Westjet
WestJet Strategic Audit
by:
Tanya Witherington #3136712
Abdullah Saleh #3157594
Tyler Ethridge #3084252
Natasha King #265841
Yao Yao #3111635
Jaiqi Lu #
BA 4101 March 21, 2005.
Daniel Doiron UNBSJ West Jet
I. Current Situation
A. Current Performance
• WestJet owned 28% of the domestic air market share in 2004 vs. 25% in 2003. • For the year ended December 31, 2004, un-audited Revenue was $1.06 billion up by $196.4 million over 2003’s revenue of $863.6 million. However, the airline reported a Net Loss of $17.2 million, down from Net Earnings of $60.5 million in 2003. • In 2004, West Jet’s share prices fell 35% in value, due to record high fuel prices as well as charges of corporate espionage (Verberg, 2004). • WestJet flies to 33 North American cities, as well as 8 international countries. • Employs over 4,500 people who are non-unionized. • As of December 31, 2003, WestJet’s Cost per Available Seat Mile (CASM) was 11.07 cents vs. Air Canada’s 16.87 per CASM • The company has elected to replace its fleet of 737-200 aircraft with state-of the art 737-700. By December, 2005, the company will operate 55 state-of-the-art 737s. o This replacement cost caused the company to incur a $47.6 million dollar write-down in assets in 2004. o 2004 Q4 net loss of $46.3 million compared with 2003 Q4 net earnings of $12.8 million. • Ranked the third most respected corporation in Canada in Ipsos-Reid’s 2004 survey. • UPDATE: Due to collapse of Jetsgo: o In March 2005, WestJet stock increased from $9.36 to $16.14 per share – almost double the value in one week (March 17, 2005: TSX online). o To accommodate the increased market demand, WestJet plans to boost capacity by 35 per cent this year and delay the retirement of 18 older airplanes to meet demand.
by:
Tanya Witherington #3136712
Abdullah Saleh #3157594
Tyler Ethridge #3084252
Natasha King #265841
Yao Yao #3111635
Jaiqi Lu #
BA 4101 March 21, 2005.
Daniel Doiron UNBSJ West Jet
I. Current Situation
A. Current Performance
• WestJet owned 28% of the domestic air market share in 2004 vs. 25% in 2003. • For the year ended December 31, 2004, un-audited Revenue was $1.06 billion up by $196.4 million over 2003’s revenue of $863.6 million. However, the airline reported a Net Loss of $17.2 million, down from Net Earnings of $60.5 million in 2003. • In 2004, West Jet’s share prices fell 35% in value, due to record high fuel prices as well as charges of corporate espionage (Verberg, 2004). • WestJet flies to 33 North American cities, as well as 8 international countries. • Employs over 4,500 people who are non-unionized. • As of December 31, 2003, WestJet’s Cost per Available Seat Mile (CASM) was 11.07 cents vs. Air Canada’s 16.87 per CASM • The company has elected to replace its fleet of 737-200 aircraft with state-of the art 737-700. By December, 2005, the company will operate 55 state-of-the-art 737s. o This replacement cost caused the company to incur a $47.6 million dollar write-down in assets in 2004. o 2004 Q4 net loss of $46.3 million compared with 2003 Q4 net earnings of $12.8 million. • Ranked the third most respected corporation in Canada in Ipsos-Reid’s 2004 survey. • UPDATE: Due to collapse of Jetsgo: o In March 2005, WestJet stock increased from $9.36 to $16.14 per share – almost double the value in one week (March 17, 2005: TSX online). o To accommodate the increased market demand, WestJet plans to boost capacity by 35 per cent this year and delay the retirement of 18 older airplanes to meet demand.
References: Calvin, Leung (2005). Le Chateau and WestJet. Canadian Business, Vol. 78 (3), 1-2. Retrieved February 28, 2005 from Buisness Source Premier Database on UNBSJ Library website. Toronto Stock Exchange (2005). www.tsx.com Verberg, P WestJet (2005). www.WestJet.com 1 2. 2003 Annual Report 3 4. 2003 Annual Information Form (AIF) ABDULLAH’s references TSX SYMBOL: WJA JUNE 2, 2003 - 09:15 ET