WestJet shares reach two-year high point

Quar­terly load num­bers a record

Calgary Herald - - CITY -

Shares of WestJet Air­lines hit a more than two-year high af­ter the Calgary-based air­line re­ported the high­est quar­terly load fac­tor in its 21-year his­tory.

The shares peaked at $27.77, the high­est level since June 2015. They closed at $27.64, up 1.1 per cent in Thurs­day trad­ing on the Toronto Stock Ex­change.

WestJet said its planes were 85.7 per cent full in the July to Septem­ber months. For Septem­ber, the load fac­tor was 80.4 per cent as traf­fic in­creased 5.9 per cent from a year ago on a 5.3 per cent growth in avail­able seats.

In the third quar­ter, the air­line flew a record 6.5 mil­lion guests, up 10.7 per cent or 630,000 pas­sen­gers from a year ago.

Sev­eral industry an­a­lysts raised their tar­get price for WestJet shares on an­tic­i­pa­tion of strong re­sults when the air­line re­ports its re­sults Oct. 31.

“The Septem­ber traf­fic num­bers again con­firm the im­prov­ing fun­da­men­tals in the air travel mar­ket, though the quar­ter is im­pacted by hur­ri­canes and in­creased com­pe­ti­tion south of the bor­der,” said Doug Tay­lor of Canac­cord Ge­nu­ity.

Cameron Do­erk­sen of Na­tional Bank Fi­nan­cial said he ex­pects strong earn­ings to con­tinue into the fourth-quar­ter and next year, but has longer-term con­cerns for the air­line.

He said the air­line could strug­gle jug­gling next year’s planned launch of a new ul­tra low-cost car­rier to be called Swoop, ma­jor in­ter­na­tional ex­pan­sion us­ing large air­craft and on­go­ing growth of its core op­er­a­tions.

“We are con­cerned the air­line has too many new strate­gic ini­tia­tives un­der­way si­mul­ta­ne­ously, which could im­pair suc­cess­ful ex­e­cu­tion,” he wrote in a re­port.

Cash flows will be con­strained in the com­ing years as it takes de­liv­er­ies of new Boe­ing 737 Max and wide-body 787s.

And Do­erk­sen said he’s skep­ti­cal Swoop, which will start next sum­mer with six planes, will can­ni­bal­ize some of WestJet’s ex­ist­ing cus­tomers.

The an­a­lyst also said union­iza­tion ef­forts by pi­lots could re­sult in higher labour costs.

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