Westjet 2011 Annual Report Download - page 56

Management’s Discussion and Analysis of Financial Results 2011
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assessment that the outcome of legal proceedings in the normal course of business will not have a material effect upon our
financial position, results of operations or cash flow, referred to under the heading “Contingencies” on page 37; our intention
to pay our first-quarter dividend to shareholders of record on March 14, 2012 on March 30, 2012, referred to under the
heading “Quarterly dividend policy” on page 38; our intention to purchase shares pursuant to the normal course issuer bid on
the open market through the facilities of the TSX, referred to under the heading “Normal course issuer bid” on page 38; our
intention to cancel any shares purchased under the normal course issuer bid, referred to under the heading “Normal course
issuer bid” on page 38; our expectation of modest year-over-year RASM growth in the first quarter of 2012, referred to under
the heading “Outlook” on page 39; our plans to add three 737 aircraft to our fleet in 2012, referred to under the heading
“Outlook” on page 39; our expectation that our year-over-year capacity will increase by approximately four per cent for full-
year 2012, referred to under the heading “Outlook” on page 39; our expectation that system capacity will increase between
and eight and nine per cent in the first quarter of 2012, referred to under the heading “Outlook” on page 39; our projection of
limited domestic capacity growth year over year between 0.5 and one per cent for the full year, and a four to five per cent
year-over-year increase in the first quarter of 2012, referred to under the heading “Outlook” on page 39; our projected first
quarter 2012 fuel costs, referred to under the heading “Outlook” on page 39; our expectation that our 2012 full-year CASM,
excluding employee profit share, to be flat to up one per cent when compared to 2011, referred to under the heading
“Outlook” on page 39; our expectation that our full-year 2012 capital expenditures will range between $165 million and $175
million, with the majority of the spending related to our two direct owned aircraft, deliveries deposits on future aircraft,
overhauls on owned engines and rotable purchases, referred to under the heading “Outlook” on page 39; our expectation that
our first quarter of 2012 capital expenditures to range between approximately $45 and $50 million, referred to under the
heading “Outlook” on page 39; 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, referred to under the heading “Outlook” on
page 39; our expectations with respect to the overhaul of six engines and 14 sets of landing gear in 2012, referred to under
the heading “Our maintenance costs will increases as our fleet ages” on page 44; our expectations with respect to the impact
of future accounting policy standards, amendments and interpretations, referred to under the heading “Future accounting
pronouncements” on page 54.
Readers are cautioned that our expectations, estimates, projections and assumptions used in the preparation of such
information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue
reliance should not be placed on forward-looking statements. With respect to forward-looking statements contained within this
MD&A, we have made the following key assumptions:
•our belief that a short-haul aircraft combined with the WestJet brand, balance sheet strength and low cost structure will
allow us to profitability accomplish four main goals is based on strategic plans and forecasts;
•our belief that the launch of a regional airline will be a significant undertaking that will materially impact our future results
of operations, financial position and cash flows is based on the strategic plans and forecasts;
•our plan to move to the next stage of implementation of a low-cost regional airline by sending requests for proposal to
two aircraft manufactures is based on the approval of the Board of Directors and our strategic plans;
•our long-term goal of establishing partnerships with airlines from all major geographical regions is based on our current
strategic plan;
•our expectations with respect to frequent year-round service to New York City is based on our successful bid for 16
landing slots at LaGuardia airport;
•our sensitivity to changes in fuel prices is 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 rate;
•our sensitivity to the change in the value of the Canadian dollar versus the US dollar is based on forecasted operating
expenses denominated in US dollars for 2011, excluding a portion of aircraft leasing expenses hedged under foreign
exchange forward contracts, as well as the exchange rate for the Canadian dollar similar to the current market rate;
•our expected annual effective tax rate for 2012 is based on forecasted financial information, tax rates, current legislation,
and expectations about the timing of when temporary differences between accounting and tax bases will occur;
•our expectation that we will begin accruing current taxes in 2012 which will become cash payable in early 2013 is based
on forecasted financial information, tax rates based on current legislation, and expectations about the timing of when
temporary differences between accounting and tax bases will occur;
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