5-Dec-2018 10:55 AM

WestJet provides targets for 2019-2022, expects margins to expand in 2019

WestJet provided (04-Dec-2018) the following targets for 2019 to 2022:

  • Margins are expected to expand in 2019 through a combination of improved revenue performance, a continued focus on cost control and a prudent approach to capacity management;
  • RASM is expected to increase 2% to 4% year-on-year for FY2019, driven by solid demand and strength in the core WestJet business as well as the roll out of branded fares across all routes. The carrier also cited the impact of an increase in its first bag fee, Swoop ancillary per traveller increasing to CAD40 (USD30) and the introduction of premium and business cabins on Boeing 787 aircraft, although offset by capacity increases in Swoop;
  • CASM is expected to be flat to up 2% for FY2019, driven by investment in the business to support the 787 and infrastructure required to deliver on WestJet's strategic plan and capacity increases in Swoop;
  • System wide capacity expected to grow between 6.5% and 8.5% in 2019, while domestic capacity is expected to grow between 1.0% and 3.0%, due to the launch of trans Atlantic service and the incremental capacity associated with Swoop increasing to 10 aircraft;
  • Capital expenditures are expected to be between CAD1.0 billion (USD752.8 million) and CAD1.2 billion (USD903 million) in FY2019, CAD980 million (USD737.7 million) in 2020 and approximately CAD1.1 billion (USD828 million) in 2021;
  • WestJet signed a LoI to sell and leaseback the first 787s scheduled for delivery in 1Q2019;
  • ROIC expected to return to double digits in 2020 and reach 13% in 2022.

WestJet expects improved earnings per share performance in 2019, building off a "challenging base year in 2018". The airline has identified annual cost savings opportunities of CAD200 million (USD150.5 million) through 2020, including fleet reconfigurations, fuel savings, guest atonement, airport operations cost savings, optimised maintenance plans, digital self service, and sales and distribution channel efficiencies. [more - original PR]

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