Today, we look at one of Canada’s most intriguing value stocks. In the highly competitive airline market, WestJet has created a niche of its own, based in part on a company culture in which most employees are shareholders and passengers praise its friendlier service. Lower fuel costs brought about by the decline in oil prices works in WestJet’s favour as well. We look at the prospects for a stock that has a long record of profitability and a dividend that appears secure.

WESTJET AIRLINES (Toronto symbol WJA; www.westjet.com) serves 93 destinations in North America, Central America, the Caribbean and Europe. Its fleet of 107 modern Boeing 737s are 30% more fuel efficient than older jets.

In June 2013, the company launched WestJet Encore, its Canadian regional airline. This business now operates 22 Bombardier Q400 NextGen turboprop planes, which seat 78 passengers.

The Canadian airline market remains highly competitive, especially with Air Canada expanding its Rouge budget airline to serve more leisure destinations in Europe, the Caribbean, Mexico and the U.S.

However, WestJet recently took delivery of its first Boeing 767 wide-body aircraft and says the plane will begin flights between Alberta and Hawaii and between Toronto and Jamaica in December 2015.

WestJet has ordered three more 767s for delivery later this year. The bigger planes will offer greater range than the company’s current fleet of Boeing 737s and let it compete with Air Canada on international routes.

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Value stocks: WestJet records 41st consecutive quarter of profitability

The company has a great hidden asset in its workforce, which continues to refrain from unionizing in favour of directly co-operating with management. Its pilots rejected unionization with a new agreement in December 2014.

And in June 2015 its almost 3,000 flight attendants voted 82% in favour of a five-year work agreement. The deal with the non-unionized Flight Attendant Association Board includes competitive wages, clearer work rules and a binding dispute mechanism.  The agreement ends a unionization drive the flight attendants began over a year ago.

That’s a plus, because many flyers find WestJet provides friendlier service than unionized airlines. The company also benefits from the fact that most of its employees are also shareholders.

Excluding one-time items, WestJet’s earnings per share jumped 26.8% in the three months ended June 30, 2015, to a record $0.52 from $0.41 a year earlier. This was the company’s 41st consecutive quarter of profitability. It continues to benefit as lower oil prices cut the cost of fuel, which typically accounts for a third of the airline’s operating costs. Revenue rose 1.3%, to $942.0 million from $930.3 million.

Earlier this year, WestJet raised its dividend by 16.6%. The $0.14 quarterly dividend yields 2.3%.

Recommendation in Stock Pickers Digest: BUY