WestJet profit beats market expectations, ups dividend

(Reuters) - WestJet Airlines Ltd reported a stronger-than-expected increase in fourth-quarter profit on Wednesday and hiked its dividend by 25 percent as revenues rose and it tightened its grip on costs.

Canada's second-biggest airline also forecast a moderate increase in revenue for the first quarter of 2013 and said the rise in full-year costs would be modest. Its shares rose 0.5 percent.

The outlook "is strong and we believe that 2013 will be another record year for WestJet earnings," Tollcross Securities airline analyst Jacques Kavafian said.

Earnings rose 71 percent to C$60.9 million ($61 million), or 46 Canadian cents a share, in the quarter, ahead of analysts' average expectations of earnings of 42 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Revenue at WestJet, which competes with bigger Air Canada , increased 10 percent to C$860.6 million, slightly ahead of analysts' expectations of C$856.7 million.

Its load factor, the percentage of available seats filled with paying customers, rose to 81.9 percent for the quarter from 78.7 percent a year earlier.

WestJet said its costs per available seat mile rose 3.2 percent, excluding fuel and employee profit-sharing. BMO Capital Markets analyst Fadi Chamoun and RBC Capital Markets analyst Walter Spracklin had expected costs to rise by at least 4 percent.

The Calgary-based company raised its quarterly dividend by 25 percent to 10 Canadian cents a share. It also announced a plan to buy back up to 5 percent of its outstanding shares.

Both the dividend increase and share buy-back are good indications that management is confident in its ability to generate strong growth in free cash flow, said RBC Capital Markets transportation analyst Walter Spracklin.

WestJet said it expected a moderate rise in revenue per available seat mile, a measure of an airline's profitability based on its per seat earnings, and margin expansion in the current quarter.

It also said it expects its 2013 costs per available seat mile to rise by 2 to 3 percent year over year, excluding fuel and employee profit-sharing costs.

WestJet shares, which have gained about 40 percent over the past six months, were up 13 Canadian cents, or 0.5 percent, at C$22.68 on the Toronto Stock Exchange on Wednesday morning.

(Reporting By Nicole Mordant in Vancouver and Maneesha Tiwari in Bangalore; Editing by Peter Galloway)

Source: http://news.yahoo.com/westjet-profit-rises-71-percent-higher-load-factor-124431699--finance.html

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