Westjet 2014 Annual Report Download - page 48

WestJet Annual Report 2014│46
our expectation that we will take delivery of twelve more Boeing 737 NG aircraft, two Boeing 767 300 ERW aircraft, and ten
Bombardier Q400 aircraft and will dispose of the further five of our oldest Boeing 737 NG aircraft, all in 2015, referred to
under the heading
Outlook on page 29; our expectation that system-wide capacity growth will increase between 4.0 and 4.5
per cent for the first quarter of 2015, and between 4.0 and 5.0 per cent for the full-year 2015, referred to under the heading
Outlook on page 29; that we anticipate our domestic capacity to grow between 3.5 and 4.0 per cent for the first quarter of
2015 and between 4.0 to 5.0 per cent year-over-year growth for the full-year 2015, referred to under the heading Outlook on
page 29; that we expect full-year 2015 CASM, excluding fuel and employee profit share, to be up 2.5 to 3.5 per cent, and
first-quarter 2015 CASM, excluding fuel and employee profit share, to be up 1.0 to 1.5 per cent year over year, referred to
under the heading
Outlook on page 29; that we expect fuel costs to range between 63 and 65 cents per litre for the first
quarter of 2015, representing a 27.8 to 30.0 per cent year-over-year increase, referred to under the heading
Outlook on page
29; that for the full-year 2015, we are forecasting capital expenditures between $920 million and $940 million, with spending
related primarily to direct owned aircraft deliveries, deposits on future aircraft, overhauls on owned engines, referred to under
the heading
Outlook on page 29; that for the first quarter of 2015, we are forecasting capital expenditures to range between
$160 million and $170 million, as referred to under the heading
Outlook on page 29; that we plan to continue adding new
markets and additional frequencies to our existing markets through the growth of our regional Bombardier Q400 fleet, our
narrow body Boeing 737 fleet and, for the first time in 2015, the addition of wide body Boeing 767-300 ERW aircraft, referred
to under the heading
Risks relating to the business on page 32; that we do not anticipate early adopting the new revenue
from contracts with customers and financial instrument standards, referred to under the heading
Future accounting
pronouncements
on page 43.
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 information contained within
this MD&A, we have made the following key assumptions:
• Our plan to begin operating four wide-body aircraft on
routes between Alberta and Hawaii is based on the
assumption that we will be able to deliver on our fleet
plan and on the agreement with Boeing;
• Our expectation that we will begin daily non-stop flights
from Halifax, Nova Scotia to Glasgow, United Kingdom
on May 29, 2015 and that WestJet Encore will
commence service from its first Maritime destination
beginning on April 15, 2015 is based on the assumption
that we will successfully carry-out our current network
plan;
• Our expectation that installations of our new IFE
system, power outlets and slim seats will be complete in
2016 is based on the assumption that the current
installation schedule will be successfully executed;
• Our estimated sensitivity to fuel costs and changes in
fuel prices is based on our fuel consumption for our
existing schedule and historical fuel burn and the
assumption that we will burn fuel in a manner
consistent therewith, as well as an assumption that the
Canadian-US dollar exchange rate will be similar to the
current rate;
• Our estimated sensitivity to the change in value of the
Canadian dollar versus the US dollar is based on
forecasted operating expenses denominated in US
dollars, excluding a portion of aircraft leasing expenses
hedged under foreign exchange forward contracts, as
well as an assumption that the exchange rate for the
Canadian dollar will be similar to the current market
rate;
• Our expected annual effective tax rate for 2015 is based
on the assumption that current legislation will continue
to apply, and expectations about the timing of when
temporary differences between accounting and tax
bases will occur;
• Our expectation that we anticipate managing through
our cash and cash equivalents balances and future debt
financing is based on the assumption that we will
effectively implement and adapt our capital
management strategy in light of our growth plans and
changing market conditions;
• Our expectation that, over a longer period of time, our
operating cash flows will sufficiently fund all our capital
and investing activities is based on the assumption that
our earnings will continue for a sufficient period of time
in the future to finance our capital requirements;
• Our expectation that the unsecured bond market
represents a significant new source of financing for
WestJet is based on the assumption that we maintain a
strong credit rating and that credit markets remain
relatively strong and liquid in the foreseeable future;