Canada's WestJet Airlines Ltd reported a quarterly profit that handily beat Street expectations as it flew more passengers and managed costs effectively. The company, which said in April that it plans to launch an ultra-low-cost carrier (ULCC) in Canada, flew 5.9 million passengers in the second quarter ended June 30, up 11.5 percent from last year. WestJet's bigger rival Air Canada also reported a higher-than-expected quarterly profit on Tuesday.
Both companies have been upgrading their fleets with fuel-efficient aircrafts. WestJet started as a low-cost airline but added premium services in a bid to increase revenue. Excluding fuel and employee profit share, cost per available seat mile (CASM) - a key measure of how much an airline spends to fly a passenger - fell to 9.84 Canadian cents from 9.93 Canadian cents in the year-ago period, WestJet said on Tuesday.
The Calgary-based company's revenue passenger miles (RPMs), or traffic, increased 8.9 percent, and capacity, measured in available seat miles (ASMs), grew 6.3 percent. Excluding items, WestJet earned 41 Canadian cents per share, smashing past analysts' estimate of 28 Canadian cents, according to Thomson Reuters I/B/E/S.
Net earnings rose to C$48.4 million ($38.8 million), or 41 Canadian cents per share, in the quarter, from C$36.7 million, or 30 Canadian cents, a year earlier. Revenue rose 11 percent to C$1.06 billion. Load factor - which is a measure of total capacity utilization - rose to 82.8 percent from 80.8 percent.
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