Westjet 2014 Annual Report Download - page 9

WestJet Annual Report 2014│ 7
CONTENTS
Annual Overview .......................................................... 8
2014 Results of Operations ......................................... 12
2014 Fourth Quarter Results of Operations ................... 18
Summary of Quarterly Results ..................................... 21
Guest Experience ....................................................... 21
Liquidity and Capital Resources ................................... 22
Fleet ......................................................................... 25
Off Balance Sheet Arrangements ................................. 27
Related Party Transactions .......................................... 27
Share Capital ............................................................. 28
Outlook ..................................................................... 29
Financial Instruments and Risk Management ................ 30
Risks and Uncertainties ............................................... 32
Accounting ................................................................ 40
Controls and Procedures ............................................. 44
Forward-Looking Information ...................................... 45
Definition of Key Operating Indicators .......................... 48
Non-GAAP and Additional GAAP Measures .................... 48
ADVISORIES
The following Management’s Discussion and Analysis of Financial Results (MD&A), dated February 2, 2015, should be read in conjunction with
the cautionary statement regarding forward-looking information below, as well as the audited consolidated financial statements and notes
thereto, for the years ended December 31, 2014 and 2013. The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). All amounts in the following MD&A are in Canadian dollars unless otherwise stated.
References to “WestJet,” “the Corporation,” “the Company,” “we,” “us” or “our” mean WestJet Airlines Ltd., its subsidiaries and consolidated
structured entities, unless the context otherwise requires. Additional information relating to WestJet, including periodic quarterly and annual
reports and Annual Information Forms (AIF), filed with Canadian securities regulatory authorities, is available on SEDAR at sedar.com and our
website at westjet.com.
Cautionary statement regarding forward-looking information
This MD&A contains “forward-looking information” as defined under applicable Canadian securities legislation. This forward-looking
information typically contains the words “anticipate,” “believe,” “estimate,” “intend,” “expect,” “may,” “will,” “should,” “potential,” “plan,”
“project” or other similar terms. Our actual results, performance or achievements could differ materially from those expressed in, or implied
by, this forward-looking information. We can give no assurance that any of the events anticipated will transpire or occur or, if any of them do,
what benefits or costs we will derive from them. By its nature, forward-looking information is subject to numerous risks and uncertainties
including, but not limited to, the impact of general economic conditions, changing domestic and international airline industry conditions,
volatility of fuel prices, terrorism, pandemics, currency fluctuations, interest rates, competition from other airline industry participants
(including new entrants, capacity fluctuations and the pricing environment), labour matters, government regulations, stock market volatility,
the ability to access sufficient capital from internal and external sources, and additional risk factors discussed in other documents we file from
time to time with securities regulatory authorities, which are available on SEDAR at sedar.com or, upon request, without charge from us.
The disclosure found under the heading “Outlook” in this MD&A, including the guidance summary for the three months ended March 31, 2015
and the year ended December 31, 2015 may contain forward-looking information that constitutes a financial outlook. The forward-looking
information, including any financial outlook, contained in this MD&A, is provided to assist investors in understanding our assessment of
WestJet’s future plans, operations and expected results. The forward-looking information, including without limitation, the disclosure found
under the heading “Outlook”, contained in this MD&A may not be appropriate for other purposes and is expressly qualified by this cautionary
statement. Please refer to page 45 of this MD&A for further information on our forward-looking information including assumptions and
estimates used in its development. Our assumptions and estimates relating to the forward-looking information referred to above are updated
in conjunction with filing our quarterly and annual MD&A and, except as required by law, we do not undertake to update any other forward-
looking information.
Non-GAAP and additional GAAP measures
Certain measures in this MD&A do not have any standardized meaning as prescribed by Generally Accepted Accounting Principles (GAAP) and,
therefore, are considered non-GAAP measures. These measures are provided to enhance the reader’s overall understanding of our financial
performance or current financial condition. They are included to provide investors and management with an alternative method for assessing
our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for
comparison between periods. These measures are not in accordance with, or an alternative to, GAAP and do not have standardized meanings.
Therefore, they may not be comparable to similar measures presented by other entities.
Please refer to page 48 of this MD&A for a reconciliation of non-GAAP measures, including cost per available seat mile (CASM), excluding fuel
and employee profit share; return on invested capital (ROIC); free cash flow; diluted free cash flow per share; diluted operating cash flow per
share; adjusted net earnings, adjusted diluted earnings per share, and adjusted earnings before income tax (EBT) margin, and for a
reconciliation of additional GAAP measures, including adjusted debt-to-equity; adjusted net debt to earnings before interest, taxes,
depreciation and aircraft rent (EBITDAR), and the cash to trailing twelve months revenue ratio.
Included in net income for the year ended December 31, 2014, is an after-tax $33.2 million non-cash loss, recorded in the third quarter of
2014, associated with the sale of 10 aircraft to Southwest Airlines being classified to assets held for sale. As this non-cash loss is a non-
recurring item we have adjusted certain non-GAAP measures to remove this item so as to improve comparability of such measures between
periods. This has resulted in the presentation of new non-GAAP measures or a change in composition of certain non-GAAP measures when
compared to previously disclosed measures including: adjusted net debt to adjusted EBITDAR, adjusted EBT margin, adjusted net earnings,
and adjusted diluted earnings per share, all of which exclude this non-cash loss (pre-tax or after-tax depending on the measure).
Definitions
Various terms used throughout this MD&A are defined at page 48 under the title “Definition of Key Operating Indicators”.