WestJet’s solid 1Q2013 performance is dampened by concerns over capacity expansion

WestJet's significant 33% growth in profits year-over-year during 1Q2013 is being overshadowed by the airline's planned 9% to 10% capacity growth during 2Q2103 amidst a softer yield environment that shows no immediate signs of retrenchment. The carrier is repeatedly stressing that its decision to expand capacity is sound, highlighting passenger spill it experienced during 2012 when it achieved record load factors of nearly 83%.

While the bulk of WestJet's planned 6%-7% domestic capacity expansion during 2Q2013 will be dedicated to transcontinental routes, the carrier's launch of its new regional carrier Encore is occurring as demand patterns are somewhat unpredictable given a slight uptick in the Canadian unemployment rate in Mar-2013 and more profitable close-in bookings showing some signs of weakness.