WestJet reports fourth quarter results; full-year net earnings up 65 per cent

WestJet to launch a new regional airline

Airline announces a normal course issuer bid and increases its quarterly dividend

WestJet (TSX: WJA) today announced its fourth quarter and year-end results for 2011. The airline reported fourth quarter net earnings of $35.6 million, or $0.26 per share and full-year net earnings of $148.7 million, or $1.06 per share; up significantly from the net earnings of $90.2 million, or $0.62 per share, reported for 2010. WestJet's operating cash flow per share for the full-year 2011 was $3.60, an increase of 25 per cent compared to last year.

"We are very pleased with our strong fourth quarter and full-year results for 2011. We managed to cover the elevated fuel costs with our revenue growth and improve our profit margin on a full-year basis," said WestJet President and CEO Gregg Saretsky. "Low-cost continues to be our focus and I am proud of WestJetters for their efforts throughout 2011 to keep controllable costs per unit relatively flat, while at the same time delivering a remarkable guest experience."

On January 16, 2012, WestJet announced that it was examining the possibility of launching a new low-cost short-haul, regional airline. Since that time, WestJetters have provided their input and voted overwhelmingly in favour of the strategy. "With resounding support from WestJetters, the leadership team and the board have made the decision to move ahead with plans to launch a new low-cost regional airline that will replicate our success in stimulating demand by bringing low fares to many new communities," commented Gregg Saretsky. "This is an exciting time for WestJet as we embark on the next phase of our evolution and introduce our friendly and caring service to more markets across North America." 

Operating highlights (stated in Canadian dollars)

*Financial information has been restated in accordance with International Financial Reporting Standards (IFRS).
**Refer to reconciliations in the accompanying tables for further information regarding calculations.

Today, WestJet also announced that the Toronto Stock Exchange has accepted the airline's notice to make a normal course issuer bid for five per cent of the currently issued and outstanding shares. The airline also declared an increase to its quarterly dividend from $0.05 to $0.06. "We successfully completed our previous bid in August 2011, and believe that continuing the share buy-back program and increasing the quarterly dividend demonstrates the robustness of our business model and commitment to return value to our shareholders," added Gregg Saretsky.

In the fourth quarter of 2011, WestJet launched a code-share arrangement with Japan Airlines and entered into two additional interline relationships. There were a total of 13 new airline partnerships introduced in 2011; three new code-share agreements and ten interline relationships. This pace is expected to continue as the airline anticipates launching another three to four code-shares and several interline relationships in 2012. In January 2012, Delta Air Lines, the world's second largest airline, was welcomed as WestJet's fifth code-share partner, expanding on the interline relationship that was introduced in early 2011.

WestJet is focused on continuing to improve the value it provides business travellers. In 2011, the airline launched an initiative with unique service offerings on its expanded daily service between Toronto and Montreal and between Toronto and Ottawa. WestJet also successfully bid on landing slots at New York's LaGuardia airport in November 2011, and plans to introduce service in June 2012. "Connecting this key business market directly to the WestJet network, in conjunction with a growing list of airline partnerships and a maturing frequent guest program, are helping expand our penetration into the higher yielding corporate travel segment," noted Gregg Saretsky.

The airline anticipates that its full-year 2012 CASM, excluding fuel and employee profit share, will be flat to up one per cent year over year.  For the first quarter of 2012, WestJet expects fuel costs, excluding hedging, to range between $0.93 and $0.95 per litre. This represents a nine to 12 per cent increase compared to the first quarter of 2011, and a 37 to 40 per cent increase versus 2010.

"We continue to expand our reach and grow profitably thanks to the teamwork of over 8,600 WestJetters and their commitment to the success of our airline," added Gregg Saretsky. "Our forward bookings remain healthy as we have not seen any negative impact despite the ongoing broader economic uncertainty." WestJet anticipates modest year-over-year RASM growth for the first quarter of 2012.

Dividend declaration
WestJet's Board of Directors declared a cash dividend of $0.06 per common voting share and variable voting share for the first quarter of 2012, to be paid on March 30, 2012, to shareholders of record on March 14, 2012. All dividends paid by WestJet are, pursuant to subsection 89(14) of the Income Tax Act, designated as eligible dividends, unless indicated otherwise. An eligible dividend paid to a Canadian resident is entitled to the enhanced dividend tax credit.

Caution regarding forward-looking statements
Certain information set forth in this news release, including, without limitation, the information regarding the launch of a new short-haul regional airline, WestJet's partnership growth strategy, plans to introduce service to LaGuardia, RASM growth in the first quarter of 2012, our forward bookings and demand for air travel, fuel costs in the first quarter of 2012, 2012 CASM, excluding fuel and employee profit share, and our future profitability, is forward-looking information within the meaning of applicable Canadian securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond WestJet's control. The forward-looking information contained in this news release is based on WestJet's current budget, forecasts and strategy, our fleet plan, realized jet fuel prices for January 2012 and forward-curve prices for February and March 2012, the expected exchange rate of the Canadian dollar to the U.S. dollar in the first quarter of 2012, along with available implementation plans, agreements and bookings, but may vary due to factors including, but not limited to, changes in consumer demand, changes in fuel prices, delays in aircraft delivery, changes in guest demand, general economic conditions, competitive environment, ability to effectively implement and maintain critical systems and other factors and risks described in WestJet's public reports and filings which are available under WestJet's profile at www.sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking statements as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.

This news release contains disclosure respecting non-IFRS performance measures including, without limitation, and CASM, excluding fuel and employee profit share and operating cash flow per share. These measures are included to enhance overall understanding of WestJet's current financial performance and to provide an alternative method for assessing WestJet's operating results in a manner that is focused on the performance of WestJet's ongoing operations, and to provide a more consistent basis for comparison between quarters. These measures are not calculated in accordance with, or an alternative to, IFRS and do not have standardized meanings. Therefore, they may not be comparable to similar measures provided by other entities. Readers are urged to review the section entitled "Reconciliation of non-IFRS measures" in WestJet's management's discussion and analysis of financial results for the year ended December 31, 2011, which is available under WestJet's profile on SEDAR at www.sedar.com, for a further discussion of such non-IFRS measures and a reconciliation of such measures to IFRS.

Management's discussion and analysis of financial results and consolidated financial statements and notes for the year ended December 31, 2011, are available through the Internet in the Media and Investor Relations section of www.westjet.com or under WestJet's SEDAR profile at www.sedar.com.

Analyst conference call
WestJet will hold its quarterly analysts' conference call today, February 8, 2012, at 9 a.m. MST (11 a.m. EST). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Vito Culmone will discuss WestJet's 2011 fourth quarter and year-end results and answer questions from financial analysts and members of the media. The conference call will be available in Toronto by calling 416-915-3239, in Vancouver by calling 604-638-5340 and across Canada and the United States through the toll-free telephone number 1-800-319-4610. The call can also be heard live through an Internet webcast accessible via the Media and Investor Relations section of www.westjet.com.

About WestJet
WestJet is Canada's favourite airline, offering scheduled service throughout its 76-city North American and Caribbean network. Inducted into Canada's Most Admired Corporate Cultures Hall of Fame and named one of Canada's best employers, WestJet pioneered low-cost flying in Canada. WestJet offers increased legroom and leather seats on its modern fleet of 97 Boeing Next-Generation 737 aircraft. With future confirmed deliveries for an additional 38 aircraft through 2018, WestJet strives to be one of the five most successful international airlines in the world.

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Consolidated Statement of Earnings
(Stated in thousands of Canadian dollars, except share and per share amounts)
(Unaudited)

Consolidated Statement of Financial Position 
(Stated in thousands of Canadian dollars)
(Unaudited)

Consolidated Statement of Cash Flows 
(Stated in thousands of Canadian dollars)
(Unaudited)

CASM, excluding fuel and employee profit share
(Stated in thousands of Canadian dollars, except per unit amounts)
(Unaudited)

WestJet excludes the effects of aircraft fuel expense and employee profit share expense to assess the operating performance of the business. Fuel expense is excluded from operating results due to the fact that fuel prices are impacted by a host of factors outside WestJet's control, such as significant weather events, geopolitical tensions, refinery capacity and global demand and supply. Excluding this expense allows WestJet to analyze its operating results on a comparable basis. Employee profit share expense is excluded from operating results due to its variable nature and excluding this expense allows greater comparability.

Operating cash flow per share
(Stated in thousands of Canadian dollars, except per share amounts)
(Unaudited)

Cash flow from operations divided by the diluted weighted average number of shares outstanding.