New: dividends and share buyback

[W5]

WestJet Airlines kicks off dividend, shares jump

http://www.reuters.com/article/idCASGE6 ... 103?rpc=44

* To pay quarterly div of C$0.05/share; will review size

* Introduces C$20 fee for second checked bag

* Q3 results in line with expectations (Recasts with executive, analyst comments; adds details)

By Nicole Mordant

VANCOUVER, Nov 3 (Reuters) - WestJet Airlines Ltd (WJA.TO) unveiled the first dividend in its 14-year history on Wednesday, lifting its shares as it also sketched a positive outlook for the rest of the year.

WestJet announced a quarterly dividend of 5 Canadian cents a share and reinstated its share buyback program as Canada's second biggest airline looked for ways to best use its hefty C$1.2 billion ($1.19 billion) cash pile.

The announcement accompanied WestJet's third quarter results, which were largely in line with analyst expectations. The airline also introduced a C$20 fee it will start charging passengers for a second piece of checked luggage.

"(Airlines paying dividends) were becoming quite a rare species in the last three years," said Robert Kokonis, managing director of airline consulting firm AirTrav Inc, alluding to the recent recession-caused travel slowdown airlines are just now emerging from.

"Historically it hasn't been a popular move because the business has such high fixed costs and is so capital-intensive. Airlines prefer to plow that money back into sustaining the operation," Kokonis said.

WestJet will review quarterly whether to increase the dividend to shareholders, who include most of the airline's employees, Chief Executive Gregg Saretsky said.

"We're very confident with having started down the track," Saretsky said on a conference call.

The share buyback will give WestJet room to repurchase up to 5 percent of its stock over the next year.

LUGGAGE WARS?

The new luggage charge could put WestJet at a competitive disadvantage to its fierce domestic rival Air Canada (ACa.TO) (ACb.TO), which dropped such a fee within Canada in 2008, Kokonis said.

On flights between Canada and the United States, WestJet's fee is lower than Air Canada's C$30 charge for a second bag.

WestJet, which started off life as a low-budget airline but has been searching for new sources of income, expects to generate between C$8 million and C$10 million in revenue a year from the new charge, Saretsky said.

Earlier, WestJet posted a 72 percent rise in quarterly profit, helped by improved margins, and said it is encouraged by the gradual recovery in pricing and the pace of its current bookings.

The airline, which mostly flies domestic routes, but also has flights to the United States, Mexico and the Caribbean, said it earned C$54 million, or 37 Canadian cents a share, in the three months to the end of September.

That compared with earnings of C$31.4 million, or 24 Canadian cents a share, in the same period last year and matched the 37 Canadian cents a share that analysts polled by Thomson Reuters I/B/E/S were expecting.

Revenue rose 14 percent to C$684.6 million, close to the C$689.7 million that analysts had forecast.

"What I found positive was commentary about Q4," said PI Financial analyst Chris Murray.

WestJet said it expects its fourth-quarter capacity to increase 13-14 percent. Even so, it expects to continue to see an improvement in its revenue per available seat mile (RASM), or unit revenue, a key airline measure.

RASM was 2 percent higher in the third quarter.

WestJet's shares rose as high as C$13.43 on the Toronto Stock Exchange, for a gain of 64 Canadian cents or 5 percent.

[Disco Stu]

What happened to your Care-antee?

We will not charge you for two checked bags.
At WestJet we think it's reasonable to bring two checked bags. Just make sure they're within our size and weight limits. For details check out our baggage info page.

[W5]

WestJet trashes its second bag “care-antee”

http://business.financialpost.com/2010/ ... are-antee/


Postmedia
WestJet announced Wednesday it would begin charging a $20 fee for passengers to check a second bag.

Scott Deveau November 3, 2010 – 3:43 pm

When WestJet Airlines Ltd. announced its new “care-antee” marketing campaign in April 2009, front and center was its guarantee not to charge passengers to check a second bag.

The campaign was meant to show what made WestJet different from its competitors, and was launched after Air Canada announced it would be charging its own passengers to check a second bag.

“We will not charge you for two checked bags,” the original Care-antee read, which has figured prominently in its ad campaigns over the past.

Well, unfortunately for its customers, that Care-antee has gone the way of the Dodo.

WestJet announced Wednesday it would begin charging a $20 fee for its passengers to check a second bag [the care-antee not to so do has also been removed from its webpage].

Richard Bartrem, WestJet spokesman, said the second bag promise, like its original promise to provide live TV to its passengers, have slowly been phased out of the airline’s marketing campaign. While WestJet has no plans to start charging for live TV, he said, it has focused the care-antee campaign more on the quality of service its employees provides rather than the extra free service the airline provides.

“We’ve just decided to shift the advertising on Care-antee, and the contents of the Care-antees, to be more about that commitment to the guest experience,” Mr. Bartrem said.

The new baggage fee is being introduced as WestJet reduced its $75 fee for a third and fourth bag to $50. WestJet estimates, however, that the new second-bag charge will create $8-million to $10-million in additional revenue a year.

Mr. Bartrem said he also expects WestJet’s customers will alter their behavior as a result. Currently, only about 27% of WestJet’s passengers check a second bag on their flights. After the charge is implemented, the carrier expects that only about 20% of those who do, will continue to, Mr. Bartrem said.

“We essentially expect that less than a quarter of the quarter to bring that second bag,” he said, adding that the extra $20 fee won’t be subtracted from the price of a ticket.

“It allows us to be as aggressive as we can from a pricing perspective while remaining profitable,” he said.

Here are are a list of WestJet’s original care-antees:

We will not charge you to change or cancel your flight for 24 hours after you book

We will not charge you for call centre bookings

We will not overbook your flight

We will not charge you for two checked bags

We will have the lowest, change, cancel and pre-reserved seating fees in Canada

We will accommodate you if your flight is delayed. Even if it’s Mother Nature’s fault

We will fly you in the youngest all-jet fleet in North America

We will provide live seatback TV on our flights

We will give you ample legroom and overhead bin space

We will publish our on-time, lost baggage and cancellation rates

We will always let you know how we’re doing as a company

We will offer free online check-in and seat selection 24 hours before departure

We will allow you to transfer your credit files to friends or family for free

We will give you free snacks and refreshments on your flight

We will always include smiles and thank yous. Always

.

Read more: http://business.financialpost.com/2010/ ... z14GSrtCIs

[FICU]

I guess they don't care anymore... Next will be no more free beverages and cookies just like we are seeing in the US... Way to go Westjet!

[True North]

I guess they don't care anymore... Next will be no more free beverages and cookies just like we are seeing in the US... Way to go Westjet!

$8M - $10M additional yearly profit. As a shareholder I agree, way to go WestJet.

[W5]

The stock market seems to agree as well (for a change).

[FICU]

I guess they don't care anymore... Next will be no more free beverages and cookies just like we are seeing in the US... Way to go Westjet!

$8M - $10M additional yearly profit. As a shareholder I agree, way to go WestJet.

Unfortunately you still need to keep filling seats to see the profits and if you go the US way of "nickel and dime for everything" you won't be seeing happy "guests" and they will leave.

[LisaS]

I guess they don't care anymore... Next will be no more free beverages and cookies just like we are seeing in the US... Way to go Westjet!

$8M - $10M additional yearly profit. As a shareholder I agree, way to go WestJet.

Unfortunately you still need to keep filling seats to see the profits and if you go the US way of "nickel and dime for everything" you won't be seeing happy "guests" and they will leave.

We'll see about that.

[Red1]

The "Nickel and dimming" is the way aviation is going...in fact it's the way everything is going no more free lunches. It's a business it needs to make money. If airlines like Delta can make $25 per of ancillary revenue, then there is business model there. I am sure Air Canada will soon follow suit. People will will still fly with WestJet, because the price and level of service is good. a second bag charge will annoy some people, but will soon be forgotten and then become normal.

Again the big news is the Dividend.

[Flightlevels]

FICU chimes in!

btw Yellowknife is doing just fine

[Rotten Apple #1]

I guess they don't care anymore... Next will be no more free beverages and cookies just like we are seeing in the US... Way to go Westjet!

Actually FICU, you have touched on the next phase of the evolution of the CARE-ANTEE. Similar to the "Supersize" phenomenon in the USA at fast food restaurants, WJ will soon be announcing the introduction of the "WestJettiSized" snacks and drinks offered onboard. I'm not permitted to reveal all details, but imagine the biggest free snack mix pack possible. Think bigger. And the 'WestJettiSized' drinks (non-alcohol only) will mean fewer trips up the aisle by our FAs. They are freakin' HUGE!!

[KAG]

I really wish we would stop inventing words.

[Rotten Apple #1]

They are freakin' HUGE!!

I ahh, meant the drinks, not the FAs.

[FICU]

FICU chimes in!

btw Yellowknife is doing just fine

You sure about that? I have deadheaded a few times with you guys out of YZF... one time I was accompanied by 23 other pax... keep believing!

BTW... what's with you guys complaining to YZF ATC about RSCs? You get current braking reports from other Boeings but bitch about not being provided with a brand spanking new RSC prior to your landing. Do you expect them to run out and provide you with your very own personal RSC everytime you come in?

[beaverguy]

You are right about the loads. I have flown that route several times and only once we were full. However, your comment about runway conditons. I sure do expect to get a recent report. They know we are coming. Is that not what airport fees are for? It does not take too long to "get er done" BTW, what has this got to do with WestJet offering dividends and a share buy back?

[FOX69]

I haven't operated our YZF route yet, but it is only reasonable that a Canadian airport which supports scheduled ops of transport category jet aircraft would provide frequent and timely RSC reports. It has always amazed me how accepting pilots are of the sub standard level of service at our large and medium airports. I never settle for guessing at what the runway surface will be like. I'm the guy wearing ALL of the blame if I guess wrong. Don't complain that I expect accurate info in order to do my job.

Bag fee: I'm sure AC is right behind us.

[FICU]

So you get an RSC that is a few hours old and recent braking reports from two 737s with no change in Wx. Yet, you still want a brand new RSC.. and when ATC questions it you bitch them out?

As for dividends... the value will always be subject to change as is your "Care-antee" so I don't hold much faith in airline dividend returns. I dumped my WJ stock many years ago back when it was worth something anyway.

[beaverguy]

I have never "bitched out" ATC. I just want the most up to date info. Not sure where the problem is with that. Sounds like you are able to work with old info. Good for you. You will never be blamed for being a burden to the system.

[FICU]

Sorry, I wasn't referring to you in particular. I just don't understand why a WJ pilot would give ATC a hard time when the RSC that was issued hasn't changed and there are braking reports from similar types. The pilot in question came off arrogant and condescending towards ATC.

[W5]

From experience: big difference between the -200 and the NG.
Also: "you can take the pilot out of the bush, but you can't take the bush out of him!"

[beaverguy]

That pilot should not have been like that. Bad day maybe? I flew the -200 before the -700 and as posted above, big difference. Give me a -200 with those buckets over a -700 with sleeves on a crappy runway anyday.

[Flightlevels]

We pay em for the service..it should be there.

Yes it's doing well yields and cargo. It ain't going away anytime soon according to Greg.

[WJ700]

YZF - The guys operating the daily flights for the most part, don't write the SOP. They can drive operational change through safety reports, but they don't make the stuff up on their own. For a while we had a solution to make landing conditions 'safer' that involved some strict information be in place for a landing as per our COM. That has since been addressed after situations like the one you mention here. I was in that situation last winter with YZF a few times (and no, I didn't 'bitch' them out). I'm not justifying anyone getting lippy with ATC but there is some frustration when you need one piece of info to avoid diversion from a runway that your experience wants to land on, but have no way to back it up when the boss phones. Enough reports went in, which drove the change, which fixed the problem. I don't doubt or condone that there was inappropriate things said to ATC but that is some of the background on where the frustration may have originated. YZF wasn't as accommodating to the change as most of the airports.

As for the Care-an-tee... trash it, it (is) was moronic. I had ground school this week and Gregg S came in to say thanks and mention the profit share payouts should be 'double' of last November. Durphy was likable and had a talented leadership style with savvy marketing ability ('owners' campaign was his baby and it worked). Gregg Saretski has that same skill set plus a very experienced airline background. I'm sure more low hanging fruit will be picked in the way of easy revenues and unbundled fare prices.

[Dockjock]

Why would somebody put a guarantee on a box?
http://www.youtube.com/watch?v=Kh9L9QitptY

[hs748]

5 cents per share per quarter. WOW. That's something to get excited about!