2010 RBC Transportation and Industrials Conference December 1, 2010 - - PowerPoint PPT Presentation

2010 RBC Transportation and Industrials Conference

December 1, 2010

FORWARD-LOOKING STATEMENT

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Certain information in this presentation and oral statements made during this presentation, including any question and answer session, may contain forward-looking statements, including but not limited to our strategy, partnerships, business fare products, our rewards program including our credit card and frequent guest program, growth drivers and expansion plans for WestJet and WestJet Vacations Inc. (WVI), capacity growth and fleet expansion, fleet and cost efficiencies, hedging activities and risk management. These forward-looking statements are subject to, and may be affected by, numerous risks and uncertainties which may cause WestJet’s actual results may differ materially from a conclusion, forecast or projection expressed in or implied by such statements. Material risks and the material factors and assumptions applied in formulating these, and the material factors that could cause actual results to differ from the forward-looking statements, are discussed in our public reports and filings which are available under WestJet’s profile on SEDAR (www.sedar.com) and include, but are not limited to: changes in government policy, exchange rates, interest rates, disruption of supplies, volatility of fuel prices, terrorism, general economic conditions, the competitive environment and other factors. Forward-looking statements are subject to change and WestJet does not undertake to update or revise any forward-looking information as a result of any new information, future events or otherwise, except as required by applicable law.

December 1, 2010

WHAT MAKES WESTJET DIFFERENT?

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• Consistently one of the most

profitable airlines in North America

• One of Canada’s most admired

corporate cultures

• Provides a world-class guest

experience

• Having fleet flexibility and

seasonal deployment strategy

• Scheduled service and

vacation packages

• Consistently one of the lowest-

cost operators in North America

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By 2016, WestJet will be one of the five most successful international airlines in the world

Costs and Margins People and Culture Revenue and Growth Guest Experience and Performance

WestJet Vacations Business traveller Rewards program Single fleet type Cost efficiency Risk management

STRATEGY - Working since day one

Building on our capabilities

BUSINESS TRAVELLER Building strength in this high-yield market

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Opening the world up to our guests:

• Providing the business traveller with

international travel options

• Incremental revenue opportunities
• Select strategic carriers in each major world

region

• Continue implementing new partnerships

throughout 2011

Airline partnerships

Many items that we may choose to bundle together but yet to be determined:

• Refundable tickets
• Pre-reserved seating
• Waive change and cancel fees
• Ability to early show
• Buy-on-board
• Lounge access
• Other new initiatives

Business Fare Products

Appeals to the mass market:

• Fully accretive to WestJet
• Strong partnership with RBC for awareness
• Simple and transparent
• Two types of cards; different earning power
• Uptake is in-line with expectations

REWARDS PROGRAM Straight to the bottom line

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Credit card

Appeals to the high frequency traveller:

• Simple and transparent program
• Targeted at the traveller doing four to 40

trips per year

• Aims to capture additional high-yielding

guests

• Uptake is in-line with expectations

Frequent Guest Program

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• Capacity-share calculation based on data from IATA-SRS.
• Mexico / Caribbean capacity share does not include charters.
• Growing brand strength
• Guest experience
• Culture
• WestJet Vacations
• Rewards program
• Airline partnerships
• New destinations
• New non-stops
• Increased frequencies

5 10 15 20 25 30 35 40 45 50

2 4 2 5 2 6 2 7 2 8 2 9 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 M a r k e t S h a r e ( % ) Domestic Transborder International

MARKET SHARE GROWTH DRIVERS Currently serving a portion of addressable market

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• One of the fastest growing vacation
• perators in Canada
• Large market opportunity available to

capture

• Integrated approach with WestJet taps

multiple demand streams

• Competitive advantage with flexible

product combinations and scheduled service to all destinations allowing more booking options

WESTJET VACATIONS Leveraging our strengths in a new marketplace

Estimated leisure market size in Canada

$5.0 $5.0 $10.9

5 10 15 20 25 Outbound Domestic Market Size

$ b n

ITC Market FIT Market Leisure Retail Market

WestJet Vacations addressable market segments are ITC and FIT Outside of current scope; might be able to capture a small percentage of this segment

Source: internal estimates FIT – Flexible itinerary travel ITC – Inclusive

5000 10000 15000 20000 25000 30000 35000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 A S M s ( m i l l i

• n

s ) 106 Aircraft 135 Aircraft

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18% 3% 10 - 11%

Leased 24 33 38 43 44 44 44 44 44 44 Owned 52 53 53 54 58 64 70 80 88 91 Total confirmed fleet 76 86 91 97 102 108 114 124 132 135 Net change in aircraft

• 10

5 6 5 6 6 10 8 3 Lease expiries

• 3
• 12

8 6

MEASURED CAPACITY GROWTH Flexible fleet expansion until 2017

Compounded average annual growth rate: Min ~4%, Max ~ 7%

Becoming one of the lowest-cost carriers in North America

A single fleet and single class of service:

• Simplifies operations
• Enhances operational productivity
• Offers an operating cost advantage
• Provides more consistent guest experience

SINGLE FLEET – BOEING NG 737 Keeping efficiency high

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Cost efficiencies have led to low break-even load factor

• Cost efficiencies are driven by:
• High utilization of aircraft
• High employee productivity
• Single-fleet efficiencies
• Ownership culture
• Disciplined focus on expenditures

COST EFFICIENCY Removing costs where possible

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Source: Internal estimates, company reports

60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% Southwest WestJet JetBlue American US Airways Air Tran Alaska Air Canada Delta United Allegiant

YTD Q3 2010 Load Factor YTD Q3 2010 Break-even Load Factor

RISK MANAGEMENT Protecting against external volatility

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• Fuel price volatility
• fuel is approximately 20% hedged for next 12 months
• combination of CAD$ WTI and USGC JET swaps, collars and call options
• CAD$ is partially a natural hedge against WTI
• Foreign exchange volatility
• Aircraft debt repayments fixed in CAD$ for term of debt
• Next 12 month aircraft US$ leasing costs approximately 90% hedged into

CAD$

Interest rate volatility

• Long-term aircraft debt has fixed interest rates averaging 5.3%

We have the financial strength to put our strategy into action

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8.7 8.7 8.9 8.5 8.5 8.5 3.3 3.4 3.5 4.7 3.2 3.5 0.9 1.9 2.2 1.7 1.2 1.2 2 4 6 8 10 12 14 16 2005 2006 2007 2008 2009 9M 2010

(cents per ASM)

CASM (ex fuel) Fuel

• Op. Margin
• Excludes reservation system impairment of $31.9 million in 2007

YTD Q3 2010 FY 2009 3 yr Avg. 2007- 2009 5 yr Avg. 2005- 2009 RASM (cents) 13.20 12.97 14.16 13.87 CASM (cents) 12.04 11.77 12.43 12.29 Operating Margin 8.8% 9.2% 11.6% 11.0% Earnings Before Tax Margin 11.1% 6.0% 9.0% 7.9% Return on Invested Capital (TTM) 8.1% 7.8% 11.6% 11.0%

PROFITABLE 54 OF 56 QUARTERS

Some of the best margins in the industry

FINANCIAL HIGHLIGHTS

Among top performer in North American airline industry

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* 2010 revenue estimates per CIBC Nov 3, 2010 Institutional Equity Research Earnings Update report. 2005 to 2008 numbers restated.

Q3 YTD 2010

Operating Margin 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% Allegiant Alaska JetBlue WestJet Southwest Delta US Airways United Continental Air Tran Air Canada American

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10* Revenue (m illions)

FINANCIAL SECURITY Cash grows while net debt shrinks

18 200 400 600 800 1000 1200 1400 2005 2006 2007 2008 2009 Q3 2010 $ millions 1 2 3 4 5 6 times Cash

• Adj. net Debt/EBITDAR
• Adj. Debt/Equity

Note: All figures are full-year figures, except for 2010 data. Debt ratios include aircraft operating leases.

At September 30, 2010:

• Cash of C$1,218 million
• Cash to trailing 12 months of revenues

ratio of 49%

• Current ratio of 1.50x
• Adjusted debt to equity ratio of 1.38x
• Adjusted net debt to EBITDAR of 1.81x

Dividend & NCIB Returning Capital to Shareholders

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Initiated a quarterly dividend

• $0.05 per share for 1st quarterly payout
• S/H on record at Dec 15, 2010, paid out Jan 21, 2011
• Track record - consistent generation of positive Cash Flow

NCIB / Share buy-back

• TSX approved 7,264,820 shares or ~ 5%
• Program to run from Nov 5, 2010 to Nov 4, 2011
• Purchase on open market and cancel

Other Items

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• IFRS conversion Jan 1, 2011
• Guidance:

– Q4 2010:

• ASM growth of 13 - 14%
• CASM (ex-fuel and profit share) flat

– FY 2011:

• ASM growth of 6 - 8%
• Capex of $110 – 130 million

WE ARE READY TO TAKE OFF

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• We continue to be among top tier in earnings margins in the industry
• We are a well-positioned, low-cost and efficient carrier
• We have a very strong culture and highly engaged workforce
• We have a strong brand in the market place
• We have a highly attractive combination of planned growth and strong

balance sheet

• We have an attractive valuation relative to peer group

For further information: Ryan Puffalt Analyst, Investor Relations P: (403) 539-7159 E: rpuffalt@westjet.com W: www.westjet.com