Have you looked at WestJet’s performance this year? You should. The stock’s up 22 per cent since January.
An airline? Performing well? Yes. Really.
Keep in mind that in the airline world, ‘well’ is a relative term. But on the whole, WestJet has proven itself. On Tuesday the company reported first-quarter earnings of 49 cents per share, much higher than the 34 cents in the same period last year. Yields were up, as were total loads.
Looking big picture, WestJet surely isn’t glowing the way that real estate investment trusts are. Its pre-recession peak was $23 per share and it currently trades at $14.40. However, it’s almost back to where it was last spring when the S&P/TSX composite index peaked north of 14,200, and analysts are saying good things.
How’d WestJet do it? Much of the success comes down to competent management, led by Gregg Saretsky, who took over as chief executive officer in 2010. Under his watch, WestJet has targeted a few key strategies, as pointed out by Raymond James analyst Ben Cherniavsky: pursuing business travellers and expanding in the ‘Eastern Triangle’ of Toronto, Ottawa and Montreal, code-sharing agreements -- and as trivial as it sounds -- instituting additional bag fees.
The airline has also seen a lot of success in its WestJet vacations division, which the company said boosted its first-quarter results.
“Although we stop short of providing a broad and ringing endorsement of everything that WestJet has been doing over the past year,” Mr. Cherniavsky wrote in 2011, “what can be said at this point with a high degree of conviction is that we feel much more comfortable about who is now in charge of the key decisions at the airline.” He reiterated this confidence after the most recent first-quarter earnings.
However, analysts do acknowledge headwinds, particularly rising fuel prices and growing industry capacity, both of which can’t be ignored. Not for one second. But so far, WestJet is proving itself, and it has plans to grow through initiatives such as plans for a short-haul airline.
Dare we say WestJet has wind beneath its wings? (Pun definitely intended.)