WestJet Profit Down 45%
CBJ — Canada’s WestJet Airlines has reported a 45% fall in quarterly profit while at the same time announcing it has agreed to buy up to 20 Dreamliner planes from Boeing as it seeks to add fuel-efficient aircraft to its fleet.
WestJet’s aircraft fuel costs jumped 41.5% to $235.5 million in the first quarter ended March 31, contributing to the sharp drop in profit.
Oil prices have nearly doubled from multi-year lows a year ago, weighing on profit margins at several airlines.
WestJet, Canada’s second largest carrier, said the deal with Boeing includes commitments for 10 Dreamliner 787-9 aircraft to be delivered between the first quarter of 2019 and December 2021. The deal also includes options to buy 10 more aircraft.
The 787-9 planes — about 20% more fuel-efficient than the 767s WestJet owns — will allow the airline to offer new routes in Asia, South America and Europe amid stiff competition from larger rival Air Canada (
WestJet now expects 2017 capital expenditure of $1 billion, up from a prior forecast of $900 million-$920 million. WestJet’s net earnings fell to $48.3 million, or 41 cents per share in the first quarter, from $87.6 million, or 71 cents per share, a year earlier. Excluding items, WestJet earned 56 cents per share. Revenue rose eight per cent to $1.11 billion.
The better-than-expected profit came as the airline flew 5.7 million passengers in the quarter, up nearly 7% from a year earlier.
“We are seeing good results from Plus, our premium economy product, growth in our WestJet Rewards program and penetration into the business traveler segment,” WestJet Chief Executive Gregg Saretsky said in a statement.