Brandon to learn results of WestJet wooing on Monday

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WestJet's new regional air service Encore will use Bombardier Q400 NextGen aircraft.

Brandon should find out first thing next week if the city's efforts to lure WestJet air service have proven successful.

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Brandon economic development officer Sandy Trudel (left) and Brandon Mayor Shari Decter Hirst (right) speak with a Bombardier representative while in Calgary last June to pitch the city to WestJet. (KEITH BORKOWSKY/BRANDON SUN)

On Monday, the Calgary-based airline will disclose whether its regional carrier, WestJet Encore, will initially serve the East or the West. An initial list of destinations is expected to be revealed at that time.

"Our lips are sealed," the company Tweeted out on Thursday when asked if Brandon was about to get good news.

The decision may not have much to do with Brandon per se. Monday's announcement is expected to reveal whether Encore will be based in Calgary or Toronto. Depending on that strategic decision, Brandon may lose out initially just by being in the wrong half of the country.

Over time, WestJet plans to grow the Encore fleet to serve more of the country, so even if Brandon is not on the first list, it's possible that the city could be added later.

"If a community is not included in the first schedule, it does not mean it will not be included in the future," a WestJet spokesman told the Sun last month. "As more aircrafts are delivered, we can add more destinations."

Encore will take flight in June, when the company takes delivery of its first two turboprops, Bombardier Q400s.

Last summer, WestJet offered more than 30 communities across the country a chance to make their pitch to tell the airline why they were the "right community" for the company.

Brandon city officials flew to Calgary in June to make an elaborate 25-minute presentation to the company.

The creative pitch included identification tags with phrases linked to Brandon, postcards with Brandon landscape and streetscape scenes, fake boarding passes to Brandon in a WestJet envelope and a mockup of a WestJet airline magazine.

The magazine was loaded with advertisements from the Wheat City, stories about Brandon and even a mock contest advertising dinner with the mayor and a shopping spree. The crossword puzzle offered many clues, but all had the same answer: Brandon.

More than 10,000 people also signed a local petition supporting WestJet service in Brandon.

Other communities known to have made presentations include Terrace, B.C., Radium Hot Springs, B.C., Thompson, Yorkton, Sask., Cold Lake, Alta., Medicine Hat, Alta., Prince Rupert, B.C., Nanaimo, B.C., Cranbrook, B.C., and Fort St. John, B.C.

Monday's announcement will follow a 2012 profit of $242.4 million for the airline, up 63 per cent from the previous year.

"What a great year," president and CEO Gregg Saretsky said Wednesday during a conference call with analysts.

The year ended on a high note with $60.9 million or 46 per diluted share of net income in the fourth quarter ended Dec. 31, the best quarter in the company's history excluding one-time gains in 2007 from lower federal taxes. The results were up more than 70 per cent from net earnings of $35.6 million or 26 cents per share a year earlier.

Revenue rose to $860.6 million from $781.5 million in the fourth quarter of 2011.

WestJet's 2012 full-year profit amounted to $1.78 per share with almost $3.43 billion in revenue.

The addition of Encore and a new fare structure that will be accompanied by a reconfiguration of its Boeing 737s to include "premium economy" seating are meant to further attract corporate and well-heeled travellers. The company said revenue from corporate customers grew by more than 20 per cent last year.

The new fare structure and premium seat offering are expected to add $50 million to $80 million in annual revenues, which analysts expect will drive a 25 to 40 cents per share boost to its bottom line.

"This will enable us to go to another level yet," added Bob Cummings, executive vice-president, sales, marketing and guest experience.

The airline announced that it plans to renew its share buyback program and will raise its quarterly dividend by 25 per cent. The payout will increase 10 cents from eight cents effective March 28 to shareholders of record on March 13.

It also unveiled a plan to cut $100 million of costs over 36 months to regain some of the cost advantage lost to Air Canada when its rival trimmed $530 million of costs.

"Even with Air Canada's transformation, we believe our costs are still somewhere between 10 and 15 per cent lower than Air Canada's," said Saretsky. "This business transform is meant to create even a wider gap again."

WestJet will also examine other ways to cut costs, including reducing the number of back office employees without resorting to layoffs, IT changes and using higher capacity aircraft on some routes.

WestJet was expected to earn 41 cents per share on $856 million of revenues in the quarter, and $1.72 per share on $3.42 billion of revenues for the year, according to analysts polled by Thomson Reuters.

The airline flew 17.4 million passengers last year, up 8.6 per cent from 2011, including 4.3 million in the fourth quarter.

Saretsky said the decision to repurchase up to five per cent of WestJet's outstanding shares and raise its dividend signals its confidence in the business and commitment to return value to shareholders.

The airline expects moderate revenue per seat mile growth in the first quarter on top of a six per cent increase last year. System capacity is expected to increase 7.5 to 8.5 per cent for the year. Domestic capacity will increase five to six per cent, after declining 0.9 per cent in 2012.

And the company foresees no deceleration in demand from customers.

"We're not seeing any guest resistance to higher fares which is coming both through the mix and higher ticket prices," Saretsky said.