WestJet
TSX : WJA

WestJet

July 28, 2005 08:30 ET

WestJet Announces 2005 Second Quarter Results: Profitability Achieved in Spite of High Fuel Costs

CALGARY, ALBERTA--(CCNMatthews - July 28, 2005) - WestJet (TSX:WJA) today announced its 2005 second quarter results and its return to profitability with net earnings of $2.3 million compared to net earnings of $7.5 million achieved in the same period in 2004. In the first six months of 2005, the airline reported a net loss of $7.3 million as compared to net earnings of $8.0 million during the first six months of 2004.

Operating revenue increased this quarter by 26.9% to $326.4 million from $257.3 million in the quarter ended June 30, 2004. Year to date, operating revenue grew 31.0% to $621.0 million from $474.0 million during the same period in 2004.

The airline recorded diluted earnings per share of two cents for April to June 2005, compared with diluted earnings per share of six cents for the second quarter of 2004. Year to date, the airline reported a diluted loss per share of six cents, compared with diluted earnings per share of six cents during the same period last year. As at June 30, 2005, the number of common shares outstanding was 128,255,922 compared to 125,409,291 on June 30, 2004.

WestJet grew its capacity this quarter, measured in available seat miles (ASMs), by 23.3% to 2.5 billion from 2.1 billion in the same quarter last year. Year to date, ASMs increased 27.1% to 5.2 billion from 4.1 billion in the same period last year. Revenue passenger miles (RPMs) increased 29.6% to 1.8 billion this quarter, from 1.4 billion in the second quarter of 2004. For the first six months of 2005, RPMs increased to 3.7 billion from 2.7 billion, up 35.8% from the same period in 2004. WestJet's load factor for the quarter was 71.0%, compared with 67.5% in the same period in 2004. The company's year-to-date load factor was 72.3%, compared with 67.7% during the first half of last year.

On an ASM basis, WestJet's fuel expense was 29.0% higher in the second quarter of 2005 versus the second quarter of 2004. The impact of this cost was mitigated somewhat by the increasing proportion of fuel-efficient Boeing Next-Generation aircraft in the fleet and the airline's increasing stage length, which increased 10.6% to 792 miles this quarter from 716 miles in the second quarter of 2004.

WestJet's costs per ASM increased during the second quarter to 12.6 cents from 11.9 cents in the same period of 2004. This increase was entirely due to the increase in the price of fuel of 0.70 cents per ASM. During the first half of the year, WestJet's cost per available seat mile increased from 11.3 cents in 2004 to 12.1 cents this year. Yield (revenue per revenue passenger mile) for the quarter was 18.2 cents compared to 18.5 cents in the second quarter of 2004.

Clive Beddoe, WestJet's President and CEO, commented: "We are extremely pleased to have returned to profitability with the announcement of our second quarter results. We performed exceptionally well at containing our costs this period as our team improved efficiencies and realized unit-cost reductions in virtually every facet of our controllable costs.

"We are disappointed, however, that the heavily discounted fares sold during the highly competitive first quarter eroded yield in this period. Had it not been for the near half a million seats sold at greatly reduced rates in the first quarter for travel during the second quarter, we would have realized an increase of approximately $20 million in pre-tax revenues during this period.

"In addition to the unprecedented number of seat sales offered with extremely low fares during the first quarter, we also faced record high fuel prices in the second quarter. To combat this uncontrollable cost, we have finalized a plan to accelerate the replacement of our less efficient 737-200 fleet with new cost-effective Boeing Next-Generation 737 aircraft. This shift to a more fuel-efficient fleet, which will be completed by the end of the first quarter of 2006, will help offset the current high price of fuel while providing a more homogeneous, comfortable and reliable fleet for our guests.

"Our ability to generate revenue improved in the second quarter over the first quarter as the competitive environment allowed us to price our product more in accordance with our costs. However, any increase in fares must be balanced against the potential that these increases can discourage air travel.

"With our ability to increase fares, growing market acceptance in Eastern Canada and an increasingly efficient fleet, we are in a particularly strong position as we enter the third quarter. It should, however, be recognized that in the second quarter a large portion of the $172 million of advanced ticket sales were sold in a $50 US per barrel fuel environment and that we will likely be flying these guests in a $60 US fuel environment. We continue to be the lowest-cost airline in the Canadian environment, operate one of the newest fleets in the world and have an incredibly cohesive team of dedicated people that are determined to drive revenue, lower costs and provide a superb guest experience."

About WestJet

WestJet is Canada's leading low-cost airline offering scheduled service throughout its 34-city North American network. Named Canada's most respected corporation for customer service in 2005, WestJet pioneered low-cost high-value flying in Canada. With increased legroom and leather seats on its modern fleet of Boeing Next-Generation 737 aircraft, and live seatback television provided by Bell ExpressVu on its 737-700 fleet, WestJet strives to be the number one choice for travellers.

2005 Management's Discussion and Analysis

Forward-looking Information

Certain information set forth in this document, including management's assessment of WestJet's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond WestJet's control, including the impact of general economic conditions, changing domestic and international industry conditions, volatility of fuel prices, terrorism, currency fluctuations, interest rates, competition from other industry participants (including new entrants, and generally as to capacity fluctuations and pricing environment), labour matters, government regulation, stock market volatility and the ability to access sufficient capital from internal and external sources. Readers are cautioned that management's expectations, estimates, projections and assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. WestJet's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements or if any of them do so, the benefits that WestJet will derive there from.

Additional information relating to WestJet, including Annual Information Forms and financial statements, is located on SEDAR at www.sedar.com.

To supplement its consolidated financial statements presented in accordance with Canadian generally accepted accounting principles ("GAAP"), the Company uses various non-GAAP performance measures, including cost per available seat mile ("CASM"), revenue per available seat mile ("RASM") and revenue per revenue passenger mile ("yield"). These measures are provided to enhance the user's overall understanding of WestJet's current financial performance and are included to provide investors and management with an alternative method for assessing the Company's operating results in a manner that is focused on the performance of the Company's ongoing operations and to provide a more consistent basis for comparison between quarters. These measures are not in accordance with or an alternative for GAAP and may be different from measures used by other companies.



Quarterly unaudited financial information
(In millions except per share data).

-----------------------------------------------
-----------------------------------------------
6/30/2005 3/31/2005 12/31/2004 9/30/2004
-----------------------------------------------
-----------------------------------------------

Total revenues $ 326 $ 295 $ 274 $ 310
Net earnings (loss) $ 2 $ (10) $ (46) $ 21
Basic earnings (loss)
per share (cents) 1.8 (7.6) (36.9) 16.8

Diluted earnings (loss)
per share (cents) 1.8 (7.6) (36.7) 16.7


-----------------------------------------------
-----------------------------------------------
6/30/2004 3/31/2004 12/31/2003 9/30/2003
-----------------------------------------------
-----------------------------------------------

Total revenues $ 257 $ 217 $ 230 $ 255
Net earnings $ 7 $ 1 $ 13 $ 32
Basic earnings per share
(cents) 6.0 0.4 10.4 28.4
Diluted earnings per
share (cents) 5.9 0.4 10.1 27.8


HIGHLIGHTS

The second quarter of 2005 marks our return to profitability despite the challenges of record-high fuel prices and the lingering effect of the nearly half million seats sold during the first quarter at extremely low prices for travel in the second quarter. The commitment of our people, a return to reasonable pricing practices in the industry and our continuous focus on cost reductions resulted in a successful period for our airline in the second quarter, and has set the stage for the future.

We continue to build on our plan for future success through initiatives such as the completion of the installation of live satellite television on all of our 700-series aircraft and the ongoing renewal of our fleet, which saw the addition of our first five 800-series aircraft and the disposition of two of our 200-series aircraft this period. The remainder of the 200-series aircraft will be disposed of over the course of the next three quarters in accordance with our revised fleet plan.

Our 800-series aircraft are completely financed though US dollar operating leases for terms of 10 years through a series of sale and leaseback transactions. The net gain on these sales are deferred and amortized over the lease term and the amortization is included in our aircraft leasing costs. The 800s are expected to boost our operating efficiencies as they have been configured to carry 166 guests and will decrease our fuel and maintenance expenditures. These Next-Generation 737-800 aircraft are more fuel efficient than our 200-series aircraft and are ideal for use on our longer-haul routes, further reducing our costs per available seat mile. This fall, we will be retrofitting the 800s with live seatback satellite television and will be adding pay-per-view movies on all aircraft outfitted with this product through the fall.

During this period, we renewed our charter agreement with Transat A.T. Inc. through to October 2007, building on the success of an earlier two-year agreement. This partnership continues to be beneficial to both organizations as well as the travelling public, who can fly onboard WestJet aircraft operated by WestJet crews to more than 25 sun destinations in the United States, Mexico and the Caribbean. We also expanded our domestic network with the commencement of seasonal scheduled service to Charlottetown, Prince Edward Island, our newest Canadian destination. WestJet now provides scheduled service across all 10 provinces, further cementing our place as Canada's national low-fare airline. We continued to expand our transborder operations with the commencement of service to San Diego, California in June, as well as the announcement of two new destinations, Las Vegas, Nevada and Fort Meyers, Florida which we will commence service to during the fourth quarter.

In addition to adding destinations and improving our product with features such as live seatback television, we also look for other innovative ways to build on our success. During the quarter, we executed a number of agreements with many of Canada's small, medium and large corporations to make WestJet their preferred airline for business travel. As well, the popularity of our BMO Mosaik® AIR MILES®(a) MasterCard® program, launched in May of 2004, is continuing to grow. We receive a fee for each newly activated credit card at the silver and gold level, as well as a percentage of net retail sales purchased with the card.

OPERATIONAL GROWTH

The airline industry is seasonal in nature, with the first and fourth quarters traditionally being the weakest, the second quarter gaining strength as the summer season arrives and the third quarter being the strongest in terms of demand and revenue generation. In this quarter, our guest revenues increased 23.2% to $287.5 million versus $233.3 million for the same period one year ago. Our load factor also increased this quarter to 71.0% from 67.5% in the second quarter of 2004; however, our revenue per passenger mile dropped by 1.6% year over year from 18.5 cents to 18.2 cents, which is attributable to the nearly half a million seats sold as advance ticket sales that remained in our system prior to the industry's return to economically sensible fares. In spite of this decline, this is a considerable improvement over the first quarter, which saw our yields decrease by 4.4% over the same quarter in the previous year. Based on the reasonable pricing levels during the second quarter, we are optimistic that our third quarter results will reflect the more rational environment that exists in the Canadian industry.

Our increase in charter and other revenue is once again impressive on a year-over-year basis with gross revenues climbing 68.5% to $37.6 million, an increase of $15.3 million. We continue to capitalize on the utilization of our aircraft during our off-peak travel periods by deploying our aircraft to sun destinations through our charter arrangements. This strategy increases revenues in what is traditionally a weaker period for the industry while simultaneously providing both new and returning guests the ability to experience the WestJet brand of customer service in destinations not serviced by our normal schedule. The strong Canadian dollar also prompted more Canadians to travel outside the country during this quarter than during the same time one year ago.

CHALLENGING TIMES

During the quarter, our available seat miles increased 23.3% while our costs per available seat mile increased 6.2%. We are once again experiencing the effects of extremely high jet fuel prices on a per seat mile basis, which grew by almost 29% from the same time a year ago and just over 59% since the second quarter of 2003. We also saw increases in our airport operations costs where we continue to face mounting terminal, landing and other fees. During the quarter, these various fees rose an additional 6.0% as compared to the second quarter of 2004, while the cost per departure rose by 12.8% and the weighted average cost for ground handling also rose by 13.7%.

The pressure of increasing direct costs has had less of an impact on our operations than might otherwise be expected, in large part due to the efforts of WestJetters to reduce costs and drive revenue in virtually every area of our business. As well, our decision to replace our older aircraft with Next-Generation aircraft has led to a continued decline in our maintenance costs. This quarter, we retired two 200-series aircraft and removed an additional six from revenue service in preparation for disposition. All of our 200s will be replaced with Next-Generation 737 aircraft by the end of March 2006.

COSTS

Subsequent to quarter-end, we announced details of an agreement with Apollo Aviation Group for the sale of the 11 737-200 aircraft remaining in our fleet at quarter end. The agreement also sees Apollo acquire our inventory of related spare parts, engines and the 737-200 flight simulator. The average age of our fleet and our cost of maintenance continues to decline as we take delivery of more new aircraft and retire older aircraft. These new aircraft and their components are covered by warranty, which also contributes to our declining costs. The new aircraft are at a stage in their lifecycle in which they require far less maintenance; those maintenance costs per hour being approximately 80% less than for the 200-series aircraft.

Our increasing stage length, which grew by 76 miles from the second quarter of 2004 to 792 miles this quarter, lowered our costs by approximately 5% on an available seat mile basis as our fixed costs are spread over longer average flights. Had our stage length remained constant, we would have expected to see an increase in our cost per available seat mile of 11.1% rather than the 6.2% we actually achieved. The difference is primarily attributable to uncontrollable costs such as fuel, airport fee increases and navigational charges, as well as stock option expenses and increases to professional fees. These costs were partially offset by the savings we achieved in maintenance and our other general and administrative expenses.

The average WTI price for fuel increased 38.3% from $38.36 US in the second quarter of 2004 to $53.04 US in the second quarter of 2005. On a stage-length-adjusted basis, however, we experienced a fuel-cost increase of 35.4%, with the resulting 2.9% savings attributable to the addition of fuel-saving winglets on our Next-Generation aircraft. Had fuel prices remained at 2004 levels, our operating costs would have dropped by $21.1 million in the quarter and $37 million for the six months ended June 30. On June 23, in order to recover a portion of our costs, we integrated a temporary fuel surcharge into our base fares for all domestic travel that ranged from $8 to $15 based on trip length. Year to date, the WTI price of oil per barrel, which correlates very closely to the price of jet fuel, has risen by $28.83 US. Only a very small portion of that increase has been recovered through the fuel surcharge.

Our aircraft leasing costs have risen both in absolute dollars as well as on a cost per available seat mile basis due to the addition of eight operating leases over the second quarter of last year. Five of the eight pertain to the 800-series aircraft and the remaining three are for 737-700s. The lease periods are over a period of 10 years and eight years respectively, payable in US funds. At June 30, 2005 the composition of our aircraft financed through leasing was as follows: 13 737-700s, five 737-800s and five 737-200s for a total of 23 leased aircraft.

BALANCE SHEET

We finished the quarter with a healthy cash position of $240.9 million and a working capital ratio of 0.8 to 1 compared to 1.0 to 1 in the same quarter of 2004. Our debt-to-equity ratio, which includes $527.7 million of off-balance sheet financing in the form of operating leases at present value, was 2.4 to 1. Despite the additional debt we are incurring, we are careful to maintain our self-imposed targeted debt-to-equity ratio of no greater than 3 to 1. We feel that this provides us with flexibility to grow our company in accordance with our strategic plan, while at the same time minimizing shareholder risk. As at July 22, 2005, we had 128,380,791 common shares outstanding and 11,572,214 options outstanding.

As sound fiscal policies are imperative to the long-term success of our company, we look for ways to manage and build our cash reserves including issuing shares from treasury for the company's share of the employee share purchase plan, thereby eliminating the need for a cash outlay of $5.6 million this quarter. This is also achieved by entering into agreements that will provide sources of ancillary revenue, such as the one our BMO Mosaik® AIR MILES®(a) MasterCard® provides. In May 2004, we recorded a long-term liability with respect to the unearned portion of revenue from future transactions on this card in the amount of $10 million, of which we were able to recognize $1.7 million during this quarter.

When acquiring aircraft, we have the option of using debt, equity and/or leasing alternatives. Each financing avenue offers advantages, and it is only through careful analysis of many factors that a determination can be made on the ideal way to grow our fleet. These factors would include funding availability, financing costs, tax implications, fleet flexibility, current and future requirements, and estimates on the useful life of an aircraft. During the quarter, we did not take on any additional financing supported by loan guarantees through the Export-Import Bank of the United States, but we did increase our obligations through capital leasing by $1.0 million for ground services equipment. We repaid a total of $25.4 million in the second quarter on our long-term debt and capital leasing obligations, and incurred interest expenses of $13.4 million in the same time period. Year to date, we have repaid a total of $50.7 million on these obligations and paid a total of $26.8 million in interest charges.

During the period, we placed pre-delivery deposits totalling $28.4 million on future aircraft deliveries and expended an additional $221.3 million on aircraft and aircraft parts net of refunded deposits. We executed a series of sales and leaseback transactions with the net gain of $7.7 million from these transactions being deferred and amortized over the terms of the operating leases.

We recognized $991,000 in current tax expense and an additional $3.7 million for future taxes during the quarter. Our effective tax rate differs from the actual statutory tax rate primarily due to non-deductible permanent differences such as stock-based compensation expense. Included in our current tax recovery is $2.9 million of large corporations' tax and provincial capital taxes that are not impacted directly by changes in net income.

Foreign exchange risk management

At June 30, 2005, we had US dollar cash and cash equivalents totalling $33,928,000 US (June 30, 2004 - $35,472,000 US). We have entered into contracts to fix the foreign exchange rates at a weighted average rate of 1.22 on future debt facilities totalling $109 million US for the purchase of four aircraft during the period from July to September 2005. The total estimated fair value of the contracts at June 30, 2005 is a gain of $57,000 CAD. We have also entered into a contract to purchase $2.5 million US per month at a forward rate of 1.22 for the payment period from March 2005 to February 2006 to hedge a portion of our committed US-dollar lease payments during the same period. The estimated fair market value of the contract as at June 30, 2005 is a loss of $9,500 CAD.

THE FUTURE

We completed this quarter on a positive note, ready to embrace the last half of the year and all that it brings. We have clearly demonstrated our resilience through the many and varied challenges we have faced in our nine-year history to become the airline of choice in Canada. We will continue to improve on our already exceptional customer service and provide our guests with an experience that is second to none.

® Registered trademark of Bank of Montreal. Bank of Montreal is a licensed user of the trademarks and design of MasterCard International Inc.

®(a) Trademarks of AIR MILES International Trading B.V. Used under license by Loyalty Management Group Canada Inc. and WestJet.



COST PER AVAILABLE SEAT MILE (CENTS)

Three months ended Six months ended
June 30, June 30,
% Change % Change
2005 2004 over 2004 2005 2004 over 2004

Aircraft fuel 3.21 2.49 (28.9%) 3.08 2.46 (25.2%)
Airport
operations 2.02 1.98 (2.0%) 2.10 1.92 (9.4%)
Flight
operations
and
navigational
charges 1.75 1.72 (1.7%) 1.67 1.67 0.0%
Sales and
marketing 1.29 1.31 1.5% 1.02 1.04 1.9%
Amortization 1.04 0.91 (14.3%) 1.00 0.91 (9.9%)
Maintenance 0.75 0.94 20.2% 0.77 0.92 16.3%
General and
administration 0.70 0.77 9.1% 0.66 0.67 1.5%
Aircraft leasing 0.61 0.52 (17.3%) 0.52 0.52 0.0%
Interest expense 0.53 0.51 (3.9%) 0.52 0.48 (8.3%)
Inflight 0.50 0.50 0.0% 0.50 0.49 (2.0%)
Customer Service 0.22 0.23 4.3% 0.24 0.25 4.0%
----- ----- ------ ----- ----- ------
----- ----- ------ ----- ----- ------
12.62 11.88 (6.2%) 12.08 11.33 (6.6%)
------------------------------------------------------------------------
------------------------------------------------------------------------


WestJet Airlines Ltd.
Consolidated Financial Statements
June 30, 2005
(Unaudited)


WestJet Airlines Ltd.
Consolidated Balance Sheets
June 30, 2005, December 31, 2004 and June 30, 2004
(Stated in Thousands of Dollars)

------------------------------------------------------------------------
------------------------------------------------------------------------
June 30, December 31, June 30,
2005 2004 2004
(unaudited) (unaudited)
------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 240,880 $ 148,532 $ 263,899
Accounts receivable 17,620 12,814 14,826
Income taxes recoverable 11,541 2,854 6,923
Assets held for sale (note 1) 4,268 - -
Prepaid expenses and deposits 29,675 25,493 20,992
Inventory 4,782 5,382 5,354
-----------------------------------------------------------------------
308,766 195,075 311,994

Property and equipment (note 1) 1,568,188 1,601,546 1,432,746

Other assets 82,046 80,733 75,017

------------------------------------------------------------------------
$1,959,000 $1,877,354 $1,819,757
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 93,410 $ 91,885 $ 81,446
Advance ticket sales 172,397 81,991 129,430
Non-refundable guest credits 26,649 26,704 22,145
Current portion of long-term
debt (note 2) 95,572 97,305 81,764
Current portion of obligations
under capital lease (note 6(b)) 4,242 6,564 6,217
-----------------------------------------------------------------------
392,270 304,449 321,002

Long-term debt (note 2) 859,535 905,631 802,225

Obligations under capital
lease (note 6(b)) 861 - 4,448

Long-term liabilities (note 3) 16,624 10,000 10,000

Future income tax 75,342 67,382 74,036
------------------------------------------------------------------------
1,344,632 1,287,462 1,211,711
Shareholders' equity:
Share capital (note 5 (a)) 414,542 390,469 390,206
Contributed surplus (note 5 (e)) 29,676 21,977 15,248
Retained earnings 170,150 177,446 202,592
-----------------------------------------------------------------------
$ 614,368 $ 589,892 $ 608,046
------------------------------------------------------------------------

Commitments and contingencies (note 6)

------------------------------------------------------------------------
$1,959,000 $1,877,354 $1,819,757
------------------------------------------------------------------------
------------------------------------------------------------------------


WestJet Airlines Ltd.
Consolidated Statements of Earnings and Retained Earnings
For the periods ended June 30, 2005 and 2004
(Unaudited)
(Stated in Thousands of Dollars, Except Per Share Data)

------------------------------------------------------------------------
Three Months Ended June 30 Six Months Ended June 30
2005 2004 2005 2004

------------------------------------------------------------------------
Revenues:
Guest revenues $ 287,490 $ 233,267 $ 511,301 $ 409,105
Charter and
other 37,644 22,346 107,428 62,015
Interest Income 1,285 1,651 2,291 2,863

-----------------------------------------------------------------------
326,419 257,264 621,020 473,983

Expenses:
Aircraft fuel 81,358 51,167 159,027 99,931
Airport operations 51,141 40,655 108,418 78,150
Flight operations and
navigational charges 44,418 35,307 86,349 68,032
Sales and marketing 32,686 27,033 52,591 42,137
Amortization 26,351 18,690 51,876 36,872
Maintenance 18,883 19,228 39,632 37,573
General and
administration 17,775 15,809 34,037 27,276
Aircraft leasing 15,449 10,727 27,014 21,051
Interest expense 13,378 10,468 26,813 19,354
Inflight 12,717 10,290 25,711 19,983
Customer service 5,704 4,876 12,607 10,150
-----------------------------------------------------------------------
319,860 244,250 624,075 460,509


------------------------------------------------------------------------
Earnings (loss)
from operations 6,559 13,014 (3,055) 13,474

Non-operating
income (expense):
Gain (loss) on
foreign exchange 436 1,512 (105) 2,031
Gain (loss) on
disposal of property
and equipment 42 (181) 83 (55)
-----------------------------------------------------------------------
478 1,331 (22) 1,976

Employee profit
share (note 7) - (1,589) - (1,704)

------------------------------------------------------------------------
Earnings (loss)
before income taxes 7,037 12,756 (3,077) 13,746

Income tax
(expense) recovery:
Current (991) 2,821 3,752 6,845
Future (3,748) (8,111) (7,971) (12,613)
-----------------------------------------------------------------------
(4,739) (5,290) (4,219) (5,768)

------------------------------------------------------------------------

Net earnings (loss) 2,298 7,466 (7,296) 7,978

Retained earnings,
beginning of period 167,852 195,126 177,446 204,731

Change in accounting
policy (note 5(d)) - - - (10,117)

------------------------------------------------------------------------
Retained earnings,
end of period $ 170,150 $ 202,592 $ 170,150 $ 202,592
------------------------------------------------------------------------
------------------------------------------------------------------------

Earnings (loss) per
share (note 5(c)):
Basic $ 0.02 $ 0.06 $ (0.06) $ 0.06
Diluted $ 0.02 $ 0.06 $ (0.06) $ 0.06


------------------------------------------------------------------------
------------------------------------------------------------------------
Operating highlights:

Available seat
miles 2,533,992,650 2,055,706,390 5,164,173,275 4,063,248,993
Revenue
passenger
miles 1,798,293,275 1,388,093,490 3,732,974,264 2,749,744,255
Load factor 71.0% 67.5% 72.3% 67.7%
Revenue per
passenger mile
(cents) 18.2 18.5 16.6 17.2
Revenue per
available seat
mile (cents) 12.9 12.5 12.0 11.7
Cost per
passenger mile
(cents) 17.8 17.6 16.7 16.7
Cost per
available seat
mile (cents) 12.6 11.9 12.1 11.3
Fuel consumption
(litres) 132,626,512 112,597,158 274,090,261 224,454,990
Fuel cost/litre
(cents) 61.3 45.4 58.0 44.5
Segment guests 2,173,899 1,803,698 4,451,299 3,568,185
Average stage length 792 716 812 723
Number of full
time equivalent
employees at
quarter end 4,275 3,709 4,275 3,709
Fleet size at
quarter end 60 50 60 50

------------------------------------------------------------------------
------------------------------------------------------------------------


WestJet Airlines Ltd.
Consolidated Statements of Cash Flows
For the periods ended June 30, 2005 and 2004
(Unaudited)
(Stated in Thousands of Dollars)

------------------------------------------------------------------------
Three Months Ended June 30 Six Months Ended June 30
2005 2004 2005 2004
------------------------------------------------------------------------
Cash flows from
(used in):

Operating
activities:
Net earnings (loss) $ 2,298 $ 7,466 $ (7,296) $ 7,978
Items not
involving cash:
Amortization 26,351 18,690 51,876 36,872
Amortization of
long-term
liabilities (144) - (170) -
(Gain) loss on
disposal of
property and
equipment (42) 181 (83) 55
Stock-based
compensation
expense 4,549 2,971 8,085 5,458
Issued from
treasury stock 5,612 - 10,213 -
Future income
tax expense 3,748 8,111 7,971 12,613
---------------------------------------------------------------------
42,372 37,419 70,596 62,976

Decrease in non-cash
working capital 51,249 48,090 78,537 48,542
---------------------------------------------------------------------
93,621 85,509 149,133 111,518
---------------------------------------------------------------------

Financing activities:
Repayment of
long-term debt (23,927) (17,402) (47,829) (32,435)
Increase in
long-term debt - 154,061 - 267,559
Decrease in
obligations
under capital lease (1,457) (1,652) (2,888) (3,236)
Increase in long-term
liabilities 7,686 - 8,530 10,000
Share issuance
costs (33) (8) (33) (10)
Increase in
other assets (4,221) (8,667) (7,506) (16,440)
Issuance of
common shares 7,252 7,601 13,496 13,808
-----------------------------------------------------------------------
(14,700) 133,933 (36,230) 239,246

Increase in
non-cash
working capital (573) - (573) -
-----------------------------------------------------------------------
(15,273) 133,933 (36,803) 239,246

Investing
activities:
Aircraft
additions (249,748) (180,214) (391,118) (305,586)
Aircraft
disposals 261,460 - 396,678 -
Other property
and equipment
additions (17,308) (19,712) (25,613) (25,268)
Other property
and equipment
disposals 22 2,033 71 2,605
----------------------------------------------------------------------
(5,574) (197,893) (19,982) (328,249)
----------------------------------------------------------------------

Net change in cash 72,774 21,549 92,348 22,515

Cash, beginning of
period 168,106 242,350 148,532 241,384

------------------------------------------------------------------------
Cash, end of period $ 240,880 $ 263,899 $ 240,880 $ 263,899
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash interest and taxes paid during the six months ended June 30, 2005
were $27,061,000 (2004- $18,352,000) and $2,868,000 (2004- $10,998,000)
respectively.

As at June 30, 2005 cash and cash equivalents include US $62,000 of
restricted cash (December 31, 2004 - US $4,251,000 June 30, 2004 - US
$5,760,000) and CAD $1,500,000 of restricted cash (December 31, 2004 -
CAD $nil, June 30, 2004 - CAD $nil).


WestJet Airlines Ltd.
Notes to Consolidated Financial Statements
For the periods ended June 30, 2005 and 2004
(Unaudited)
(Tabular Dollar Amounts are Stated in Thousands, Except Per Share Data)

The interim consolidated financial statements of WestJet Airlines Ltd.
("WestJet" or "the Corporation") have been prepared by management in
accordance with accounting principles generally accepted in Canada. The
interim consolidated financial statements have been prepared following
the same accounting policies and methods of computation as the
consolidated financial statements for the fiscal year ended December 31,
2004. The disclosures provided below are incremental to those included
with the annual consolidated financial statements. The interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto in the
Corporation's annual report for the year ended December 31, 2004.

The Corporation's business is seasonal in nature, with the highest
activity in the summer (third quarter) and the lowest activity in the
winter (first quarter) due to the high number of leisure travelers and
their preference to travel during the summer months.

1. Property and equipment:

------------------------------------------------------------------------
June 30, 2005 Accumulated
Cost Depreciation Net book value
------------------------------------------------------------------------

Aircraft - 700 series $ 1,312,456 $ 70,275 $ 1,242,181
Ground property and equipment 123,928 42,967 80,961
Spare engines and parts
- 700 series 63,877 6,450 57,427
Aircraft - 200 series 62,785 57,006 5,779
Buildings 39,636 3,332 36,304
Aircraft under capital lease 31,652 29,101 2,551
Spare engines and parts
- 200 series 22,223 17,127 5,096
Leasehold improvements 6,057 3,564 2,493
------------------------------------------------------------------------
1,662,614 229,822 1,432,792
Deposits on aircraft 115,010 - 115,010
Assets under construction 20,386 - 20,386
------------------------------------------------------------------------
$ 1,798,010 $ 229,822 $ 1,568,188
------------------------------------------------------------------------
------------------------------------------------------------------------


------------------------------------------------------------------------
December 31, 2004 Accumulated
Cost Depreciation Net book value
------------------------------------------------------------------------
Aircraft - 700 series $ 1,282,308 $ 46,180 $ 1,236,128
Ground property and equipment 109,334 34,586 74,748
Spare engines and parts
- 700 series 52,641 4,777 47,864
Aircraft - 200 series 142,657 121,182 21,475
Buildings 39,636 2,840 36,796
Aircraft under capital lease 31,304 26,781 4,523
Spare engines and parts
- 200 series 24,397 16,523 7,874
Leasehold improvements 5,655 3,104 2,551
------------------------------------------------------------------------
1,687,932 255,973 1,431,959
Deposits on aircraft 156,943 - 156,943
Assets under construction 12,644 - 12,644
------------------------------------------------------------------------
$ 1,857,519 $ 255,973 $ 1,601,546
------------------------------------------------------------------------
------------------------------------------------------------------------


------------------------------------------------------------------------
June 30, 2004 Accumulated
Cost Depreciation Net book value
------------------------------------------------------------------------
Aircraft - 700 series $ 1,064,616 $ 29,832 $ 1,034,784
Ground property and equipment 101,379 28,757 72,622
Spare engines and parts
- 700 series 50,280 3,545 46,735
Aircraft - 200 series 144,733 72,432 72,301
Buildings 39,401 2,346 37,055
Aircraft under capital lease 31,219 20,823 10,396
Spare engines and parts
- 200 series 25,647 13,143 12,504
Leasehold improvements 5,360 2,757 2,603
------------------------------------------------------------------------
1,462,635 173,635 1,289,000
Deposits on aircraft 130,788 - 130,788
Assets under construction 12,958 - 12,958
------------------------------------------------------------------------
$ 1,606,381 $ 173,635 $ 1,432,746
------------------------------------------------------------------------
------------------------------------------------------------------------

During the six month period ended June 30, 2005 property and equipment
was acquired at an aggregate cost of $1,031,000 (2004 - $nil) by means
of capital leases.

During the three months ended June 30, 2005, the Corporation entered
into agreements to sell 11 200-series aircraft to an unrelated third
party including spare engines, parts and a simulator. At quarter end,
six of these aircraft have already been taken out of revenue generating
service and are included at their fair value in current assets, as
assets held for sale. The remaining five aircraft will be delivered to
the third party following their scheduled retirement between October and
November 2005. The remaining spare engines, parts and simulator will
also be delivered in early 2006. The aircraft, spare engines, parts and
simulator will be fully depreciated to their residual value at their
date of disposal and accordingly, there will be no gain or loss arising
on their disposal.

2. Long-term debt:

------------------------------------------------------------------------
June 30 December 31 June 30
2005 2004 2004
------------------------------------------------------------------------
$1,053,530,000 in 26 individual term
loans, amortized on a straight-line
basis over a 12-year term, repayable
in quarterly principle instalments
ranging from $768,000 to $955,000,
including fixed rate weighted average
interest at 5.48%, guaranteed by the
Ex-Im Bank, secured by 26 737-700
series aircraft, and maturing in 2014
through 2016.
$ 910,777 $ 954,674 $ 834,524

$26,000,000 in two term loans,
repayable in monthly instalments
ranging from $106,000 to $156,000
including floating interest at the
bank's prime rate plus 0.88% with
an effective interest rate of 5.13%
as at June 30, 2005, with varying
maturities ranging between July 2008
and July 2013, secured by two
Next-Generation flight simulators,
cross-collateralized by one 200-series
aircraft, and cash of $1,500,000
20,648 21,684 22,697

$12,000,000 term loan repayable in
monthly instalments of $108,000
including interest at 9.03%, maturing
April 2011, secured by the Calgary
hangar facility
10,912 11,075 11,218

$22,073,000 in six individual term
loans, repayable in monthly
instalments ranging from $25,000 to
$87,000 including fixed rate weighted
average interest at 8.43% all maturing
in October 2005, secured by three
200-series aircraft.
3,471 5,301 7,056

$4,550,000 term loan repayable in
monthly instalments of $50,000,
including floating interest at the
bank's prime rate plus 0.50%, with
an effective interest rate of 4.75%
as at June 30, 2005, maturing April
2013, secured by the Calgary hangar
facility
3,690 3,899 4,106

$6,939,000 in 11 individual term
loans, amortized on a straight-line
basis over a five year term, repayable
in monthly principle instalments
ranging from $29,000 to $33,000,
including floating interest at the
Canadian LIBOR rate plus 0.08%, with
a weighted average effective interest
rate of 2.78%, as at June 30,2005,
maturing in 2009, guaranteed by the
Ex-Im Bank and secured by certain
700-series aircraft.
5,609 6,303 4,388

------------------------------------------------------------------------
955,107 1,002,936 883,989
Less current portion 95,572 97,305 81,764
------------------------------------------------------------------------
$ 859,535 $ 905,631 $ 802,225
------------------------------------------------------------------------
------------------------------------------------------------------------


Future scheduled repayments of long-term debt are as follows:

------------------------------------------------------------------------
2005 $ 49,493
2006 92,183
2007 92,353
2008 97,647
2009 91,051
2010 and thereafter 532,380
------------------------------------------------------------------------
$ 955,107
------------------------------------------------------------------------
------------------------------------------------------------------------

3. Long-term liabilities

The Corporation has $8,264,000 (December 31, 2004 - $10,000,000, June
30, 2004 - $10,000,000) of unearned revenue related to the tri-branded
credit card for future net retail sales and for newly activated credit
cards. Commencing in May 2005, the second year of the agreement, the
Corporation has begun to recognize this revenue, with $2,000,000 to be
recognized in each of contract years two and three, and $3,000,000 in
years four and five. During the three and six month periods ended June
30, 2005 the Corporation has recognized $1,736,000 of the $2,000,000
under the second year of the agreement.

Included in long-term liabilities at June 30, 2005 are net deferred
gains totalling $8,360,000, net of amortization (December 31, 2004 -
$nil, June 30, 2004 - $nil). The net gain on the sale and leaseback of
aircraft is deferred and amortized over the lease term with the
amortization included in aircraft leasing. During the three and six
months ended June 30, 2005 the Corporation recognized amortization of
$144,000 (2004 - $nil) and $170,000 (2004 - $nil), respectively.

4. Foreign exchange risk management:

At June 30, 2005, the Corporation had U.S. dollar cash and cash
equivalents totaling US $33,928,000 (December 31, 2004 - US $37,924,000,
June 30, 2004 - US $35,472,000).

The Corporation has entered into contracts to fix the foreign exchange
rates at a weighted average rate of 1.22 on future debt facilities
totalling US $109 million for the purchase of four aircraft during the
period from July to September 2005. The total estimated fair value of
the contracts as at June 30, 2005 is a gain of CAD $57,000.

The Corporation has entered into a contract to purchase US $2.5 million
per month at a forward rate of 1.22 for the payment period from March
2005 to February 2006 to hedge a portion of the Corporation's committed
US dollar lease payments during the same period. The estimated fair
market value of the contract as at June 30, 2005 is a loss of CAD
$9,500.

5. Share capital:

(a) Issued:

------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, 2005 June 30, 2005
------------------------------------------------------------------------
Number Amount Number Amount
------------------------------------------------------------------------
Common shares:

Balance,
beginning of
period 127,029,152 $ 401,450 125,497,407 $ 390,469
Exercise of
options 465,944 1,640 1,316,130 3,284
Stock-based
compensation
expense 250 386
Issued from treasury 760,826 11,224 1,442,385 20,425
Issued on rounding
of stock split - - - -
Share issuance costs (33) (33)
Tax benefit of issue
costs 11 11
------------------------------------------------------------------------
Balance,
end of period 128,255,922 $ 414,542 128,255,922 $ 414,542
------------------------------------------------------------------------
------------------------------------------------------------------------


------------------------------------------------------------------------
Year Ended
December 31, 2004
------------------------------------------------------------------------
Number Amount
------------------------------------------------------------------------

Common shares:

Balance, beginning of period 123,882,490 $ 376,081
Exercise of options 1,611,721 13,949
Stock-based compensation expense 445
Issued from treasury -
Issued on rounding of stock split 3,196
Share issuance costs (10)
Tax benefit of issue costs 4
------------------------------------------------------------------------
Balance, end of period 125,497,407 $ 390,469
------------------------------------------------------------------------
------------------------------------------------------------------------

The Corporation has an Employee Share Purchase Plan ("ESPP") whereby the
Corporation matches every dollar contributed by each employee. Under the
terms of the ESPP the Corporation has the option to acquire common
shares on behalf of employees through open market purchases or to issue
new shares from treasury at the current market price. During the period
ended June 30, 2005, shares under the ESPP were issued from treasury at
the current market price. For the three and six months ended June 30,
2005 $5,612,000 and $10,212,500 of common shares were issued from
treasury, respectively (three months ended June 30, 2004 - $nil, six
months ended June 30, 2004 - $nil) representing the Corporation's
matching contribution from treasury for employee contributions, for
which no cash was exchanged. Current market price for common shares
issued from treasury is determined based on the weighted average trading
price of the common shares on the Toronto Stock Exchange for the five
trading days preceding the issuance.

------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, 2004 June 30, 2004
------------------------------------------------------------------------
Number Amount Number Amount
------------------------------------------------------------------------

Common shares:

Balance, beginning
of period 124,542,522 $ 382,544 123,882,489 $ 376,081
Exercise of options 863,573 7,601 1,523,606 13,808
Stock-based
compensation expense - 69 - 327
Issued on rounding
of stock split 3,196 - 3,196 -
Share issuance costs (8) (10)

------------------------------------------------------------------------
Balance, end
of period 125,409,291 $ 390,206 125,409,291 $ 390,206
------------------------------------------------------------------------
------------------------------------------------------------------------

(b) Stock option plan:

Changes in the number of options, with their weighted average exercise
prices, are summarized below:

------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, 2005 June 30, 2005
------------------------------------------------------------------------
Weighted Weighted
Number average Number average
of exercise of exercise
Options price Options price
------------------------------------------------------------------------

Stock options
outstanding,
beginning of period 8,426,911 $ 13.09 10,682,082 $ 12.37
Issued 4,224,053 $ 14.60 4,431,734 $ 14.48
Exercised (1,034,909) $ 9.90 (3,467,904) $ 9.82
Cancelled (27,585) $ 15.13 (57,442) $ 14.84

------------------------------------------------------------------------
Stock options
outstanding,
end of period 11,588,470 $ 13.92 11,588,470 $ 13.92
------------------------------------------------------------------------
------------------------------------------------------------------------

Exercisable, end of
period 3,946,214 $ 12.22 3,946,214 $ 12.22
------------------------------------------------------------------------
------------------------------------------------------------------------

------------------------------------------------------------------------
Year Ended
December 31, 2004
------------------------------------------------------------------------
Weighted
Number average
of exercise
Options price
------------------------------------------------------------------------

Stock options
outstanding,
beginning of period 9,809,753 $ 10.78
Issued 2,927,875 $ 15.73
Exercised (1,959,002) $ 9.42
Cancelled (96,544) $ 12.83

------------------------------------------------------------------------
Stock options
outstanding,
end of period 10,682,082 $ 12.37
------------------------------------------------------------------------
------------------------------------------------------------------------

Exercisable, end of period 4,694,357 $ 10.88
------------------------------------------------------------------------
------------------------------------------------------------------------


------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, 2004 June 30, 2004
------------------------------------------------------------------------
Weighted Weighted
Number average Number average
of exercise of exercise
Options price Options price
------------------------------------------------------------------------

Stock options
outstanding,
beginning of period 9,106,758 $ 10.87 9,809,753 $ 10.78
Granted 2,891,040 $ 15.78 2,891,040 $ 15.78
Exercised (932,909) $ 9.24 (1,592,942) $ 9.31
Cancelled (10,915) $ 11.21 (53,877) $ 11.68

------------------------------------------------------------------------
Stock options
outstanding,
end of period 11,053,974 $ 12.29 11,053,974 $ 12.29
------------------------------------------------------------------------
------------------------------------------------------------------------

Exercisable, end
of period 5,015,603 $ 10.83 5,015,603 $ 10.83
------------------------------------------------------------------------
------------------------------------------------------------------------

Under the terms of the Corporation's stock option plans, a cashless
settlement alternative is available whereby option holders can either
(a) elect to receive shares by delivering cash to the Corporation in the
amount of the options or (b) elect to receive a number of shares
equivalent to the market value of the options over the exercise price.
For the three and six months ended June 30, 2005, option holders
exercised 867,493 and 3,127,425 options, respectively (three months
ended June 30, 2004 - 97,966, six months ended June 30, 2004 - 97,966)
on a cashless settlement basis and received 298,528 and 975,651 shares
respectively (three months ended June 30, 2004 - 28,630 shares, six
months ended June 30, 2004 - 28,630 shares).

(c) Per share amounts:

The following table summarizes the common shares used in calculating net
earnings (loss) per common share:

------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------------------------------------------
2005 2004 2005 2004
------------------------------------------------------------------------
Weighted average
number of common
shares outstanding
- basic 127,690,721 125,106,881 126,989,015 124,693,746
Effect of dilutive
employee stock
options 713,159 879,025 - 2,089,666
------------------------------------------------------------------------
Weighted average
number of common
shares outstanding
- diluted 128,403,880 125,985,906 126,989,015 126,783,412
------------------------------------------------------------------------
------------------------------------------------------------------------

For the three and six month periods ended June 30, 2005, 9,289,131 and
11,588,470 options, respectively, were not included in the calculation
of dilutive potential common shares as the result would be anti-
dilutive.

(d) Stock-based compensation:

On January 1, 2004 the Corporation changed its accounting policy related
to stock options granted on or after January 1, 2002. Under the new
policy, the Corporation determines the fair value of stock options on
their grant date and records this amount as compensation expense over
the period that the stock options vest, with a corresponding increase to
contributed surplus. The Corporation has retroactively adopted the
changes without restatement of prior periods on January 1, 2004 which
resulted in retained earnings decreasing by $10,117,000 and an
offsetting entry to contributed surplus.

As new options are granted, the fair value of these options will be
expensed over the vesting period, with an offsetting entry to
contributed surplus. The fair value of each option grant is estimated on
the date of grant using the Black-Scholes option-pricing model. Upon the
exercise of stock options, consideration received together with amounts
previously recorded in contributed surplus is recorded as an increase in
share capital.

Employee compensation expense included in flight operations and general
and administration expenses totalled $4,550,000 and $8,086,000 for the
three and six months ended June 30, 2005 (three months ended June 30,
2004 - $2,971,000, six months ended June 30, 2004 - $5,458,000)
respectively related to the vesting of the outstanding stock options
issued on or after January 1, 2002 to officers and certain employees of
the Corporation.

The fair market value of options granted during the three and six months
ended June 30, 2005 and 2004 and the assumptions used in their
determination are as follows:

------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------------------------------------------
2005 2004 2005 2004
------------------------------------------------------------------------
Weighted average fair
market value per option $ 5.33 $ 5.85 $ 5.33 $ 5.85
Average risk free
interest rate 3.40% 3.70% 3.40% 3.70%
Average volatility 43% 45% 43% 45%
Expected life (years) 3.7 years 3.5 years 3.7 years 3.5 years
Dividends per share $ - $ - $ - $ -
------------------------------------------------------------------------
------------------------------------------------------------------------

(e) Contributed surplus:

Changes to contributed surplus were as follows:

------------------------------------------------------------------------
Three months ended Six months ended Year ended
June 30, June 30, June 30, June 30, December 31,
2005 2004 2005 2004 2004
------------------------------------------------------------------------
Balance,
beginning
of year $ 25,377 $ 12,346 $ 21,977 $ - $ -
Stock-based
compensation
- adoption - - - 10,117 10,117
Stock-based
compensation
expense 4,549 2,971 8,085 5,458 12,305
Stock options
exercised (250) (69) (386) (327) (445)
------------------------------------------------------------------------
Balance, end
of period $ 29,676 $ 15,248 $ 29,676 $ 15,248 $ 21,977
------------------------------------------------------------------------
------------------------------------------------------------------------

6. Commitments and contingencies:

(a) Aircraft:

The Corporation has committed to purchase 13 737-600s and five 737-700s
for delivery between July 2005 and August 2006.

The remaining estimated amounts to be paid in deposits and purchase
prices in US dollars relating to the purchases of the remaining
aircraft, live satellite television systems and winglets are as follows:

---------------------------------------
2005 $ 218,255
2006 322,567
---------------------------------------
$ 540,822
---------------------------------------
---------------------------------------

The Corporation has an agreement to purchase a Next-Generation flight
simulator and fixed-based trainer. The obligations in Canadian dollars
are:

---------------------------------------
2005 $ 5,257
2006 1,456
---------------------------------------
$ 6,713
---------------------------------------
---------------------------------------

(b) Leasehold commitments:

The Corporation has entered into operating leases and agreements for
aircraft, buildings, computer hardware and software licenses, satellite
programming, and capital leases relating to aircraft and ground
handling equipment. The obligations are as follows:

---------------------
Capital Operating
Leases Leases
---------------------
---------------------
2005 $ 2,766 $ 48,698
2006 1,747 91,564
2007 198 88,633
2008 198 87,881
2009 198 85,611
2010 and thereafter 277 424,647
---------------------
Total lease payments 5,384 $827,034
----------
----------
Less imputed interest at 7.38% (281)
----------
Net minimum lease payments 5,103
Less current portion of obligations under
capital lease (4,242)
----------
Obligations under capital lease $ 861
----------
----------

The Corporation has capital leases denominated in US dollars. These
obligations in US dollars are 2005 - $2,170,000, 2006 - $1,260,000.

Included in operating leases are US dollar operating leases primarily
related to aircraft. The obligations of these operating leases in US
dollars are 2005 - $34,149,000, 2006 - $68,027,000, 2007 - $67,510,000,
2008 - $67,510,000, 2009 - $67,510,000, 2010 and thereafter -
$330,214,000.

(c) Contingencies:

An Amended Fresh as Amended Statement of Claim was filed by Air Canada
and ZIP Air Inc. in the Ontario Superior Court on March 11, 2005 against
the Corporation, two officers, two employees, two former officers, and
one former employee (the "Defendants"). The principal allegations are
that the Defendants unlawfully obtained confidential flight load and
load factor information from Air Canada's employee travel website and,
as a result, the Plaintiffs have suffered damages and the Defendants
have benefited from having access to the alleged confidential
information. The Plaintiffs are seeking damages, aggregating $220
million, but the Plaintiffs have provided no details or evidence to
substantiate their damages claim.

A Statement of Claim was also filed by Jetsgo Corporation in the Ontario
Superior Court on October 15, 2004 against the Corporation, an officer,
and a former officer (the "defendants"). The principal allegations are
that the defendants conspired together to unlawfully obtain Jetsgo's
proprietary information and to use this proprietary information to harm
Jetsgo and benefit WestJet. The Plaintiff is seeking damages, in an
amount to be determined plus $50 million, but the Plaintiff has provided
no details or evidence to substantiate its claim. On May 13, 2005 Jetsgo
Corporation declared Bankruptcy. As a result, this action has been
stayed and no further steps can be taken in the litigation unless a
court order is obtained.

Based on the results to date of (i) an internal investigation, (ii)
advice from independent industry experts, (iii) cross-examinations of
witnesses in the Air Canada proceedings, and (iv) evidence filed by the
Plaintiffs in support of various court applications, management believes
the amounts claimed are substantially without merit. The amount of loss,
if any, to the Corporation as a result of these two claims cannot be
reasonably estimated. The defense and investigation of these claims are
continuing.

The Corporation is party to other legal proceedings and claims that
arise during the ordinary course of business. It is the opinion of
management that the ultimate outcome of these matters will not have a
material effect upon the Corporation's financial position, results of
operations or cash flows.

7. Employee profit share provision:

The provision for employee profit share is estimated based on actual
year-to-date earnings results. The actual employee profit share amount
is to be determined by the Board of Directors based on audited financial
results at the completion of the financial year.

8. Comparative figures:

Certain prior period balances have been reclassified to conform to
current period's presentation.




Contact Information

  • WestJet
    Media Relations:
    Gillian Bentley
    (403) 444-2615
    Website: www.westjet.com