Cowen Securities 6 th Annual Global Transportation Conference June - - PowerPoint PPT Presentation

Cowen Securities 6th Annual Global Transportation Conference June 11, 2013

CAUTION REGARDING FORWARD-LOOKING INFORMATION

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Certain statements set forth in this presentation and statements made during this presentation, including, without limitation, information respecting WestJet’s company-wide business transformation initiative, the future growth of the company, our fleet expansion and modernization plans, aircraft delivery positions, potential interline and code-share agreements and their expected benefits, the further development of our fare bundle selections, market expansion opportunities, the launch and

• peration of WestJet Encore and the communities it will serve and the guidance provided for the

second quarter of 2013 and the full year 2013 are forward-looking statements within the meaning of applicable Canadian securities laws. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond WestJet’s control. Readers are cautioned that undue reliance should not be placed

• n forward-looking statements as actual results may vary materially from the forward-looking

statements due to a number of factors including, without limitation, changes in consumer demand, energy prices, aircraft deliveries, general economic conditions, competitive environment, regulatory developments, environment factors, ability to effectively implement and maintain critical systems and

• ther factors and risks described in WestJet’s public reports and filings which are available under

WestJet’s profile at www.sedar.com. Any forward-looking statements contained in this presentation represent WestJet’s expectations as of the date of this presentation and are subject to change after such date. WestJet does not undertake to update, correct or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by law. June 2013

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WESTJET’S TRACK RECORD OF PROFITABILITY SINCE INCEPTION

Net Earnings (millions of dollars)

Reported in Canadian GAAP up to 2009 with 2005-2008 restatements. 2010 - 2012 reported under IFRS.

• 50

50 100 150 200 250 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

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WESTJET’S GOAL TO GENERATE 12% RETURN ON INVESTED CAPITAL

Return on Invested Capital*

Note: 2010-13 presented under IFRS; 2009 and prior presented under previous Canadian GAAP. * Based on trailing 12 month basis before tax .

Goal

14.3% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013

Sustainable goal

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WESTJET A PROFITABLE GROWTH STORY

Guests (thousands) Available Seat Miles (millions)

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 5,000 10,000 15,000 20,000 25,000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Revenues ($ millions)

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77

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GROWTH AND STRONG FINANCIAL PERFORMANCE CONTINUES

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OPERATING HIGHLIGHTS – Q1 2013

Record earnings reported in the first quarter 2013

• $91.1

$68.3 33.3%

• $0.68

$0.49 38.8%

• $967.2

$891.0 8.6%

• 16.03

15.66 2.4%

• 0.93

0.95 (2.1%) !"# " 8.94 8.95 (0.1%) Earnings before tax margin 13.0% 10.7% 2.3 pts

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First Quarter 2013 adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market hedge gains/losses)

FIRST QUARTER 2013 – ADJUSTED EBT MARGIN

WESTJET RANKS 3rd AMONG LEADING NORTH AMERICAN PEERS

18.5% 14.4% 13.0% 5.2% 2.1% 1.8% 1.6% 1.0% (2.1%) (3.8%) (7.4%)

• 10%
• 5%

0% 5% 10% 15% 20%

Allegiant Spirit WestJet Alaska Southwest JetBlue US Airways Delta American United Air Canada

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*IFRS basis

Excludes reservation system impairment of $31.9 million in 2007

COSTS REMAIN UNDER CONTROL

8.6 8.3 8.5 8.8 8.9 9.1 8.9 3.5 4.7 3.2 3.5 4.3 4.5 4.5 2.2 1.7 1.2 1.0 1.2 1.7 2.2

2 4 6 8 10 12 14 16 18 2007 2008 2009 2010 2011 2012 Q1 2013

cents per ASM

CASM (ex fuel and profit share) Profit Share Fuel

• Op. Margin

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• Target to reduce costs by $100 million over the next 36 months
• Undertake a longer term initiative to ensure our unit costs are competitive

with low cost North American airlines

Aircraft utilization and channel efficiency Productivity Non-Operational Expenses People

BUSINESS TRANSFORMATION INITIATIVE

Four key focus areas:

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• Selling 10 of our oldest Boeing 737-700s in 2014 & 2015
• Buying 10 new Boeing 737-800s in 2014-15
• Deferring delivery of five 737-700s from 2014-15, to 2016-17
• Transaction creates value:
• Lowers CASM by effectively adding incremental capacity
• Benefits associated with a younger fleet
• Accelerates our move towards more optimal fleet mix
• Allows new planes to be financed in a low interest rate environment
• Assists transition to our long-term in-flight entertainment connectivity

strategy once finalized

• Maintains Fleet flexibility

MODERNIZING OUR FLEET - CREATING VALUE

100 105 105 98 101 103 102 3 15 23 29 33 50 60 70 80 90 100 110 120 130 140 2012 2013 2014 2015 2016 2017 2018 737 Committed Fleet Cumulative Lease Extension Options

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MEASURED GROWTH - 737 FLEXIBLE FLEET PLAN INCLUDING MODERNIZING TRANSACTION

108 113 124 132 135

7 16 20 20 20 20 5 14 23 25 10 20 30 40 50 2013 2014 2015 2016 2017 2018 Q400 NextGen Committed Fleet Cumulative Purchase Options

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Q400 NEXTGEN FLEET PLAN ALSO BUILDS IN FLEXIBILITY

25 34 43 45

BUILDING ON OUR CAPABILITIES

• Strategically selecting carriers in each major world region
• Seamless access to more destinations
• International travel options for the business traveller
• Selective approach keeps costs in line

AIRLINE PARTNERSHIPS EXPANDING OUR NETWORK

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ENRICHING MORE LIVES ACROSS SEGMENTS

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20

PLUS FARE SEATING Reconfiguration was completed end of Q1 2013

119 95 136 112 166 150 24 24 24 50 70 90 110 130 150 170 737-600 Before 737-600 After 737-700 Before 737-700 After 737-800 Before 737-800 After Guest seats Economy Plus

119 136 174

OUR PLUS SEATING WITH EXTENDED LEGROOM

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WESTJET ENCORE

MARKET OPPORTUNITIES REGIONAL (50+ seats) = $2.1B – DOMESTIC + TRANSBORDER

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17 Destinations 59 Destinations 31 Destinations

AIR CANADA AND PARTNERS SERVE DOUBLE THE NUMBER OF CANADIAN DESTINATIONS VERSUS WESTJET

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WestJet Encore

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WESTJET ENCORE: SIGNIFICANT NETWORK POTENTIAL

YVR YCD YEG YXJ YYC YYJ YXE YQR YQU

Encore launch: 30 departs at 9 stations

Potential new stations Potential existing stations

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YBR

WESTJET ENCORE AT MATURITY

9 3:;%#%# 9 :;<= >?*7<@@" 9 %-

• 05
• Type of flying

Description New destinations Flights to/from new destinations not currently served by the WestJet network Join the dots Flights between existing destinations not currently flown by WestJet Schedule improvements Flights on some existing short-haul routes that benefit from increased frequency and higher load factors; B737 flying will be redeployed to maximize the network

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CRITICAL SUCCESS FACTORS REMAIN THE SAME FOR WESTJET ENCORE " 9 3"

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WE HAVE THE FINANCIAL STRENGTH TO PUT OUR STRATEGY INTO ACTION

29 *Note: 2010-13 presented under IFRS; 2009 and prior presented under previous Canadian GAAP. Note: All figures are full-year figures based on trailing twelve months. Debt ratios include aircraft operating leases.

CAPITAL STRUCTURE - EXCESS CASH HAS BEEN USED TO LOWER LONG TERM DEBT & BUY BACK STOCK

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G!'0H# At March 31, 2013 Net Cash C$1,365-mln "0012" 39% 34*56'7&0631 0.84 x

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RELATIVE LIQUIDITY & LEVERAGE RATIOS – March 31, 2013

8( 2

39%

0% 10% 20% 30% 40% 50%

Allegiant WestJet Spirit Alaska Southwest US Airways Air Canada JetBlue United Delta American Cash / LTM Revenue 0.84

2 4 6

Allegiant Alaska WestJet Southwest Spirit Delta Air Canada American US Airways JetBlue United

• Adj. Net Debt / EBITDAR

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RETURNING VALUE TO SHAREHOLDERS – Dividend & NCIB

9* 9* 9*+ 9*- 9*: 9*

• ,
• ,

+ +, 7E'D@ 7<'D@ 7D'DD 7A'DD 7E'DD 7<'DD 7D'DA 7A'DA 7E'DA 7<'DA 7D'DE

• I

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• Initiated a $0.05 quarterly dividend,

November 2010; increased to:

• $0.06 in February 2012
• $0.08 in August 2012
• $0.10 in February 2013

Normal Course Issuer Bid

• Completed first NCIB August 2011 for $106

million or $14.59 per share

• Completed second NCIB November 2012

for $112 million or $16.20 per share

• TSX approved up to 6.6 million share NCIB
• r ~5%, announced on February 14, 2013.

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GUIDANCE* ; <

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* Provided in conjunction with release of Q1 2013 results on May 7, 2013.

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• Earnings margins are consistently among the top tier in the industry
• Proven track record of profitable growth
• Award-winning culture and highly engaged workforce
• Strong brand in the marketplace and expanding airline partnerships
• Attractive combination of planned growth and a strong balance sheet
• Committed to generating and returning value to shareholders

SUMMARY – WHY INVEST IN WESTJET