WestJet returned to a second-quarter profit this year, while also moving one step closer to being acquired by private equity firm Onex by the end of 2019.
The Calgary-based carrier reported a net profit of C$44.3 million ($33.7 million) for the quarter ending 30 June, recovering from a loss of C$15.8 million the previous year. This return to profit was primarily due to increased passenger revenue and the resolution of labor disputes, the airline says in its earnings report published on 26 July.
On the same day, the company also announced that Alberta superior court approved its proposed acquisition by Onex, clearing the latest hurdle to complete the transaction following approval by WestJet shareholders on 23 July.
WestJet says it will not have a second quarter earnings call because of the lead up to the Onex acquisition.
The airline reported that revenue spiked 11.5% to C$1.2 billion, up from C$1 billion during the second quarter of 2018. Revenue per available seat miles (RASM) increased 8.5% year-on-year from 13.7 cents to 14.9 cents year-on-year.
Operating expenses increased by 7% year-on-year to C$1.17 billion, up from $1 billion in 2018. Cost per available seat mile (CASM) excluding fuel and other items rose 6% to 10.66 cents up from 10 cents for the same period 2018.
Capacity increased by 3% following the addition of three Boeing 787 aircraft to the airline’s fleet during the first quarter of 2019 as part of its expansion of transatlantic flight to destinations including Ireland. WestJet has seven additional 787 aircraft on order with options to purchase 10 more widebodies.
WestJet says it has done its best to keep the grounding of its 13 Boeing 737 Max aircraft from being a drag on revenue. The carrier has suspended all investor guidance for 2019 due to uncertainty over how long 737 Max aircraft will remain out of service.
“Our contingency planning and proactive schedule adjustments enables us to reduce last minute flight cancellations and unexpected travel disruptions, providing assurance to our guests during the busy summer travel period,” the airline says of adjustments during the Max grounding.
The second quarter also marked the one-year anniversary of WestJet’s ultra-low-cost carrier Swoop, which has grown from five to 16 destinations including Jamaica and Mexico. The Swoop fleet during its first year grew from three to seven Boeing 737-800s.
Analysts expect that WestJet will be able to focus on growth once it goes private under Onex as it will no longer have to satisfy as many parties as a publicly-traded company. WestJet and Onex entered into a definitive agreement on 12 May under which the private equity firm will acquire the airline’s outstanding stock at C$31.00 ($23.55) per share - a 67% premium over the 10 May closing price of C$18.52.
WestJet has seen increased unionisation since 2017 when a majority of pilots chose to join the Air Line Pilots Association. Most recently, the Aircraft Maintenance Engineers Association union ratified a five-year agreement with the carrier at the start of April, effective 1 May.
Source: Cirium Dashboard