Westjet 2014 Annual Report Download - page 22

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WestJet Annual Report 2014│20
Aircraft fuel
In the fourth quarter of 2014, aircraft fuel expense decreased by 6.4 per cent to $243.8 million from $260.5 million. Fuel costs
per ASM for the fourth quarter of 2014, was 3.82 cents, compared to 4.38 cents in the fourth quarter of 2013, a decrease of
12.8 per cent year over year. These decreases were mainly driven by the decrease in our fuel costs per litre.
Our fuel costs per litre decreased by 12.0 per cent to 81 cents per litre during the quarter ended December 31, 2014 from 92
cents per litre in the same period of 2013. On average, the market price for jet fuel was US $101 per barrel in the fourth
quarter of 2014 versus US $124 per barrel in the fourth quarter of 2013, a decrease of 18.5 per cent. Despite a weaker
Canadian dollar versus the US dollar on a year-over-year basis, the average market price for jet fuel in Canadian dollars
decreased to $114 per barrel during the three months ended December 31, 2014 as compared to $130 per barrel in the
comparable period of 2013. This decrease was due to the significant decline in the US dollar market price for jet fuel, which
was partially offset by the weaker Canadian dollar.
Airport operations
Airport operations expense consists primarily of airport landing and terminal fees, ground handling, salaries and benefits and
de-icing costs. For the three months ended December 31, 2014, our airport operations expense was $130.6 million, a $14.3
million or 12.3 per cent increase from $116.3 million for the same period in 2013. Airport operations expense per ASM was
2.05 cents for 2014, an increase of 5.1 per cent from 1.95 cents in the same period in 2013. Compared to the fourth quarter
of 2013, we experienced increased terminal and landing fees in the fourth quarter of 2014 due to the increased volume of
service out of many of our airport bases and the overall expansion of our network. This increase is also driven by the impact
of the devaluation of the Canadian dollar as certain airport rates and fees are denominated in US dollars.
Flight operations and navigational charges
Flight operations and navigational charges are comprised mainly of salaries and benefits, costs related to flight delays and
cancellations and related accommodations for displaced guests. For the three months ended December 31, 2014, flight
operations and navigational charges were $118.5 million, an $18.3 million or 18.2 per cent increase from $100.3 million during
the same period in 2013. The increase was primarily attributable to a $9.8 million lump-sum payment associated with the new
pilot agreement reached in December 2014. Flight operations and navigational charges per ASM were 1.86 cents in 2014, an
increase of 10.1 per cent from 1.69 cents in the same period in 2013. Excluding the $9.8 million lump-sum payment incurred
in the fourth quarter of 2014, on an ASM basis, flight operations and navigational charges would have been 1.71 cents in
2014, representing an increase of only 1.2 per cent from the same period in 2013.
Maintenance
Maintenance expense for the three months ended December 31, 2014, was $42.1 million, which represents a $2.9 million or
6.5 per cent decrease from $45.0 million in 2013. Our maintenance cost per ASM was 0.66 cents for the three months ended
December 31, 2014, representing a decrease of 13.2 per cent from 0.76 cents in the fourth quarter of the prior year. These
year-over-year decreases were mainly attributable to vendor credits recorded in the fourth quarter of 2014 for 2014
maintenance activities and a recovery for $1.6 million in maintenance reserves paid to aircraft lessors, which were previously
deemed unrecoverable, but are now considered recoverable due to the extension of two of the aircraft leases during the
fourth quarter.