Westjet 2013 Annual Report Download - page 5

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WestJet Annual Report 2013 5
We have continued our long trend of successful
operational and financial performance. We completed
2013 by marking our ninth consecutive year of
profitability and reaching a return on invested capital of
13.9 per cent, the sixth consecutive quarter in which we
have surpassed our 12 per cent sustainable target. In
2013, we achieved record net earnings of $268.7 million,
a 10.9 per cent increase over 2012, and record earnings
per diluted share of $2.03, a 14 per cent year-over-year
increase. We reported 6.9 per cent higher revenue of nearly
$3.7 billion, and recorded an earnings before tax margin
of 10.2 per cent, up 0.3 percentage points from 2012.
In 2013, we were proud to successfully launch WestJet
Encore, our new short-haul regional airline, bringing
WestJet’s caring service and low fares to more
communities in Western Canada. WestJet Encore has
also enabled us to create new connections between
existing WestJet markets, build additional feed into our
current network, and increase our schedule efficiency.
We’re excited about expanding WestJet Encore across
Canada and into the U.S.
In 2013, we also successfully launched our fare bundles
product, which offers our guests additional flexibility,
comfort and convenience. Specifically, our new Plus
product includes extra legroom, complimentary change
and cancel options, advance boarding, priority security
screening at available airports, and complimentary
food and beverages. Fare bundles have also created
incremental revenue opportunities, which we expect
to be at the high end of the $50-million to $80-million
range on an annualized basis, as we’ve forecasted.
The year 2013 also saw our airline expand as we took
delivery of five Boeing 737 Next-Generation (NG) aircraft
to end the year with a total of 105 Boeing 737 NGs in
our fleet. As well, WestJet Encore took delivery of its
first eight Bombardier Q400 NextGen aircraft. We flew
nearly 18.5million guests in the year, a 6.1 per cent
increase over 2012.
At the beginning of 2013, we announced our business
transformation initiative with the goal of reducing our
annual costs by $100 million by the end of 2015. This
is part of our long-term vision to ensure WestJet’s
unit costs are competitive with other low-cost North
American airlines, allowing us to continue to offer low
fares to our guests. I’m proud to say we have identified
and put into action measures that we believe will enable
us to achieve these savings by the end of 2014, a year
ahead of our initial goal, and we will continue to identify
and implement new cost-saving initiatives. Some of
these measures include fleet optimization and seat
reconfiguration initiatives; our transition to a 1:50 flight
attendant staffing ratio, allowing us to compete on
anequal basis with North American and international
carriers; and moving to a multi-base model for our crews,
reducing costs and improving operational reliability.
WestJet’s network expansion continues, and we now
serve 88 destinations in 20 countries in North America,
Central America, the Caribbean and Europe. Combined
with our airline partners, our network includes more than
140 destinations. In November 2013, we announced we are
bringing WestJet’s brand of caring service and low fares
to Europe with service to our first transatlantic destination
– Dublin, Ireland, beginning in June 2014. During 2013,
we grew the total number of airline partnerships to 33, as
we evolved our interline agreements with Air France and
China Southern Airlines into code-sharing agreements.
In 2014, our focus will be on maturing our existing
relationships and adding a number of new partnerships.
In 2013, we announced two major initiatives as part
of our long-term fleet strategy, starting with the sale
of 10 of our oldest Boeing 737 Next-Generation (NG)
700 aircraft to Southwest Airlines and our concurrent
agreement to purchase a total of 10 new Boeing 737
NG 800 aircraft in 2014 and 2015, effectively reducing
the average age of WestJet’s fleet by approximately one
year. In September 2013, we entered into an agreement
to purchase 65 Boeing 737 MAX aircraft, with deliveries
scheduled between 2017 and 2027. We anticipate that
the 737 MAX aircraft, with its fuel-efficient technology
and enhanced amenities, will support our continued
growth and low-cost operating model while providing
our guests with anexceptional experience.
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