WESTJET AIRLINES $11.55 - Toronto symbol WJA

WESTJET AIRLINES $11.55 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com;
Shares outstanding: 139.4 million; Market cap: $1.6 billion; Dividend yield: 1.7%) was our “#1 Stock of the Year” for 2010 and 2011.

WestJet’s revenue rose 3.3% in the three months ended September 30, 2011, to $775.3 million from $684.1 million a year earlier. Demand for the company’s flights remained strong.

However, earnings per share fell 6.7%, to $0.28 from $0.30, mainly because WestJet’s fuel costs rose 27% from a year earlier, to an average of $0.89 a litre.

WestJet has a modern, fuel-efficient fleet and a low cost structure. To keep growing, it is selectively adding to the 71 cities it currently serves. The company is focusing on sunshine destinations, where it can add to its earnings by selling customized vacation packages that include flights.

In addition, WestJet is considering launching a new short-haul Canadian regional airline. That would let it feed more customers into its international routes and better serve its frequent-flying business clients.

WestJet is still a buy.

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