CALGARY - WestJet (
TSX:WJA,
Forum) reported record earnings Tuesday in its second quarter, propelled by falling fuel costs and a rising number of passengers.
Gregg Saretsky, the CEO of the Calgary-based airline, said he expects the company's discounted rates and updated WestJet Plus fares for its premium economy class to drive similarly strong results in the second half of the year, despite a stumbling Canadian economy.
“We're making a lot of Canadians happy and we're filling up a lot of planes,” he said in a conference call with analysts and investors.
WestJet earned a second-quarter profit of $61.6 million, up from $51.8 million in the same period last year. Revenue improved to $942.0 million, up from $930.3 million last year.
Earlier this year, WestJet said it would add the Boeing (
NYSE:BA,
Forum) 767 to its fleet of aircraft, with an eye to using the larger passenger jets on some of its longer flights.
The new planes will feature an Economy Plus class, a cheaper alternative to business class that still gives travellers more room and extra amenities, WestJet said.
“We're taking advantage of what we're seeing in corporate Canada with corporate travel policies changing and companies not permitting their flyers on segments under five hours to buy business class fares,” Saretsky said.
The quarterly results come as WestJet pilots are in the midst of a vote to decide if they'll form the airline's first union. The WestJet Professional Pilots Association is pushing to unionize the company's roughly 1,300 pilots, with voting until Aug. 5.
Saretsky said he doesn't believe the company's relationship with its workforce will change, regardless of what happens.
“We've enjoyed very good labour relations with our employees over 19 years,” he said. “I don't expect that changes.”
The WestJet Professional Flight Attendants Association also wants to have the airline's approximately 2,700 flight attendants unionized, but they are still working to have a majority of members sign up before a vote can be held.
The company also said Tuesday that it is rolling out a new in-flight entertainment system, offering TV shows, movies and wireless Internet access to passengers who download a company app on their personal smartphones or tablets.
In its quarterly report, capacity was up 7.5 per cent compared with a year ago, while revenue passenger miles were up 5.5 per cent.
Cost per available seat mile for the airline improved to 12.65 cents, down from 13.76 cents a year ago. But revenue per available seat mile slipped to 14.16 cents compared with 15.02 cents in the same quarter last year.
Saretsky also said the company intends to complete its search for a chief financial officer by the end of the next quarter, with interim CFO Candice Li one of the candidates for the position.
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KUALA LUMPUR, Malaysia - Long-haul budget carrier AirAsia X (
GREY:AIABF,
Forum) said Tuesday it expects to return to operational profit by the end of the year and is open to foreign investment.
AirAsia X has suffered losses in the past two years and its share price has plunged to near record lows at around 0.20 ringgit (5 cents), far below its IPO price of 1.25 ringgit (33 cents).
Acting Chief Executive Benyamin Ismail blamed losses on “irrational competition” by national carrier Malaysia Airlines, which had previously offered cheap fares to fill up seats. But the flag carrier has now cut capacity as part of an overhaul, which will benefit AirAsia X, he said.
Malaysia-based AirAsia X has cut loss-making routes to Adelaide, Australia and Nagoya and Narita in Japan and plans new destinations such as Sapporo in October and Honolulu in November, he said.
“The only reason we are suffering in the last 1.5 to 2 years is because of irrational competition. We cannot compare with airlines that offer fares below cost,” Benyamin said. “In the second half, the numbers will be better. We are on track on our revamped business plan.”
He said it was important for the carrier to conserve cash and focus on routes that could make money,
Asked about reports that two foreign airlines were keen to take a stake in the company, he said AirAsia X is “open to investment.”
“If the price is right, we will look at it. We have not found any new partner to team up with but we are not ruling it out,” he said.
AirAsia X, launched in late 2007, flies to 14 countries in Asia, Australia and the Middle East.
Some analysts are pessimistic about the airline's prospects. CIMB Research recently predicted losses for AirAsia X this year and next, citing a more challenging outlook and continuing drain on its cash.
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DUBAI, United Arab Emirates - The Middle East's biggest sea port is growing.
Dubai port operator DP World (
GREY:DPWRF,
Forum) said on Tuesday it is beginning a $1.6 billion expansion of the Gulf commercial hub's sprawling Jebel Ali port.
The expansion will add a fourth container terminal to the port on a reclaimed island north of one of its existing container terminals. The first phase of the project will be able to handle the equivalent of 3.1 million standard 20-foot shipping containers annually by 2018, boosting capacity by 16 per cent.
Jebel Ali is the centerpiece of government-backed DP World's network of more than 65 marine terminals around the world.
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ATLANTA - Overseas business helped UPS (
NYSE:UPS,
Forum) during its second quarter, as did the absence of a hefty charge recorded a year ago.
The package-delivery company earned $1.23 billion, or $1.35 per share, for the three months ended June 30. A year earlier it earned $454 million, or 49 cents per share.
Last year's quarter included a $665 million charge for the transfer of some post-retirement liabilities to defined-contribution health care plans.
The results topped Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of $1.26 per share.
The Atlanta company's revenue slipped $14.1 billion from $14.27 billion, hindered by lower fuel surcharges and foreign currency fluctuations.
Six analysts surveyed by Zacks expected higher revenue of $14.49 billion.
Total shipments climbed 2.1 per cent to 1.1 billion packages. UPS daily export shipments rose 5.5 per cent, mostly due to an 8.5 per cent increase in intra-Europe shipments.
United Parcel Service Inc. maintained its full-year forecast for earnings in a range of $5.05 to $5.30. Analysts surveyed by FactSet expect $5.19 per share.