WestJet stock dives after posting first quarterly loss in 13 years
WestJet Airlines Ltd. reported its first quarterly profit loss in 13 years on Tuesday following a turbulent second quarter that saw the airline narrowly avoid a pilots’ strike, but absorbed soaring jet fuel prices.
“Our 2018 results are off track from the path to our 2020 targets and we are now operating in a very different fuel and competitive environment against earlier assumptions,” WestJet’s chief executive Ed Sims told analysts on a conference call on Tuesday. “To maximize our returns for this challenging period, we are taking action to improve interim results while also re-evaluating the pace and implementation of our strategic initiatives.”
The Calgary-based airline reported a loss of $20.8 million, or 18 cents per diluted share, in the three-month period ending June 30, down from a $48.6-million profit, or 41 cent per diluted share, during the same time in 2017. Although the results were slightly better than analysts had anticipated, the loss drove WestJet’s stock down as much as 10 per cent on Tuesday. The share price closed at $18.32, down 8.17 per cent.
The threat of WestJet’s pilots going on strike in late May led to the company losing “tens of millions of dollars” in revenue due to cancellations and passengers turning elsewhere to book flights, Sims told analysts. The pain of the labour issues is also expected to affect bookings in the third quarter, he said.
Jet fuel prices in the second quarter rose nearly 31 per cent from a year earlier, putting pressure on WestJet’s operating expenses. It said it expects fuel costs to rise by 35 and 38 per cent in the third quarter, compared to the same time last year.
Oversupply in the domestic market has offset strong passenger demand.