011 33

  • Page 34
    ...stressed conditions. At December 31, 2011, we had cash on hand of 2.88 (2010 - 3.44) times our advance ticket sales balance. Credit risk associated with cash and cash equivalents is managed by ensuring that these financial assets are invested primarily in debt instruments from highly-rated financial...

  • Page 35
    ... of 75 basis points, for the February and June 2012 deliveries, respectively. Refer to Financial instruments - Interest rate risk on page 40 of this MD&A for further information. We have yet to pursue financing for our aircraft commitments for 2013 and onwards. â", WestJet Annual Report 2011 35

  • Page 36
    ...Financial Results 2011 Free cash flow Free cash flow is a measure that represents the cash that a company is able to generate after meeting its requirements to maintain or expand its asset base. It is a calculation of operating cash flow, less the amount of cash used in investing activities related...

  • Page 37
    ... of these and any outstanding matters will not have a material effect upon our financial position, results of operations or cash flows. RELATED-PARTY TRANSACTIONS During 2010, we engaged a relocation firm to purchase a single family residence from the President and CEO for a guaranteed price of US...

  • Page 38
    ...follows: Number of shares January 31, December 31, 2012 2011 Issued and outstanding: Common voting shares Variable voting shares Total voting shares issued and outstanding Voting shares potentially issuable: Stock options RSUs - Key employee and pilot plan RSUs - Executive share unit plan PSUs Total...

  • Page 39
    ... will be an exciting year for WestJet in 2012 as we continue to grow our airline partnerships, increase the value we provide for business travellers, improve on our self-service options and prepare for the launch of a new low-cost short-haul regional airline, which could be as early as 2013. We are...

  • Page 40
    ... rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. We are exposed to interest rate fluctuations on short-term investments included in our cash and cash equivalents balance. A change of 50 basis points...

  • Page 41
    ... in the statement of financial position approximate their fair values because of the short-term nature of the instruments. The fair value of deposits, which relate to purchased aircraft and airport operations, approximates their carrying amounts as they are at a floating market rate of interest...

  • Page 42
    ... could have an adverse impact on our business, financial condition, results of operations and cash flows. We may not realize on one or more of the goals we have established for the new short-haul airline which could affect the profitability of the new airline. â", WestJet Annual Report 2011 42

  • Page 43
    Management's Discussion and Analysis of Financial Results 2011 As we have expanded our use of partnership agreements with other airlines our financial results will become more sensitive to the effectiveness of our interline and code sharing arrangements. We have expanded our reach through airline ...

  • Page 44
    ... need to meet our growth plans or replace departing employees. If we are unable to hire and retain qualified employees at a reasonable cost, our business, operating results and financial condition could be adversely affected. Our financial results are affected by foreign exchange and interest rate...

  • Page 45
    ...-related issues that may impact WestJet's results of operations include hiring/retention rates, pay rates, outsourcing costs and the costs of employee benefits. Significantly increased labour costs, combined with curtailed growth, could negatively impact WestJet's competitive position. Our business...

  • Page 46
    Management's Discussion and Analysis of Financial Results 2011 Risks relating to the airline industry Any major safety incident involving our aircraft or similar aircraft of other airlines could materially and adversely affect our service, reputation and profitability. A major safety incident ...

  • Page 47
    ... interruption at a number of key airports, including Toronto Pearson International Airport and Calgary International Airport. An interruption or stoppage in service at a key airport could have a material adverse impact on our business, results from operations and financial condition. A localized...

  • Page 48
    ... Analysis of Financial Results 2011 significant reduction in guest traffic on our network could have a material adverse effect on our business, results from operations and financial condition. Governmental fee increases discourage air travel. All commercial service airports in Canada are regulated...

  • Page 49
    ... discount rate used to present value the future cash flows and the lifespan of life-limited parts. These estimates are based on data and information obtained from various sources including the lessor, current maintenance schedules and fleet plans, contracted costs with maintenance service providers...

  • Page 50
    ..., timing and size of cash flows, and discount and interest rates. (vi) Fair value of equity-settled share-based payments Grants under our equity-settled share-based compensation plans are measured at the fair value of the equity instrument granted. We use an option pricing model to determine the...

  • Page 51
    ...-tax, risk-free discount rate as at January 1, 2010. This adjustment reflects a discount rate equal to the remaining term until cash flow instead of the full term of the aircraft lease. The resulting effect is an adjustment of $6.5 million to the opening statement of financial position balances for...

  • Page 52
    ...reporting period. (ii) Maintenance reserves Certain aircraft lease agreements require us to pay maintenance deposits to the lessor based on predefined cycle and flight hour formulas. These payments are intended to provide the lessor with collateral should an aircraft not be returned in the condition...

  • Page 53
    ... of financial position as non-refundable guest credits. These credits are made up of both soft dollar and hard dollar credit files. Soft dollar credit files are provided to guests for inconveniences such as flight and baggage delays as a sign of goodwill to be used towards future travel. Hard dollar...

  • Page 54
    Management's Discussion and Analysis of Financial Results 2011 Changes to deferred income tax assets and liabilities and the related deferred tax expense or benefit are the direct result of changes to the accounting values from Canadian GAAP to IFRS. There is no recognition and measurement ...

  • Page 55
    ... and Analysis of Financial Results 2011 CONTROLS AND PROCEDURES Disclosure controls and procedures (DC&P) Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to management, including the CEO and the chief financial...

  • Page 56
    ...; our projection that 2012 will be an eventful year for WestJet as we continue to grow our airline partnerships, increase the value we provide for business travellers, improve on our self-service options and prepare for the launch of a new short-haul regional airline which could be as early as 2013...

  • Page 57
    ...an eventful year for WestJet as we continue to grow our airline partnerships, increase the value we provide for business travellers, improve on our self-service options and prepare for the launch of a new shorthaul regional airline in 2013 is based on our current operational and financial results as...

  • Page 58
    ... and expanding the asset base. Free cash flow per share: Free cash flow divided by the diluted weighted average number of shares outstanding. Operating cash flow per share: Cash flow from operations divided by the diluted weighted average number of shares outstanding. â", WestJet Annual Report 2011...

  • Page 59
    Management's Discussion and Analysis of Financial Results 2011 RECONCILIATION OF NON-IFRS MEASURES TO IFRS ($ in thousands, except share and per share amounts) Net earnings, excluding special items Net earnings Special items: CEO departure (net of tax) Income tax rate reductions and estimate change...

  • Page 60
    Management's Discussion and Analysis of Financial Results 2011 ($ in thousands, except percentage amounts) Return on invested capital(i) Earnings before income taxes Add: Special items before tax(ii) Finance costs Implicit interest in operating leases(iii) Invested capital: Average long-term debt(...

  • Page 61
    Consolidated Financial Statements and Notes For the years ended December 31, 2011 and 2010

  • Page 62
    ...shareholders. The auditors' report outlines the scope of their examination and sets forth their opinion. Gregg Saretsky President and Chief Executive Officer Vito Culmone Executive Vice-President, Finance and Chief Financial Officer Calgary, Canada February 7, 2012 â", WestJet Annual Report 2011...

  • Page 63
    INDEPENDENT AUDITORS' REPORT To the Shareholders of WestJet Airlines Ltd. We have audited the accompanying consolidated financial statements of WestJet Airlines Ltd., which comprise the consolidated statements of financial position as at December 31, 2011, December 31, 2010 and January 1, 2010, the...

  • Page 64
    Consolidated Statement of Earnings For the years ended December 31 (Stated in thousands of Canadian dollars, except per share amounts) Note 2011 2010 Revenues: Guest Other Expenses: Aircraft fuel Airport operations Flight operations and navigational charges Sales and distribution Marketing, ...

  • Page 65
    Consolidated Statement of Financial Position (Stated in thousands of Canadian dollars) December 31 2011 December 31 2010 January 1 2010 Note Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable Prepaid expenses, deposits and other Inventory Non-current assets: ...

  • Page 66
    ... hedge settlements Loss on derivative instruments Loss (gain) on disposal of property and equipment Share-based payment expense Income tax credit Deferred income tax expense Unrealized foreign exchange loss Change in non-cash working capital Change in restricted cash Change in other assets 148,702...

  • Page 67
    Consolidated Statement of Changes in Equity For the years ended December 31 (Stated in thousands of Canadian dollars) Note 2011 2010 Share capital: Balance, beginning of year Issuance of shares pursuant to stock option plan Transfer of share-based payment expense Shares repurchased 13 647,637 ...

  • Page 68
    ... income income taxes taxes taxes taxes taxes of of of of of $(870) (2010 - $1,224). $(1,250) (2010 - $(586)). $135 (2010 - $nil). $(679) (2010 - $670). $682 (2010 - $(2,509)). The accompanying notes are an integral part of the consolidated financial statements. â", WestJet Annual Report 2011 68

  • Page 69
    ... the guests. Included in ancillary revenues are fees associated with guest itinerary changes or cancellations, second checked baggage fees, excess baggage fees, buy-on-board sales, pre-reserved seating fees, and ancillary revenue from the Frequent Guest Program (FGP). â", WestJet Annual Report 2011...

  • Page 70
    ... in other revenue at the time a credit is issued. Revenue related to new cards issued is recognized in other revenue immediately upon activation. (iv) Non-refundable guest credits The Corporation issues future travel credits to guests for flight changes and cancellations as well as for gift...

  • Page 71
    ... uses various financial derivative instruments such as forwards, swaps, collars and call options to manage fluctuations in foreign exchange rates, interest rates and jet fuel prices. The Corporation's derivatives that have been designated and qualify for hedge accounting are classified as cash flow...

  • Page 72
    ... between $4,000 and $6,000 per aircraft. Spare engines have a residual value equal to 10% of the original purchase price. Residual values, where applicable, are reviewed annually against prevailing market rates at the consolidated statement of financial position date. Major overhaul expenditures are...

  • Page 73
    .... A certain number of aircraft leases also require the Corporation to pay a maintenance reserve to the lessor. Payments are based on aircraft usage. The purpose of these deposits is to provide the lessor with collateral should an aircraft be returned in an operating condition that does not meet the...

  • Page 74
    ... (q) Share-based payment plans Equity-settled share-based payments to employees are measured at the fair value of the equity instrument granted. An option valuation model is used to fair value stock options issued to employees on the date of grant. The market value of the Corporation's voting shares...

  • Page 75
    ... data and information obtained from various sources including the lessor, current maintenance schedules and fleet plans, contracted costs with maintenance service providers, other vendors and company-specific history. (vii) Fair value of awards and breakage associated with the Frequent Guest Program...

  • Page 76
    ... updates these assumptions to reflect the best information available to the Corporation if and when an impairment assessment requires the recoverable amount of a CGU to be determined. (x) Fair value of share-based payments The Corporation uses an option pricing model to determine the fair value of...

  • Page 77
    ... date. Management continues to evaluate the potential qualitative and quantitative impact of these new standards on the Corporation's financial statement measurements and disclosures. The Corporation does not anticipate early adopting these standards at this time. â", WestJet Annual Report 2011...

  • Page 78
    ... issue new shares, pay dividends and adjust current and projected debt levels. In the management of capital, the Corporation includes shareholders' equity (excluding hedge reserves), long-term debt, finance leases, cash and cash equivalents and the Corporation's off-balance-sheet obligations related...

  • Page 79
    ... Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 3. Capital management (continued) As at December 31, 2011 and 2010, the Corporation exceeded its internal targets of an adjusted debt-to-equity measure...

  • Page 80
    Notes to Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 7. Property and equipment January 1 2011 1,616,263 60,298 72,952 98,344 122,662 6,617 3,243 9,143 1,989,522 January 1 2010 1,748,250...

  • Page 81
    ... Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 7. Property and equipment (continued) January 1, 2010 Aircraft Ground property and equipment Spare engines and rotables Deposits on aircraft Buildings...

  • Page 82
    ...to Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 9. Maintenance provisions and reserves The Corporation's operating aircraft lease agreements require leased aircraft to be returned to the...

  • Page 83
    ...Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 10. Long-term debt (continued) Future scheduled repayments of long-term debt as at December 31, 2011 are as follows: Within 1 year 1 - 3 years 3 - 5 years...

  • Page 84
    ... to Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 12. Income taxes (continued) (b) Tax on earnings from continuing operations 2011 Current tax: Current tax Adjustments of current tax of...

  • Page 85
    Notes to Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 13. Share capital (a) Authorized Unlimited number of common voting shares The common voting shares may be owned and controlled only ...

  • Page 86
    ... and outstanding voting shares at any time. In May 2011, the Board approved amendments to the stock option plan to extend the maximum permitted expiry date from five years to seven years for all new options granted. Stock options are granted at a price equal to the five day weighted average market...

  • Page 87
    ...Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 13. Share capital (continued) (c) Stock option plan (continued) Changes in the number of options, with their weighted average exercise prices...

  • Page 88
    ... reserved for issuance under the ESU plan. The fair market value of the RSUs and PSUs at the time of grant is equal to the weighted average trading price of the Corporation's voting shares for the five trading days immediately preceding the grant date. Each RSU entitles the senior executive officers...

  • Page 89
    ... through open market purchases or to issue new shares from treasury at the current market price, which is determined based on the volume weighted average trading price of the Corporation's voting shares for the five trading days preceding the issuance. For the years ended December 31, 2011 and 2010...

  • Page 90
    ... earnings per share: Weighted average number of shares outstanding - basic Effect of dilution Employee stock options Key employee and pilot - Restricted share units Executive - Restricted share units Executive - Performance share units Weighted average number of shares outstanding - diluted 2011 139...

  • Page 91
    ...Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 17. Financial instruments and risk management (a) Fair value of financial assets and financial liabilities The Corporation's financial assets...

  • Page 92
    ... Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 17. Financial instruments and risk management (continued) (a) Fair value of financial assets and financial liabilities (continued) Fair value Through profit...

  • Page 93
    ... rate and the current forward price obtained from the counterparty. Classified in level 2, as the significant measurement inputs used in the valuation models are observable in active markets. At December 31, 2011, the average contracted rate on the forward contracts was 0.9914 (December 31, 2010...

  • Page 94
    ... value or future cash flows of a financial instrument will fluctuate due to changes in market prices. The Corporation's significant market risks relate to fuel price risk, foreign exchange risk and interest rate risk. (i) Fuel price risk The airline industry is inherently dependent upon jet fuel to...

  • Page 95
    ... Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 17. Financial instruments and risk management (continued) (b) Risk management related to financial instruments (continued) Market Risk (continued) (i) Fuel price...

  • Page 96
    ... or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. Cash and cash equivalents The Corporation is exposed to interest rate fluctuations on its short-term investments, included in cash and cash equivalents. A change of 50 basis points in...

  • Page 97
    ... years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 17. Financial instruments and risk management (continued) (b) Risk management related to financial instruments (continued) Market Risk (continued) (iii) Interest rate risk (continued...

  • Page 98
    ... Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 17. Financial instruments and risk management (continued) (b) Risk management related to financial instruments (continued) Credit Risk Credit risk is the risk...

  • Page 99
    ... 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 quarter, payable quarterly. As at December 31, 2011, no amounts were drawn (December 31, 2010 - $nil; January 1, 2010 - $nil). â", WestJet Annual Report 2011...

  • Page 100
    ... December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 19. Related parties (a) Subsidiaries and partnership The consolidated financial statements of WestJet Airlines Ltd., the parent company, include the accounts of the Corporation and its following...

  • Page 101
    ...Assets: Aircraft deposits (iv) Maintenance reserves - long term Other (i) 17 Trade receivables relate to day-to-day operations. Industry receivables include receivables relating to travel agents, interline agreements with other airlines and partnerships. All significant services and counterparties...

  • Page 102
    ... dollars, except share and per share amounts) 20. Additional financial information (continued) (b) Liabilities Note December 31 2011 December 31 2010 January 1 2010 Accounts payable and accrued liabilities: Trade and industry Frequent guest program Maintenance provision - current Derivatives...

  • Page 103
    ...the pre-tax, risk-free discount rate as at January 1, 2010. This adjustment reflects a discount rate equal to the remaining term until cash flow instead of the full term of the aircraft lease. The resulting effect is an adjustment to the opening statement of financial position balances for long-term...

  • Page 104
    ... revaluation of the US-dollar denominated maintenance liabilities at each reporting period. (ii) Maintenance reserves Certain aircraft lease agreements require the Corporation to pay maintenance deposits to the lessor based on predefined cycle and flight hour formulas. These payments are intended to...

  • Page 105
    ... of financial position as non-refundable guest credits. These credits are made up of both soft dollar and hard dollar credit files. Soft dollar credit files are provided to guests for inconveniences such as flight and baggage delays as a sign of goodwill to be used towards future travel. Hard dollar...

  • Page 106
    ..., specifically sale and leaseback transactions, among others. Share-based payment expense for the Corporation's stock options is now recognized over a longer service period for certain employees, and incorporates an estimated forfeiture rate on the number of instruments expected to vest at the date...

  • Page 107
    ...(199,215) Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities 220,042 - Advance ticket sales 297,720 - Non-refundable guest credits 64,506 - Current portion of long-term debt 171,223 - Current portion of obligations under finance leases 744...

  • Page 108
    ...(237,163) Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities 274,603 - Advance ticket sales 337,002 - Non-refundable guest credits 36,778 - Current portion of long-term debt 183,681 - Current portion of obligations under finance leases 108...

  • Page 109
    ... of Consolidated Statement of Earnings for the year ended December 31, 2010 Canadian GAAP balance IAS 16 Revenues: Guest 2,405,281 - Other 203,980 - 2,609,261 - Expenses: Aircraft fuel 674,608 - Airport operations 388,392 - Flight operations and navigational charges 325,754 - Sales and distribution...

  • Page 110
    ... derivative instruments Gain on disposal of property and equipment Share-based payment expense Income tax credit Deferred income tax expense Unrealized foreign exchange loss Change in non-cash working capital Change in restricted cash Change in other assets Investing activities: Aircraft additions...

  • Page 111
    Notes to Consolidated Financial Statements For the years ended December 31, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share amounts) 22. Transition to IFRS (continued) Reconciliation of Consolidated Statement of Comprehensive Income for the year ended December 31, ...