New Presentation Deck - Airports Council International

Culture Matters
•A little about the airline industry
•WestJet – Taking a flying leap
•Our 5 secrets to success
•The next chapter
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Kargo
Kargo Kids
Kids
http://www.youtube.com/watch?v=M4SkoJy3D0M&feature=relmfu
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Over the past 60 years, airlines have rung
The
airline
industry
is oftough
up a
cumulative
net loss
$14 billion.
"If I'd been at Kitty Hawk in 1903 when Orville Wright took off, I would have been farsighted
enough, and public-spirited enough -- I owed this to future capitalists -- to shoot him down."
- Warren Buffet
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Canadian airline graveyard
30000 Island Air
Air Alliance (1988 - 99, to Air Nova)
Air Atlantic (1980s – 1998)
Air Baffin (1990-?) (now Air Nunavut)
Air BC (1980 - 2001, to Air Canada Jazz)
Air Canada Tango (2001 - 03)
Air Club International (1993 – 1996)
Air Dawson (-1997?)
Air Nova (1986 - 2001, to Air Canada Jazz)
Air Ontario (1987 - 2001, to Air Canada Jazz)
All Canada Express
Austin Airways (1934 - 87, to Air Ontario)
Baxter Aviation (1985 – 2007)
Canada 3000 (1988 - 2001, formerly C2000)
Canada West Air (1986 - 90)
Canada West Airlines (2002 - 04)
Canadian Airlines (1987 - 2001, to AC)
Canadian Airways (1923 - 29)
Canadian Colonial Airways (1929 - 42)
Canadian Pacific Air Lines (1942 - 87,
to Canadian)
Canadian Regional Airlines (1991 - 2001,
to Air Canada Jazz)
City Express (ceased operations 1991)
Colonial Airlines (1942 – 1956)
Eastern Provincial Airways (1949 - 87,
to Canadian)
Fortunair
Globemaster Air Cargo (2003 – 2004)
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Great Lakes Airlines (to Air Ontario)
Greyhound Air (1996 - 97)
Harmony Airways (2002 – 2007)
Ilford-Riverton Airways (1960 - 86)
Inter-Canadien (to Canadian)
Jetsgo (2002 - 05)
Knighthawk Air Express (1993 – 2004)
Lamb Air
Maestro (2006 – 2007)
Maritime Central Airways
Millardair (1962 - 90)
NAC Airways (2000 – 2008)
Nationair (1984 - 93)
Newfoundland Airways (1948-1983,
to Air Labrador)
Norcanair (1947 – 1987)
Nordair (1951 - 87)
NorOntair (1971 - 96)
North Canada Air (to Time Air)
NWT Air (1960 - 98)
Odyssey International (1988 – 1990)
Ontario Express (to Canadian)
Pacific Western Airlines (1946 - 87,
to Canadian)
Peace Air (1962 – 2007)
Pem Air (1970 - 2002)
Quebecair (1946 - 87)
Quebecair Express
Queen Charlotte Airlines
QuikAir (2001 - 06)
Regal Air (was ATAC.ca member)
Roots Air (2000 – 01)
Royal Aviation (1991 - 2001)
SkyService
Sonicblue Airways
(ceased operations 2006)
Southern Frontier Airlines
(to Time Air)
Time Air (1966 - 91, to Canadian)
Torontair (1961 - 99)
Transair
Trans-Canada Air Lines
(now Air Canada)
Trans-Provincial Airlines
Triton Airlines (1993 - 94)
Val Air (2003 - 04)
Vision Airways Corporation
(ceased operations 1994)
Vistajet (1997 - 97)
Wardair (1946 - 90, to Canadian)
Western Canada Airways (1926-30)
Westex Airlines
Wilderness Air LTD.
Winnport
Worldways Canada (1974 - 91)
World-Wide Airways (1947 - 66)
Zip (2002 - 04)
Zoom Airlines
78+
Thegood
bad idea…
The
idea…
Start an airline…
airline.
…but do it differently!
WestJet took to the skies Feb 29, 1996
with 200 people, three Boeing 737-200s,
and five destinations…
WestJet Route Map 1996
WestJet Route Map 2012
Airline Partnerships
Expanding our Network
• Partner carriers in each major world region
• Seamless access to more destinations
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WestJet - a paradigm shift
• A provider of choice
– Lower costs & a new way to price fares
• A unique culture of care
• The right language
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The right language
Guests vs. Passengers
Our vision drives our purpose
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Here’s how we frame our culture
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At the root of it all
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1.
We care to plan
Dedicated Departments
• Culture
– To ensure that our culture thrives and continues
to provide WestJetters with a sense of community
within the organization and a sense of pride in
association with WestJet
• CARE
– The execution arm of Culture
– Over 250 programs annually that celebrate the
culture
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2. We care to share
• Employee Share Purchase Plan
– Owners try harder
– Over 85% of WestJetters are shareholders
• Profit share
– Our people have earned more than $215M since the
inception of the program
– Twice yearly party where 10 percent of our profits are
divided among all WestJetters
– As the profits get bigger, so does their share of it!
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3. We care to really listen
• We listen to WestJetters
– Culture Connection, Tech Talks, Airport visits,
Adopt A Base
– Test ideas – uniforms, commercials, snacks on
planes
• We listen to guests
– Guest surveys, Advisory Boards
– Incorporation in to our decisions
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Speaking of listening
• WestJetters given
opportunity to
vote on whether
to launch regional
airline
• If it was no, it was
a “no-go”
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A case study – Regional airline
• Leadership ready to recommend to Board in Q4/’11
but wanted to ensure employee buy-in
• Entire strategic initiative put to employee vote
• 12 town halls in three cities
• 31 bases visited by executives in three weeks
• Presentations on board aircraft, at departure
lounges, in between flights
• Blog opened for 2-way dialogue
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So, what happened?
• Employees voted 91 per cent in favour of
launching new airline, with high employee
turn out
• Employees will now take part in a naming
contest for the new airline
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4. We care to design
• We design all of our experiences and
processes to
– Make sure our WestJetters can be proud and
successful
– Ensure our guests are truly getting value in
everything we do
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WestJet Rewards program
• WestJet dollars can be used just like cash
towards the purchase of WestJet flights or
WestJet Vacations packages
• Good on any date, to any destination, with no
blackout periods – even on seat sales
• Use your WestJet dollars right away or keep
them for up to five years
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5. We care to celebrate and have fun
•
•
•
•
Profit Share
Kudos
Birthday parties
New destination launches –
– Elvis on our first flight to Vegas
• Incorporating family –
– Dirty Bird Wash
• Fun is part of the fabric of our culture
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Momentum
http://www.youtube.com/watch?v=820bkTGeTIU
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WestJet – A Growth Story
Revenue (millions of dollars)
Available Seat Miles (millions)
25,000
3,500
3,000
20,000
2,500
15,000
2,000
1,500
10,000
1,000
5,000
500
0
'05
35
'06
'07
'08
'09
'10
'11
0
'05
'06
'07
'08
'09
'10
'11
OPERATING HIGHLIGHTS – Q1 2012
Record First Quarter Net Earnings - up 42%
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Q1 2012
Q1 2011
Change
Net earnings (millions)
$68.3
$48.2
41.6%
Diluted earnings per share
$0.49
$0.34
44.1%
Total revenues (millions)
$891.0
$772.4
15.3%
RASM (revenue per available seat mile)
(cents)
15.66
14.77
6.0%
Fuel costs per litre (dollars)
$0.95
$0.85
11.6%
CASM, excluding fuel and employee
profit share (cents)
8.95
8.91
0.4%
FIRST QUARTER 2012 – ADJUSTED EBT MARGIN
WESTJET RANKS 2nd AMONG LEADING NORTH AMERICAN PEERS
20%
15%
14.5 %
10.9 %
10%
4.5 %
5%
4.0 %
0%
(0.4)%
(0.7)%
(0.7)%
Southwest
US Airways
Delta
JetBlue
Alaska
WestJet
Allegiant
United continental
(3.3)%
-5%
First Quarter 2012 adjusted EBT Margin per reported results (adjusted for special items and non-op mark-to-market
hedge gains/losses)
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RELATIVE LIQUIDITY & LEVERAGE RATIOS - DECEMBER 31, 2011
50%
40%
Cash / LTM Revenue
Liquidity
40%
30%
26%
20%
18%
20%
15%
10%
10%
0%
WestJet
Alaska
Southwest
Air Canada
US Airways
5.76
Adj. Net Debt / EBITDAR
Leverage
6
38
3.91
4
3.37
1.92
2
0
Delta
1.28
1.39
Alaska
WestJet
Southwest
Delta
Air Canada
US Airways
CAPITAL STRUCTURE EXCESS CASH HAS BEEN USED TO
LOWER LONG TERM DEBT & BUY BACK STOCK
1600
6
1400
At March 31, 2012:
- Cash of C$1.4 Billion
- Cash to TTM of revenues ratio of 44%
- Adjusted net debt to EBITDAR of 1.13x
5
4
1000
800
3
600
times
$ millions
1200
Initiated a quarterly dividend in November 2010
- Increased to $0.06 from $0.05 in February 2012
2
400
1
200
0
0
2005
2006
2007
Cash
2008
2009
2010*
2011
Q1
2012
Normal Course Issuer Bid – Share Buy Back
- TSX approved 6,914,330 share bid or ~ 5%
Announced on February 8, 2012
Purchased 1,351,930 shares
- Completed a prior NCIB on August 9, 2011 for total
price of $106 million or $14.57 per share
Adj. net Debt/EBITDAR
*2010 and 2011 presented under IFRS. Note: All figures are full-year figures based on trailing twelve months. Debt ratios include aircraft
operating leases.
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WESTJET’S GOAL TO GENERATE 12% RETURN ON INVESTED CAPITAL
Return on Invested Capital
14%
13%
Goal
12%
11%
10%
9%
8%
7%
6%
5%
2005
2006
2007
2008
2009
2010
2011
Q1 2012
Note: 2010-2011 calculated under IFRS; 2009 & prior are calculated under Canadian GAAP
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WESTJET VACATIONS
LEVERAGING OUR STRENGTHS IN A NEW MARKETPLACE
• One of the fastest growing vacation operators 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
•Exclusive provider of capacity to Thomas Cook Canada starting Winter
2012/13
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Commitment to responsible growth
• Young fuel-efficient fleet - average age of 6 years
• North American leader in the use of blended winglet technology
• One of the most experienced air carriers in the world in RNP operations
• Carbon offset program - partnering with Carbonzero
• Introduced baggage tugs which run on rechargeable lithium batteries
• Calgary Campus attained gold certification under the Leadership in
Energy and Environment Design (LEED) program
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FUEL EFFICIENCY – GREEN SKIES
2011 - ASMs Per Litre of Jet Fuel
WestJet
20.6
20.6
18.7
18.7
JetBlue
18.1
18.1
Southwest
17.6
17.6
Alaska
16.9
16.9
Air Canada
United Continental
16.5
16.5
Delta
16.1
16.1
US Airways
16.0
16.0
Source: company annual reports, conversion from gallons to litres, estimates
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WestJet’s next chapter
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WestJet’s Regional Airline - 2013
Guest experience and culture
Guest experience and low cost
•
Consistent WestJet guest experience
•
Consistent WestJet values
•
Similar caring culture
•
Engaged workforce
Low cost
•
Meaningful & sustainable cost
advantage vs regional
competitors
•
Low fares to stimulate demand
and steal traffic
•
Expanded service to new markets
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WestJet’s Regional Airline at Maturity
•
•
•
Organizational structure: wholly owned subsidiary
Fleet size: ~ 45 x 78-seat turboprop aircraft
Network and schedule
• National operation (Eastern and Western)
• Domestic and transborder operations
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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Regional is the building block for a global WestJet
Medium term
(next five years)
Allows us to
continue to grow
737 flying
Long term
(five-plus years)
Supports the opportunity for
wide-body in the future
WestJet with regional
Building a regional
airline
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WestJet
737
&
WestJet
regional
Momentum
• Earnings margins are consistently among the top tier in the industry
• Proven track record of profitable growth
• Well-positioned, low-cost and efficient carrier
• Award winning culture and highly engaged workforce
• Strong brand in the market place and expanding airline partnerships
• Attractive combination of planned growth and a strong balance sheet
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