* Co raises 2017 capex forecast
* Q1 profit dips, but beats estimates
* Shares fall nearly 6 pct
(Adds exec comments)
By Muvija M
May 2 Canada's WestJet Airlines Ltd
reported a 45 percent drop in quarterly profit on Tuesday, and
said it agreed to buy up to 20 Dreamliner planes from Boeing Co
as part of a plan to add fuel-efficient aircraft to its
Shares of the Calgary-based carrier fell as much as 5.7
percent to C$21.54 on the Toronto Stock Exchange as the aircraft
purchase was seen as expensive.
"(The order) will result in elevated capex for the next
several years," analysts at Cowen & Co wrote in a note, adding
that 10 Dreamliner planes will cost WestJet about C$1.85 billion
at current exchange rates.
WestJet raised its full-year spending target on Tuesday to
C$1 billion, up from a prior forecast of C$900 million-C$920
million, party due to the Boeing order.
WestJet will fund the aircraft purchase with cash from
operations, CEO Gregg Saretsky said on a post-earnings call.
The company, Canada's second largest carrier, said the
Boeing deal includes commitments for 10 787-9 Dreamliner
aircraft to be delivered between 2019 and 2021, with options to
buy 10 more aircraft.
The 787-9 planes — about 20 percent more fuel-efficient than
the 767s WestJet owns — will allow the airline to offer new
routes in Asia, South America and Europe amid stiff competition
from larger rival Air Canada.
WestJet said in late-April that it planned to launch an
ultra-low-cost carrier (ULCC) in Canada.
The low-cost carrier would be more of a "separate vehicle",
said Bob Cummings, an executive vice president at WestJet who is
responsible for the yet-to-be-named ULCC.
WestJet flew 5.7 million passengers in the first quarter, up
nearly 7 percent from a year earlier, helping the company post a
better-than-expected quarterly profit.
Excluding items, WestJet earned 56 Canadian cents per share,
according to Thomson Reuters I/B/E/S, beating analysts' average
estimate of 50 Canadian cents.
However, WestJet's aircraft fuel costs jumped 41.5 percent
to C$235.5 million ($172.3 million) in the quarter ended March
31, contributing to a sharp drop in profit.
WestJet's net earnings fell to C$48.3 million, in the first
quarter, from C$87.6 million, a year earlier.
The company also forecast a 23 percent to 26 percent rise in
fuel costs per liter for the current quarter.
Oil prices have nearly doubled from multi-year lows a year
ago, weighing on profit margins at several airlines.
WestJet's shares were down 3.8 percent at C$21.97 in
($1 = 1.3669 Canadian dollars)
(Reporting by Muvija M and John Benny in Bengaluru; Editing by
Sai Sachin Ravikumar and Shounak Dasgupta)