WESTJET AIRLINES $22.29 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 132.3 million; Market cap: $2.9 billion; Divd. yield: 1.8%) serves 81 destinations in North America, Central America and the Caribbean. Its fleet of 100 modern Boeing 737s are 30% more fuel efficient than older jets. WestJet plans to take delivery of 35 more 737s through 2018.
In the three months ended December 31, 2012, the company’s revenue rose 10.1%, to $860.6 million from $781.5 million a year earlier. Demand for its flights remains high. Earnings per share rose 76.9%, to $0.46 from $0.26. WestJet has also raised its quarterly dividend by 25%, to $0.10 from $0.08. The shares now yield 1.9%.
WestJet continues to add ticketing and baggage-transfer alliances with other airlines, including Cathay Pacific, British Airways, Delta Airlines and American Airlines. This lets it reach new markets while limiting its risk. WestJet has also invested heavily in a state-of-the-art computer reservation system.
Non-union workforce is a huge hidden asset
WestJet has a hidden asset in its non-union workforce, which helps keep its costs down. Many flyers also find that its service is friendlier than unionized airlines. As well, most of its workers are shareholders.
The company is now extending its low-cost, non-union model into its new short-haul Canadian regional airline, WestJet Encore, which it aims to start up in June 2013. Its main competition, unionized Air Canada, is subject to periodic strikes that devastate passenger confidence.
Newly re-elected President Obama’s pro-union stance could also help WestJet. U.S. airlines are heavily unionized, and any strengthening of unions would add to their costs. That would give WestJet an opportunity to undercut them (continued at top of page 18)
and attract price-conscious flyers. Its flights now link 70 U.S. destinations with 31 Canadian cities.
As well, the company is considering adding international routes and has begun talks with Boeing and rival Airbus SAS about buying jets that could fly further than its 737s. WestJet will proceed cautiously, but its cost advantages bode well for its success.
WestJet is up 58.1% since we made it our #1 pick in 2011 (see the column on page 17). But we still think it has lots of room to rise.
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Privacy Policy and Terms of Use
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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