BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Application of 

WESTJET 

for an exemption from 49 U.S.C. § 41301 pursuant 

to 49 U.S.C. § 40109 and a foreign air carrier 

permit pursuant to 49 U.S.C. § 41301 

(U.S. – Canada) 

Docket DOT-OST-2001-11158 

APPLICATION OF WESTJET FOR RENEWAL OF EXEMPTION AUTHORITY 

AND A FOREIGN AIR CARRIER PERMIT 

Communications with respect to this document should be sent to: 

Gregg Saretsky 

President & C.E.O. 

WESTJET 

22 Aerial Place NE 

Calgary, Alberta 

CANADA T2E 3J1 

Barbara Munroe 

Vice President, Legal Services 

WESTJET 

22 Aerial Place NE 

Calgary, Alberta 

CANADA T2E 3J1 

Don H. Hainbach 

Jason E. Maddux 

Garofalo Goerlich Hainbach PC 

1200 New Hampshire Ave., NW, Ste. 800 

Washington, DC 20036 

202-776-3970 

Counsel for WestJet

December 2, 2011 

NOTICE: Any person may support or oppose this application by filing an answer and serving a 

copy of the answer on counsel for WestJet and upon each person served with this application. 

Answers to the exemption application must be filed on or before December 19, 2011, and 

answers to the permit application must be filed on or before December 23, 2011. 
BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Application of 

WESTJET 

for an exemption from 49 U.S.C. § 41301 pursuant 

to 49 U.S.C. § 40109 and a foreign air carrier 

permit pursuant to 49 U.S.C. § 41301 

(U.S. – Canada) 

Docket DOT-OST-2001-11158 

APPLICATION OF WESTJET FOR RENEWAL OF EXEMPTION AUTHORITY 

AND A FOREIGN AIR CARRIER PERMIT 

Pursuant to Section 40109 of Title 49 of the United States Code and Part 302 of the 

Department’s Economic Regulations, WestJet hereby requests renewal of its exemption authority 

to engage in: 

(i) scheduled foreign air transportation of persons, property and mail from points 

behind Canada via Canada and intermediate points to a point or points in the 

United States and beyond; 

(ii) charter foreign air transportation between any point or points in Canada and any 

point or points in the United States and beyond, provided that, except with respect 

to cargo charters, such service constitutes part of a continuous operation, with or 

without a change of aircraft, that includes service to Canada for the purpose of 

carrying local traffic between Canada and the United States; and 

(iii) other charters pursuant to Part 212 of the Department’s Economic Regulations. 
2 

WestJet’s exemption authority was most recently granted by Notice of Action Taken issued 

December 4, 2009, in Docket DOT-OST-2001-11158 and now is scheduled to terminate on 

December 4, 2011.1

Pursuant to section 41301 of Title 49 of the United States Code, Parts 211 and 302 of the 

Department’s Economic Regulations, and the Air Transport Agreement between the Government 

of the United States of America and the Government of Canada, WestJet further requests 

issuance of a foreign air carrier permit to enable WestJet to engage in the same foreign air 

transportation described above. 

WestJet requests that the authority described above be issued expeditiously and that the 

Department process this application pursuant to the streamlined regulatory procedures for 

licensing U.S. and foreign air carriers set forth in the Notice dated August 23, 2005 (Docket 

OST-2005-22228), and issue a single order (1) granting the requested renewed exemption 

authority for a two-year period or until the requested permit authority becomes effective, 

whichever occurs first, and (2) approving the corresponding foreign air carrier permit under the 

show-cause procedures described in the August 23, 2005 Notice. 

In support of this Application, WestJet states as follows: 

1. Name and Address of Applicant 

The full name and address of WestJet is: 

WestJet 

22 Aerial Place N.E. 

Calgary, Alberta, 

Canada T2E 3J1 

 

1

 WestJet hereby invokes the Administrative Procedure Act, 5 U.S.C. § 558(c), as 

implemented by 14 C.F.R. Part 377, to continue in effect the existing exemption referenced 

herein pending final decision on this renewal request. 
3 

2. Form of Organization 

WestJet is a partnership established under the Alberta Partnership Act, RSA 2000, c P-3. 

3. Operational Authority 

WestJet holds an Air Operator Certificate issued by Transport Canada, a copy of which is 

attached as Exhibit 1. WestJet also holds a license for international service issued by the 

Canadian Transportation Agency. A copy of this license is attached as Exhibit 2. 

4. Name and Address of Relevant Aviation Authority 

The competent Canadian air transport authorities with regulatory jurisdiction over 

WestJet are: 

Canadian Transportation Agency 

15 Eddy Street 

Gatineau, Quebec, Canada 

J8X 4B3 

Transport Canada 

330 Sparks Street 

Ottawa, ON

K1A 0N8

5. Bilateral Authority 

Aviation relations between the United States and Canada are governed by the Air 

Transport Agreement between the Government of the United States of America and the 

Government of Canada (2007) (“Agreement”). The authority requested here is consistent with 

the Agreement.

6. Proposed Services and Traffic Forecast 

WestJet currently operates extensive scheduled service between major cities in Canada 

and major cities in the United States, as well as Mexico and the Caribbean. WestJet also 
4 

operates charter service commensurate with demand. WestJet does not anticipate altering its 

operations as a result of grant of this application. 

7. Directors and Key Management Personnel 

The names and citizenship of WestJet’s directors and key management personnel are set 

forth in Exhibit 3. WestJet is not aware that any of the individuals listed in Exhibit 3 are related 

by blood or marriage.

8. Ownership and Control of Applicant 

 WestJet is a Canadian partnership comprised of WestJet Investment Corp. and WestJet 

Operations Corp., both of which are wholly owned by WestJet Airlines Ltd., a Canadian holding 

company. WestJet Airlines Ltd. is a publicly traded company on the Toronto Stock Exchange. 

Under Canadian rules, only owners of 10% or more of WestJet Airlines Ltd.’s capital stock, of 

which there are none, are required to file notice. 

9. Homeland Government and Other Relationships 

WestJet’s parent company, WestJet Airlines Ltd., is a publicly traded company and does 

not receive or expect to receive any financial assistance from the Canadian Government. 

WestJet does not hold an interest in any U.S. carrier, any other foreign air carrier, any persons 

engaged in the business of aeronautics, any common carrier, or any person whose principal 

business is the holding of stock in, or control of, any air carrier. 
5 

10. History of Operations

WestJet was founded in 1996 as WestJet Airlines Ltd. with three planes, five destinations 

and 220 friendly WestJetters.2 WestJet began U.S. service in 1997 and currently serves fourteen 

U.S. destinations year-round and two additional U.S. destinations seasonally. It now employs 

approximately 8,000 WestJetters flying 96 Boeing aircraft to 71 destinations in Canada, the 

United States, the Caribbean and Mexico.

11. Aircraft and Maintenance Arrangements 

WestJet currently operates 96 Boeing 737 aircraft. WestJet’s fleet composition is set 

forth in Exhibit 4. All WestJet aircraft are Canadian registered. 

All routine maintenance will be performed by WestJet. WestJet’s maintenance 

program complies with the International Civil Aviation Organization (ICAO) Pilots and Airmen 

Annexes 1, 6 (Part 1), and 7.

12. Code-share Arrangements 

WestJet does not participate in any code-share or co-operative arrangements with any 

U.S. or non-U.S. carrier that would affect the proposed service to the United States that are not 

already on file with the Department. 

 

2

 By application dated December 11, 2001, in Docket DOT-OST-2001-11156, WestJet 

Airlines Ltd. requested a transfer of its foreign air carrier permit to “WestJet,” pursuant to 49 

U.S.C. § 41303, explaining that it sought the transfer in connection with a corporate 

reorganization. That application remains pending, and WestJet would not object to that 

application being dismissed upon issuance of the foreign air carrier permit requested herein. 
6 

13. Financial Summary 

WestJet’s 2010 annual report, containing financial data for 2009, and its consolidated 

interim financial reports for the first three quarters of 2011 are included in Exhibit 5. 

14. Family Assistance Plan and Passenger Manifest Information 

WestJet’s Aviation Disaster Family Assistance Plan is already on file in Docket DOTOST-1998-3304. 

Pursuant to Part 243 of the Department’s Regulations, WestJet has already submitted its 

passenger manifest information collection process in Docket DOT-OST-1998-3305. 

15. Insurance 

Attached as Exhibit 6 is a copy of WestJet’s Foreign Air Carrier Insurance Certificate 

(OST Form 6411) verifying that WestJet’s insurance coverage complies with the Department’s 

insurance requirements. 

16. Safety and Tariff Violations 

WestJet has not had any safety or tariff violations or fatal accidents in the last five (5) 

years. 

17. Waiver of Warsaw Convention Limits 

A copy of WestJet’s OST Form 4523, covering the waiver of liability limitations under 

the Warsaw Convention, is already on file in Docket DOT-OST-1995-236. 
7 

18. Estimated Fuel Usage 

 WestJet anticipates that grant of the requested permit authority will not result in 

additional aircraft fuel consumption exceeding 10 million gallons. Accordingly, grant of the 

requested exemption would not constitute a “major regulatory action” under the Energy and 

Conservation Act of 1975, as defined in Section 313.4 of the Department’s regulations. 

When the Department previously granted WestJet’s exemption authority in this docket, it 

determined that WestJet was qualified to perform the proposed operations. Based on those 

findings, the Department concluded that grant of the requested authority would be consistent 

with the public interest. WestJet remains fully qualified to operate scheduled and charter foreign 

air transportation to the United States and on a worldwide basis. Renewal of WestJet’s existing 

exemption authority and issuance of a foreign air carrier permit would continue to provide 

consumers in the United States and Canada additional choices in air transportation, expand the 

trans-border service options currently available, increase competition, and therefore benefit the 

traveling public. Under these circumstances, grant of the authority requested here is consistent 

with the public interest. 

ACCORDINGLY, for the reasons discussed above, WestJet respectfully requests that the 

Department renew WestJet’s existing exemption authority and grant a foreign air carrier permit 

in order to engage in: 

(i) scheduled foreign air transportation of persons, property and mail from points 

behind Canada via Canada and intermediate points to a point or points in the 

United States and beyond; 
8 

(ii) charter foreign air transportation between any point or points in Canada and any 

point or points in the United States and beyond, provided that, except with respect 

to cargo charters, such service constitutes part of a continuous operation, with or 

without a change of aircraft, that includes service to Canada for the purpose of 

carrying local traffic between Canada and the United States; and 

(iii) other charters pursuant to Part 212 of the Department’s Economic Regulations. 

Respectfully submitted, 

Don H. Hainbach 

Jason E. Maddux 

Counsel for WestJet 

December 2, 2011
CERTIFICATE OF SERVICE 

 I hereby certify that on this 2nd day of December 2011, a copy of the foregoing 

Application has been served by electronic mail on the parties named below. 

 _________________________________ 

 Vanessa Krasniewicz 

Marshall S. Sinick (Alaska/Horizon) msinick@ssd.com 

Carl Nelson, Jr. (American/American Eagle) carl.nelson@aa.com 

John Richardson (Amerijet International) jrichardson@johnlrichardson.com 

Gerald Murphy (ASA/ExpressJet/SkyWest) gmurphy@crowell.com 

Jennifer Trock (Compass) jennifer.trock@pillsburylaw.com 

Alexander Van der Bellen (Delta) sascha.vanderbellen@delta.com 

Jeff Morgan (Delta) jeff.morgan@delta.com 

Sametta Barnett (Delta) Sametta.c.barnett@delta.com 

Lisa Harig (GoJet) lharig@mklawdc.com 

Jonathan Hill (Hawaiian/JetBlue/Air Wisconsin) jhill@dowlohnes.com 

Malcolm Benge (North American) mlbenge@zsrlaw.com 

Bob Cohn (Republic/Shuttle America/Chautauqua) robert.cohn@hoganlovells.com 

Pat Rizzi (Republic/Shuttle America/Chautauqua) patrick.rizzi@hoganlovells.com 

David Hayes dhayes@transstates.net 

Dan Weiss (United/Continental) dan.weiss@coair.com 

Howard Kass (US Airways) Howard.kass@usairways.com 

Benjamin Slocum (US Airways) benjamin.slocum@usairways.com 

Barbara Russell (Virgin America) barbara.russell@virginamerica.com 

John Allen (FAA) john.allen@faa.gov 

Kris Urs (State Department) urskr@state.gov 

Robert Finamore (DOT) Robert.finamore@dot.gov 
WESTJET 

______________________________________________________________________________ 

EXHIBIT 1 

AIR OPERATOR CERTIFICATE 

WESTJET 

______________________________________________________________________________ 

EXHIBIT 2 

CTA INTERNATIONAL LICENSE 

WESTJET 

______________________________________________________________________________ 

EXHIBIT 3 

KEY MANAGEMENT PERSONNEL 
Name & Position Business Address Citizenship 

Clive J. Beddoe 

Chairman of the Board 

22 Aerial Place N.E. 

Calgary, Alberta, 

Canada T2E 3J1 

British and 

Canadian 

Hugh J. Bolton 

Director 

Same as above Canadian 

Ron Brenneman 

Director 

Same as above Canadian 

Brett Godfrey 

Director 

Same as above Australian 

Don Hougan 

Director 

Same as above Canadian 

Allan Jackson 

Director 

Same as above Canadian 

S. Barry Jackson 

Director 

Same as above Canadian 

Wilmot L. Matthews 

Director 

Same as above Canadian 

Janice Gaye Rennie

Director 

Same as above Canadian 

L. Jacques Ménard 

Director 

Same as above Canadian 

Larry Pollock 

Director 

Same as above Canadian 

Arthur R.A. Scace 

Director 

Same as above Canadian 

Gregg Saretsky 

Director, President and CEO 

Same as above U.S. and 

Canadian 

Barbara Munroe 

VP General Counsel and Secretary 

Same as above Canadian 
Vito Culmone 

EVP - Finance and CFO 

Same as above Canadian 

Dr. Hugh Dunleavy 

EVP – Strategy 

Same as above U.S. and 

U.K. 

Cheryl Smith 

EVP & Chief Information Officer 

Same as above U.S. 

Bob Cummings 

EVP – Marketing and Distribution 

Same as above Canadian 

Cam Kenyon 

EVP – Operations 

Same as above U.S. 

Ferruccio G.F. Pugliese 

EVP – People and Culture 

Same as above Canadian 

Duncan Bureau 

VP – Sales 

Toronto Canadian 

Ian Fraser 

Chief Pilot 

Same as above Canadian 

Janice Paget 

VP – Finance 

Same as above Canadian 

Chris Avery 

VP – WestJet Vacations 

Same as above Canadian 

Richard Bartrem 

VP – Communications & 

Community Relations 

Same as above Canadian 

Lauri Feser 

VP – Marketing 

Same as above Canadian 

Tyson Matheson 

VP – People Relations & Inflight 

Services 

Same as above Canadian 

Mike McNaney 

VP – Environment & Regulatory 

Same as above Canadian 
Affairs 

Dale Tinevez 

VP – Guest Services 

Same as above Canadian 

Len Winzinowich 

VP – Flight Operations 

Same as above Canadian 

Russ White 

VP – Technical Operations 

Same as above Canadian 

Candice Li 

VP – Treasury 

Same as above Canadian 

Robert Palmer 

VP – Controller 

Same as above Canadian 

John MacLeod 

VP – Network Management & 

Alliances 

Same as above Canadian 

Blair Pollard 

VP – Talent Management 

Same as above Canadian 

Scott Wilson 

VP – Safety Security & Quality

Same as above Canadian 
WESTJET 

______________________________________________________________________________ 

EXHIBIT 4 

AIRCRAFT FLEET 
WestJet

Fleet Summary

As At October 31, 2011

Aircraft Type Registration Aircraft Type Registration

Number Number

Boeing 737 C-GPWS Boeing 737 C-FWBG

Boeing 737 C-GWSB Boeing 737 C-FWBL

Boeing 737 C-GWSI Boeing 737 C-FWBW

Boeing 737 C-GWSJ Boeing 737 C-FWBX

Boeing 737 C-GWSL Boeing 737 C-FWCC

Boeing 737 C-GWSK Boeing 737 C-FWCN

Boeing 737 C-GBWS Boeing 737 C-GWBF

Boeing 737 C-GWJU Boeing 737 C-GWBJ

Boeing 737 C-GWCQ Boeing 737 C-GWBT

Boeing 737 C-GWCT Boeing 737 C-GWCM

Boeing 737 C-GWCY Boeing 737 C-FWSF

Boeing 737 C-GXWJ Boeing 737 C-FWSO

Boeing 737 C-GEWJ Boeing 737 C-FWSV

Boeing 737 C-FIWS Boeing 737 C-FWSX

Boeing 737 C-FJWS Boeing 737 C-FWSY

Boeing 737 C-FKWS Boeing 737 C-GWAZ

Boeing 737 C-GLWS Boeing 737 C-GWJO

Boeing 737 C-FZWS Boeing 737 C-FGWJ

Boeing 737 C-GRWS Boeing 737 C-GCWJ

Boeing 737 C-GTWS Boeing 737 C-FUWS

Boeing 737 C-GUWS Boeing 737 C-GWJF

Boeing 737 C-GWSE Boeing 737 C-FMWJ

Boeing 737 C-GWSH Boeing 737 C-GWBN

Boeing 737 C-FBWJ Boeing 737 C-GWBX

Boeing 737 C-FXWJ Boeing 737 C-GWCN

Boeing 737 C-FEWJ Boeing 737 C-GYWJ

Boeing 737 C-FIWJ Boeing 737 C-GMWJ

Boeing 737 C-FTWJ Boeing 737 C-GGWJ

Boeing 737 C-GWJE Boeing 737 C-GWJG

Boeing 737 C-GWJK Boeing 737 C-GQWJ

Boeing 737 C-FCWJ Boeing 737 C-GVWJ

Boeing 737 C-GWSU Boeing 737 C-GUWJ

Boeing 737 C-FWSI Boeing 737 C-FWSK

Boeing 737 C-FBWS Boeing 737 C-GWJT

Boeing 737 C-GWSN Boeing 737 C-GKWJ

Boeing 737 C-GWSO Boeing 737 C-GJWS

Boeing 737 C-GWSP Boeing 737 C-GZWS

Boeing 737 C-GWSQ Boeing 737 C-GWSA

Boeing 737 C-GWSY Boeing 737 C-GWBL

Boeing 737 C-GSWJ Boeing 737 C-GWWJ

Boeing 737 C-FLWJ Boeing 737 C-GWSR

Boeing 737 C-FKIW Boeing 737 C-FWSE

Boeing 737 C-FIBW Boeing 737 C-GWSZ

Boeing 737 C-FWAD Boeing 737 C-GWSX

Boeing 737 C-FWAF Boeing 737 C-FKWJ

Boeing 737 C-FWAI Boeing 737 C-FCNW

Boeing 737 C-FWAO Boeing 737 C-FAWJ

Boeing 737 C-FWAQ Boeing 737 C-GWSV
WESTJET 

______________________________________________________________________________ 

EXHIBIT 5 

FINANCIAL DATA 
 

Condensed Consolidated Interim Financial Statements and Notes 

For the three and nine months ended September 30, 2011 and 2010 
 WestJet Third Quarter 2011 │ 1

Consolidated Statement of Earnings 

(Stated in thousands of Canadian dollars, except per share data) 

(Unaudited) 

Three months ended 

September 30 

Nine months ended 

September 30 

Note 2011 2010 2011 2010 

 

Revenues: 

 Guest 714,621 632,659 2,079,053 1,751,438 

 Other 60,664 51,440 210,942 163,637 

775,285 684,099 2,289,995 1,915,075 

Expenses: 

Aircraft fuel 230,764 170,828 680,304 495,332 

Airport operations 106,051 94,051 314,266 287,826 

Flight operations and navigational charges 89,063 83,890 259,628 245,333 

Sales and distribution 67,846 64,928 206,491 188,696 

Marketing, general and administration 50,624 44,369 152,926 142,327 

Depreciation and amortization 43,624 42,598 130,439 127,896 

Aircraft leasing 41,384 36,754 123,721 106,409 

Maintenance 38,317 30,268 103,444 86,620 

Inflight 35,519 30,680 103,334 92,414 

Employee profit share 5,973 8,567 18,142 14,780 

709,165 606,933 2,092,695 1,787,633 

Earnings from operations 66,120 77,166 197,300 127,442 

 

Non-operating income (expense): 

Finance income 3,865 2,531 11,604 6,303 

Finance costs ( ) 14,682) ( 17,670 ( ) 46,465) ( 54,033

Gain on foreign exchange 1,255 441 3,393 1,753 

Gain (loss) on disposal of property and 

equipment ( ) 20) ( 11 ( 595 11)

Loss on derivatives 10 ( ) 1,233) ( 473 ( ) 7,649) ( 399

( ) 10,815) ( 15,182 ( ) 39,128) ( 45,781

Earnings before income tax 55,305 61,984 158,172 81,661 

 

Income tax expense: 

Current ( 383 222) 962 1,115 

Deferred 16,260 17,770 44,092 27,517 

16,038 18,153 45,054 28,632 

Net earnings 39,267 43,831 113,118 53,029 

Earnings per share: 9 

Basic 0.28 0.30 0.81 0.37 

Diluted 0.28 0.30 0.80 0.36 

The accompanying notes are an integral part of the condensed consolidated interim financial statements. 
 WestJet Third Quarter 2011 │ 2

Consolidated Statement of Financial Position 

(Stated in thousands of Canadian dollars) 

(Unaudited) 

September 30 December 31 

Note 2011 2010 

 

Assets 

Current assets: 

Cash and cash equivalents 4 1,320,091 1,187,899 

Accounts receivable 30,859 17,518 

Prepaid expenses, deposits and other 69,815 53,761 

Inventory 28,650 26,095 

 1,449,415 1,285,273 

Non-current assets: 

Property and equipment 5 1,936,747 1,989,522 

Intangible assets 14,487 13,018 

Other assets 93,911 96,167 

Total assets 3,494,560 3,383,980 

 

Liabilities and shareholders’ equity 

Current liabilities: 

Accounts payable and accrued liabilities 337,046 287,710 

Advance ticket sales 433,801 336,926 

Non-refundable guest credits 39,594 36,381 

Current portion of long-term debt 7 165,151 178,337 

Current portion of obligations under finance leases 75 108 

975,667 839,462

Non-current liabilities: 

Maintenance provisions 6 117,718 106,711 

Long-term debt 7 725,556 848,465 

Obligations under finance leases 3,193 3,249 

Other liabilities 9,483 8,958 

Deferred income tax 315,491 268,069 

Total liabilities 2,147,108 2,074,914 

 

Shareholders’ equity: 

Share capital 8 629,994 647,637 

Equity reserves 72,060 66,726 

Hedge reserves 257 (10,470) 

Retained earnings 645,141 605,173 

Total shareholders’ equity 1,347,452 1,309,066 

 

Total liabilities and shareholders’ equity 3,494,560 3,383,980 

The accompanying notes are an integral part of the condensed consolidated interim financial statements. 
 WestJet Third Quarter 2011 │ 3

Consolidated Statement of Cash Flows

(Stated in thousands of Canadian dollars) 

(Unaudited) 

Three months ended 

September 30 

Nine months ended 

September 30 

Note 2011 2010 2011 2010 

 

Operating activities: 

Net earnings 39,267 43,831 113,118 53,029 

Items not involving cash: 

Depreciation and amortization 43,624 42,598 130,439 127,896 

Change in long-term maintenance provisions 8,037 7,292 22,541 20,849 

Change in other liabilities ( ) 183) ( 150 ( ) 115) ( 530

Amortization of hedge settlements 350 350 1,050 1,049 

Loss on derivative instruments 1,233 473 7,649 399 

(Gain) loss on disposal of property and 

equipment 20 ) ( 68 11 ) ( 744

Share-based payment expense 8 2,903 2,772 10,015 12,507 

Income tax credit − − − ( 1,667)

Deferred income tax expense 16,260 17,770 44,092 27,517 

Unrealized foreign exchange (gain) loss ( 71 696) 1,387 222 

Change in non-cash working capital 78,429 48,339 122,061 132,450 

Change in other assets (1,942) ) ( 1,445 (4,727) ) ( 4,274

187,302 161,833 447,521 368,703 

 

Investing activities: 

Aircraft additions ( ) 8,682) ( 3,938 ( ) 56,290) ( 18,727

Other property and equipment and intangible 

additions ( ) 8,731) ( 6,817 ( ) 25,067) ( 12,064

( ) 17,413) ( 10,755 ( ) 81,357) ( 30,791

 

Financing activities: 

Repayment of long-term debt ( ) 46,158) ( 41,322 ( ) 137,204) ( 123,689

Decrease in obligations under finance leases ( ) 18) ( 87 ( ) 90) ( 505

Shares repurchased 8 ( 16,740) − ( 74,570) −

Dividends paid ( 6,912) − ( 28,086) −

Issuance of common shares 34 − 34 520 

Change in other assets 76 77 ( ) 601) ( 4,411

Change in non-cash working capital ( 1,679 2) 7,092 2,621 

( ) 69,720) ( 39,653 ( ) 233,425) ( 125,464

 

Cash flow from operating, investing and 

financing activities 100,169 111,425 132,739 212,448 

Effect of foreign exchange on cash and cash 

equivalents 3,891 ) ( 1,525 ( 434 547)

Net change in cash and cash equivalents 104,060 109,900 132,192 212,882 

 

Cash and cash equivalents, beginning of period 1,216,031 1,108,163 1,187,899 1,005,181 

 

Cash and cash equivalents, end of period 4 1,320,091 1,218,063 1,320,091 1,218,063 

Cash taxes received (paid) 1,183 ) ( 712 417 ) ( 2,367

Cash interest received 4,512 1,819 10,574 4,493 

Cash interest paid 12,630 15,081 39,634 46,764 

The accompanying notes are an integral part of the condensed consolidated interim financial statements. 
 WestJet Third Quarter 2011 │ 4

Consolidated Statement of Changes in Equity

(Stated in thousands of Canadian dollars) 

(Unaudited) 

Nine months ended September 30 

Note 2011 2010 

Share capital: 8 

 Balance, beginning of period 647,637 633,075 

Issuance of shares pursuant to stock option plan 34 520 

Transfer of share-based payments expense 4,681 24,631 

Shares repurchased (22,358) −

629,994 658,226 

 

Equity reserves: 8 

Balance, beginning of period 66,726 75,866 

Share-based payments expense 10,015 12,507 

Transfer of share-based payments expense ( (24,631) 4,681)

72,060 63,742 

 

Hedge reserves: 

Balance, beginning of period (10,470) (14,852) 

Other comprehensive income 10,727 5,703 

257 (9,149) 

 

Retained earnings: 

Balance, beginning of period 605,173 542,921 

Dividends declared (20,938) −

Shares repurchased (52,212) −

Net earnings 113,118 53,029 

645,141 595,950 

 

Total shareholders’ equity 1,347,452 1,308,769 

The accompanying notes are an integral part of the condensed consolidated interim financial statements. 
 WestJet Third Quarter 2011 │ 5

Consolidated Statement of Comprehensive Income 

(Stated in thousands of Canadian dollars) 

(Unaudited) 

Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

 

Net earnings 39,267 43,831 113,118 53,029 

 

Other comprehensive income, net of tax: 

Amortization of hedge settlements to aircraft leasing 350 350 1,050 1,049 

Net unrealized (loss) gain on foreign exchange 

derivatives under cash flow hedge accounting (i) 9,238 (2,271) 5,559 (88) 

Reclassification of net realized loss on foreign 

exchange derivatives to net earnings (ii) 1,444 145 4,126 1,246 

Net unrealized (loss) gain on fuel derivatives under 

cash flow hedge accounting (iii) − (221) 1,952 (2,070) 

Reclassification of net realized loss (gain) on fuel 

derivatives to net earnings (iv) − 2,192 (1,960) 5,566 

11,032 195 10,727 5,703 

 

Total comprehensive income 50,299 44,026 123,845 58,732 

(i) Net of income taxes of $(3,173) and $(1,898) (2010 – $809 and $29). 

(ii) Net of income taxes of $(500) and $(1,435) (2010 – $(55) and $(469)). 

(iii) Net of income taxes of $nil and $(675) (2010 – $83 and $779). 

(iv) Net of income taxes of $nil and $678 (2010 – $(825) and $(2,095)). 

The accompanying notes are an integral part of the condensed consolidated interim financial statements. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

WestJet Third Quarter 2011 │ 6

1. Statement of significant accounting policies 

The condensed consolidated interim financial statements of WestJet Airlines Ltd. (the Corporation) for the three and nine months 

ended September 30, 2011 and 2010, were authorized for issue by the Board of Directors on November 8, 2011. The 

Corporation is a public company incorporated and domiciled in Canada. The Corporation provides airline service and travel 

packages. The Corporation’s shares are publicly traded on the Toronto Stock Exchange (TSX). The principal business address is 

22 Aerial Place N.E., Calgary, Alberta, T2E 3J1 and the registered office is Suite 1400, 350 - 7 Avenue SW, Calgary, Alberta, T2P 

3N9. 

(a) Basis of presentation 

These condensed consolidated interim financial statements and the notes thereto have been prepared in accordance with IAS 34 

– Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should 

be read in conjunction with the consolidated financial statements of the Corporation for the years ended December 31, 2010 and 

2009, and the Corporation’s first consolidated interim financial statements filed under International Financial Reporting Standards 

(IFRS) for the three months ended March 31, 2011 and 2010. 

For all periods up to and including the year ended December 31, 2010, the Corporation prepared its consolidated financial 

statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP). These condensed consolidated 

interim financial statements for the three and nine months ended September 30, 2011 and 2010 have been prepared in 

accordance with IFRS. For an explanation of the significant accounting policies and principal adjustments made by the 

Corporation in the transition to IFRS from Canadian GAAP refer to note 13 and the consolidated interim financial statements for

the three months ended March 31, 2011 and 2010. There have been no changes to the Corporation’s accounting policies from 

those disclosed in the consolidated interim financial statements for the three months ended March 31, 2011 and 2010. 

(b) Principles of consolidation 

The accompanying condensed consolidated interim financial statements include the accounts of the Corporation and its wholly 

owned subsidiaries, as well as the accounts of five special-purpose entities (SPEs), which are utilized to facilitate the financing of 

aircraft. The Corporation has no equity ownership in the SPEs; however, the substance of the relationship between the 

Corporation and the SPEs indicates that they are controlled by the Corporation. Accordingly, the accounts of the SPEs have been

consolidated in the Corporation’s financial statements and all intercompany balances and transactions have been eliminated. 

(c) Seasonality 

The Corporation experiences increased domestic travel in the summer months and more demand for transborder and 

international travel over the winter months, thus reducing the effects of seasonality on net earnings. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 7

1. Statement of significant accounting policies (continued)

(d) New standards and interpretations 

The International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC) 

have issued the following standards and amendments that have not been applied in preparing these condensed consolidated 

interim financial statements as their effective dates fall in annual periods beginning subsequent to the current reporting period. 

Proposed 

standards/amendments Description Previous standard 

Effective 

date (i) 

IFRS 7 – Financial Instruments: 

Disclosures (amendment)

Enhances the disclosure requirements for the 

transfer of financial assets to better understand 

the nature and timing of risk associated with 

these transfers. 

IFRS 7 – Financial 

Instruments: Disclosures 

July 1, 

2011 

IAS 12 – Income Taxes 

(amendment)

Requires an entity to measure the deferred tax 

relating to an asset based on whether the entity 

expects to recover the carrying amount through 

use or sale. 

IAS 12 – Income Taxes July 1, 

2011 

IAS 1 – Financial Statement 

Presentation (amendment) 

Amendments to improve the presentation of other 

comprehensive income (OCI) by grouping 

together items in OCI that will be reclassified to 

the statement of earnings and those that will not. 

IAS 1 – Financial 

Statement Presentation 

July 1, 

2012 

IFRS 9 – Financial Instruments 

(new) 

Initially issued in November 2009 to address the 

classification and measurement of financial 

assets. Additional guidance issued in October 

2010 on the classification and measurement of 

financial liabilities. 

IAS 39 – Financial 

Instruments: Recognition 

and Measurement 

January 1, 

2013 

IFRS 10 – Consolidated Financial 

Statements (new) 

Builds on the existing principles of control and 

elaborates on the definition of control when 

determining whether an entity should be 

consolidated or not. 

SIC-12 – Consolidation – 

Special Purpose Entities 

IAS 27 – Consolidated 

and Separate Financial 

Statements

January 1, 

2013 

IFRS 11 – Joint Arrangements 

(new) 

Focuses on the rights and obligations of an 

arrangement rather than its legal form and 

requires a single method to account for interests 

in jointly controlled entities. 

IAS 31 – Interests in 

Joint Ventures 

SIC 13 – Jointly 

Controlled Entities – 

Non-Monetary 

Contributions by 

Venturers

January 1, 

2013 

IFRS 12 – Disclosure of 

Interests in Other Entities (new) 

A new standard detailing disclosure requirements 

for all forms of interests in other entities, 

including joint arrangements, associates, special 

purpose entities and other off-statement of 

financial position vehicles. 

Various – no direct 

replacement

January 1, 

2013 

IFRS 13 – Fair Value 

Measurement (new)

Sets out a single framework for measuring fair 

value and disclosure requirements surrounding 

the inputs and assumptions used in determining 

fair value. 

Various – no direct 

replacement 

January 1, 

2013 

(i) Effective for annual periods beginning on or after the stated date. 

Management continues to evaluate the potential impact of standards and amendments effective in future periods on both 

quantitative and qualitative disclosure. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 8

2. Capital management 

The Corporation’s policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to 

sustain the future development of the airline. The Corporation manages its capital structure and makes adjustments in light of 

changes in economic conditions and the risk characteristics of the underlying assets. 

In order to maintain or adjust the capital structure, the Corporation may, from time to time, purchase shares for cancellation 

pursuant to normal course issuer bids, issue new shares, pay dividends and adjust current and projected debt levels. 

In the management of capital, the Corporation includes shareholders’ equity (excluding hedge reserves), long-term debt, finance

leases, cash and cash equivalents and the Corporation’s off-balance-sheet obligations related to its aircraft operating leases, all 

of which are presented in detail below.

 The Corporation monitors its capital structure on a number of bases, including adjusted debt-to-equity and adjusted net debt to 

earnings before net finance costs, taxes, depreciation and amortization and aircraft leasing (EBITDAR). EBITDAR is a non-GAAP 

financial measure commonly used in the airline industry to evaluate results by excluding differences in the method by which an 

airline finances its aircraft. In addition, the Corporation will adjust EBITDAR for one-time special items, for non-operating gains 

and losses on derivatives and for gains and losses on foreign exchange. The calculation of EBITDAR is a measure that does not 

have a standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by 

other issuers. The Corporation adjusts debt to include its off-balance-sheet aircraft operating leases. Common industry practice is 

to multiply the trailing 12 months of aircraft leasing expense by 7.5 to derive a present-value debt equivalent. The Corporation 

defines adjusted net debt as adjusted debt less cash and cash equivalents. The Corporation defines equity as total shareholders’ 

equity, excluding hedge reserves. 

September 30, 2011 December 31, 2010 Change 

Adjusted debt-to-equity 

Long-term debt (i) 890,707 1,026,802 (136,095)

Obligations under finance leases (ii) 3,268 3,357 ) (89

Off-balance-sheet aircraft leases (iii) 1,205,198 1,075,358 129,840

Adjusted debt 2,099,173 2,105,517 ) (6,344

Total shareholders’ equity 1,347,452 1,309,066 38,386

Add: Hedge reserves (257) 10,470 ) (10,727

Adjusted equity 1,347,195 1,319,536 27,659

Adjusted debt-to-equity 1.56 1.60 (2.5%) 

Adjusted net debt to EBITDAR (iv)

Net earnings 150,285 90,197 60,088

Add: 

Net finance costs (v) 48,135 61,004 ) (12,869

Taxes 59,690 43,268 16,422

Depreciation and amortization 173,005 170,462 2,543

Aircraft leasing 160,693 143,381 17,312

Other (vi) 3,065 (2,545) 5,610

EBITDAR 594,873 505,767 89,106

Adjusted debt (as above) 2,099,173 2,105,517 (6,344)

Less: Cash and cash equivalents (1,320,091) (1,187,899) ) (132,192

Adjusted net debt 779,082 917,618 ) (138,536

Adjusted net debt to EBITDAR 1.31 1.81 (27.6%) 

(i) As at September 30, 2011, long-term debt includes the current portion of long-term debt of $165,151 (December 31, 2010 – $178,337) and longterm debt of $725,556 (December 31, 2010 – $848,465). 

(ii) As at September 30, 2011, obligations under finance leases includes the current portion of obligations under finance leases of $75 (December 31, 

2010 – $108) and obligations under finance leases of $3,193 (December 31, 2010 – $3,249). 

(iii) Off-balance-sheet aircraft leases are calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. As at September 30, 2011, the 

trailing 12 months of aircraft leasing costs totalled $160,693 (December 31, 2010 – $143,381). 

(iv) The trailing 12 months are used in the calculation of EBITDAR. 

(v) As at September 30, 2011 net finance costs includes the trailing 12 months of finance income of $15,211 (December 31, 2010 – $9,910) and the 

trailing 12 months of finance costs of $63,346 (December 31, 2010 – $70,914). 

(vi) As at September 30, 2011, other includes the trailing 12 months foreign exchange gain of $4,219 (December 31, 2010 – gain of $2,579) and the 

trailing 12 months non-operating loss on derivatives of $7,284 (December 31, 2010 – loss of $34). 

As at September 30, 2011 and December 31, 2010, the Corporation exceeded its internal targets of an adjusted debt-to-equity 

measure of no more than 3.00 and an adjusted net debt to EBITDAR measure of no more than 3.00. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 9

3. Employee counts and compensation 

The Corporation employed 7,011 full-time equivalent employees as at September 30, 2011 (September 30, 2010 – 6,581). The 

following table reconciles the Corporation’s compensation expense items to where the amounts are presented on the 

consolidated interim statement of earnings:

Note 

Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Salaries and benefits (i) 116,975 106,619 356,612 330,195

Employee share purchase plan 14,951 13,323 43,415 38,711

Employee profit share (ii) 5,973 8,567 18,142 14,780

Share-based payment expense 8 2,903 2,772 10,015 12,507

 140,802 131,281 428,184 396,193

Presented on the consolidated interim statement of earnings as follows: 

Airport operations 19,715 19,169 61,035 58,401 

Flight operations and navigational charges 45,248 41,894 138,991 129,220

Sales and distribution 10,816 11,177 34,232 34,597

Marketing, general and administration 20,349 17,009 62,933 58,745

Maintenance 10,727 9,534 32,490 28,805

Inflight 27,975 23,930 80,361 71,645 

Employee profit share 5,972 8,568 18,142 14,780

 140,802 131,281 428,184 396,193

(i) Salaries and benefits expense is classified in the consolidated interim statement of earnings based on the related nature of the service performed. 

(ii) Employee profit share expense is a variable payment based on a percentage of pre-tax earnings available to all employees. 

4. Cash and cash equivalents 

September 30 

2011 

December 31 

2010 

Cash and cash equivalents: 

Bank balances 396,678 229,817 

Short-term investments 923,413 958,082 

1,320,091 1,187,899 

Included in these balances, as at September 30, 2011, the Corporation has US-dollar cash and cash equivalents totalling US 

$49,500 (December 31, 2010 – US $66,194). 

As at September 30, 2011, cash and cash equivalents includes total restricted cash of $42,472 (December 31, 2010 – $28,583). 

Included in this amount is $35,296 (December 31, 2010 – $21,578), representing cash held in trust by WestJet Vacations Inc., a 

wholly owned subsidiary of the Corporation, in accordance with regulatory requirements governing advance ticket sales for 

certain travel related activities; $6,806 (December 31, 2010 – $6,691) for security on the Corporation’s facilities for letters of 

guarantee; and, in accordance with U.S. regulatory requirements, US $354 (December 31, 2010 – US $315) representing cash 

not yet remitted for passenger facility charges. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 10

5. Property and equipment 

January 1 

2011 

Net 

additions Depreciation(i) Transfers 

September 30 

2011 

Aircraft(ii) 1,616,263 31,599 (111,660) 15,047 1,551,249

Ground property and equipment 60,298 6,459 (8,057) 569 59,269 

Spare engines and parts 72,952 12,188 (4,550) 2,538 83,128 

Deposits on aircraft 98,344 19,521 − (11,979) 105,886 

Buildings 122,662 4 (2,574) − 120,092 

Leasehold improvements 6,617 1,290 (420) 2,299 9,786 

Assets under finance leases 3,243 − (104) − 3,139 

Assets under development 9,143 3,529 − (8,474) 4,198 

1,989,522 74,590 (127,365) − 1,936,747 

January 1 

2010 

Net 

additions Depreciation(i) Transfers 

December 31 

2010 

Aircraft(ii) 1,748,250 10,483 (145,635) 3,165 1,616,263

Ground property and equipment 67,591 3,429 (10,741) 19 60,298 

Spare engines and parts 71,846 6,334 (5,228) − 72,952 

Deposits on aircraft 81,001 17,343 − − 98,344 

Buildings 126,385 324 (3,312) (735) 122,662 

Leasehold improvements 7,009 115 (507) − 6,617 

Assets under finance leases 3,672 − (429) − 3,243 

Assets under development 2,597 9,772 − (3,226) 9,143 

2,108,351 47,800 (165,852) (777) 1,989,522 

(i) For the nine months ended September 30, 2011, total aircraft depreciation expense was $48,017 (year ended December 31, 2010 - $60,739) for 

overhaul components and $63,643 (year ended December 31, 2010 - $84,896) for aircraft, including live satellite television equipment. 

(ii) Aircraft includes (a) aircraft (b) engine, airframe and landing gear overhauls, and (c) live satellite television equipment. 

September 30, 2011 Cost 

Accumulated 

depreciation 

Net book 

value 

Aircraft 2,510,066 (958,817) 1,551,249 

Ground property and equipment 131,458 (72,189) 59,269 

Spare engines and parts 121,629 (38,501) 83,128 

Deposits on aircraft 105,886 − 105,886 

Buildings 135,820 (15,728) 120,092 

Leasehold improvements 13,555 (3,769) 9,786 

Assets under finance leases 4,221 (1,082) 3,139 

Assets under development 4,198 − 4,198 

3,026,833 (1,090,086) 1,936,747 

December 31, 2010 Cost 

Accumulated 

depreciation 

Net book 

value 

Aircraft 2,463,536 (847,273) 1,616,263 

Ground property and equipment 124,674 (64,376) 60,298 

Spare engines and parts 106,903 (33,951) 72,952 

Deposits on aircraft 98,344 – 98,344 

Buildings 135,817 (13,155) 122,662 

Leasehold improvements 9,965 (3,348) 6,617 

Assets under finance leases 4,413 (1,170) 3,243 

Assets under development 9,143 – 9,143 

2,952,795 (963,273) 1,989,522 

The net book value of the property and equipment pledged as collateral for the Corporation’s long-term debt was $1,478,512 as 

at September 30, 2011 (December 31, 2010 – $1,592,871). 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 11

6. Maintenance provisions and reserves 

The Corporation’s aircraft leasing agreements require leased aircraft to be returned to the lessor in a specified condition. The 

Corporation recognizes maintenance costs over the lease term based on the passage of time and aircraft usage. 

January 1 

2011 Additions 

Foreign 

exchange Accretion Transfers Settled

September 30

2011 

Maintenance provisions: 

Current portion(i) 12,372 2,185 (290) − 18,538 (16,783) 16,022

Long-term portion 106,711 18,826 7,004 3,715 (18,538) − 117,718

119,083 21,011 6,714 3,715 − (16,783) 133,740

January 1 

2010 Additions 

Foreign 

exchange Accretion Transfers Settled 

December 31 

2010 

Maintenance provisions: 

Current portion (i) 8,031 1,073 (692) − 6,763 (2,803) 12,372 

Long-term portion 91,227 23,202 (5,680) 4,725 (6,763) − 106,711 

99,258 24,275 (6,372) 4,725 − (2,803) 119,083 

(i) The current portion of maintenance provisions is included in accounts payable and accrued liabilities. 

A certain number of aircraft leases also require the Corporation to pay a maintenance reserve to the lessor. Maintenance 

reserves are refunded when qualifying maintenance is performed and therefore represent a reimbursement of the related 

maintenance provision recognized. Where the amount of maintenance reserves paid exceeds the estimated amount recoverable 

from the lessor, the non-recoverable amount is recorded as maintenance expense in the period it is incurred. 

As at September 30, 2011, maintenance reserves included in prepaid expenses, deposits and other is $15,898 (December 31, 

2010 – $12,045), $3,133 (December 31, 2010 – $nil) included in accounts receivable and the long-term portion of maintenance 

reserves included in other assets is $36,447 (December 31, 2010 – $41,736). 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 12

7. Long-term debt 

September 30 

2011 

December 31 

2010 

Term loans – purchased aircraft (i) 867,537 985,571 

Term loan – purchased aircraft (ii) 22,418 25,729 

Term loan – flight simulator (iii) − 5,575 

Term loan – live satellite television equipment (iv) − 41 

Term loan – Calgary Hangar facility (v) − 8,707 

Term loan – Calgary Hangar facility (vi) 752 1,179 

890,707 1,026,802 

Current portion 165,151 178,337 

725,556 848,465 

(i) 52 individual term loans, amortized over a 12-year term, each repayable in quarterly principal instalments ranging from $668 to $955, at a fixed 

interest at an effective weighted average rate of 5.97%, maturing between 2014 and 2020. These facilities are guaranteed by Ex-Im Bank and 

secured by one 800-series aircraft, 38 700-series aircraft and 13 600-series aircraft. 

(ii) Term loan of US $21,571 repayable in quarterly instalments of US $1,788, including effective interest at a rate of 4.82%, maturing in 2014. This 

facility is secured by one 800-series aircraft. 

(iii) Five-year term loan matured in July 2011 with a final payment of $5,123. This facility was secured by one flight simulator. 

(iv) Five-year term loan matured in January 2011 with a final payment of $41. This facility was for the purchase of live satellite television equipment, was 

guaranteed by the Ex-Im Bank and was secured by certain 700-series and 600-series aircraft. 

(v) Ten-year term loan matured in April 2011 with a final payment of $8,575. This facility was secured by the Calgary Hangar. 

(vi) Term loan repayable in monthly instalments of $50, including floating interest at the bank’s prime rate plus 0.50%, with an effective interest rate of 

3.50% as at September 30, 2011, maturing April 2013, secured by the Calgary Hangar facility. 

Future scheduled repayments of long-term debt as at September 30, 2011 are as follows: 

Within 1 year 165,151

1 – 3 years 332,842

3 – 5 years 245,577

Over 5 years 147,137

890,707
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 13

8. Share capital 

(a) Issued and outstanding

September 30, 2011 December 31, 2010 

Number Amount Number Amount 

Common and variable voting shares: 

 

Balance, beginning of year 142,958,414 647,637 144,359,383 633,075 

Issuance of shares pursuant to stock option plan 173,016 34 741,014 520 

Share-based payment expense on stock options 

exercised – 3,976 – 21,860 

Issuance of shares pursuant to key employee 

and pilot plan 9,230 – 2,298 – 

Share-based payment expense on settled key 

employee and pilot units – 125 – 29 

Issuance of shares pursuant to executive share 

unit plan 36,371 – 194,449 – 

Share-based payment expense on executive 

share units exercised – 580 – 2,748 

Shares repurchased (4,926,090) (22,358) (2,338,730) (10,595) 

Balance, end of period 138,250,941 629,994 142,958,414 647,637 

As at September 30, 2011, the number of common voting shares outstanding was 130,115,914 (December 31, 2010 – 

137,489,456) and the number of variable voting shares was 8,135,027 (December 31, 2010 – 5,468,958). 

During the nine months ended September 30, 2011, the Corporation purchased and subsequently cancelled 4,926,090 shares 

under its normal course issuer bid for total consideration of $74,570. The average book value of the shares repurchased of $4.54 

per share was charged to share capital with the $52,212 excess of the market price over the average book value, including 

transaction costs, charged to retained earnings. 

(b) Stock option plan 

The fair value of the options granted during the three and nine months ended September 30, 2011 and 2010 and the 

assumptions used in their determination are as follows: 

 Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Weighted average fair value per option 4.01 3.87 4.31 4.03 

Weighted average risk-free interest rate 1.5% 1.9% 2.3% 2.5% 

Weighted average expected volatility 35.8% 38.8% 37.8% 38.4% 

Expected life of options (years) 4.77 3.6 4.00 3.6 

Dividend yield 1.4% – 1.4% –

Three months ended Nine months ended 

September 30, 2011 September 30, 2011 

Number of 

options 

Weighted 

average 

exercise price 

Number of 

options 

Weighted 

average 

exercise price 

Stock options outstanding, beginning of period 7,496,178 14.15 8,083,431 14.21 

Granted 15,161 14.00 1,841,546 14.87 

Exercised (82,955) 12.60 (1,024,483) 12.56 

Forfeited – – (6,252) 12.50 

Expired (32,765) 15.76 (1,498,623) 16.41 

Stock options outstanding, end of period 7,395,619 14.16 7,395,619 14.16 

Exercisable, end of period 4,967,082 14.07 4,967,082 14.07 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 14

8. Share capital (continued) 

(b) Stock option plan (continued) 

Three months ended Nine months ended 

September 30, 2010 September 30, 2010 

Number of 

options 

Weighted 

average 

exercise price 

Number of 

options 

Weighted 

average 

exercise price 

Stock options outstanding, beginning of period 8,345,253 14.23 11,521,844 13.42 

Granted 17,491 12.50 1,996,793 12.77 

Exercised (22,225) 12.40 (5,098,123) 11.83 

Forfeited (9,364) 12.43 (28,082) 12.51 

Expired (257,283) 14.82 (318,560) 14.77 

Stock options outstanding, end of period 8,073,872 14.21 8,073,872 14.21 

Exercisable, end of period 3,335,619 16.51 3,335,619 16.51 

Under the terms of the Corporation's stock option plan, with the approval of the Corporation, option holders can either (i) elect 

to receive shares by delivering cash to the Corporation in the amount of the exercise price of the options, or (ii) choose a 

cashless settlement alternative, whereby they can elect to receive a number of shares equivalent to the market value of the 

options over the exercise price. For the three and nine months ended September 30, 2011, option holders exercised 80,266 and 

1,021,794 options, respectively, (three and nine months ended September 30, 2010 – 22,225 and 5,054,132 options, 

respectively) on a cashless settlement basis and received 7,674 and 170,327 shares, respectively (three and nine months ended 

September 30, 2010 – 1,024 and 696,289 shares, respectively). For the three and nine months ended September 30, 2011, 

2,689 and 2,689 options were exercised on a cash basis, respectively, and with option holders receiving 2,689 and 2,689 shares,

respectively (three and nine months ended September 30, 2010 – nil and 43,991 shares, respectively). 

(c) Key employee and pilot plan 

Three months ended Nine months ended 

September 30, 2011 September 30, 2011 

Number of 

units 

Weighted fair 

value 

Number of 

units 

Weighted fair 

value 

Units outstanding, beginning of period 355,710 13.88 171,129 12.77 

Granted 11,472 14.00 197,125 14.82 

Units, in lieu of dividends 1,382 13.05 3,763 13.98 

Settled (6,818) 13.74 (9,230) 13.49 

Forfeited – – (1,041) 12.50 

Units outstanding, end of period 361,746 13.88 361,746 13.88 

Vested, end of period – – – – 

Three months ended Nine months ended 

September 30, 2010 September 30, 2010 

 Number of 

units 

Weighted fair 

value 

Number of 

units 

Weighted fair 

value 

Units outstanding, beginning of period 166,316 12.77 – – 

Granted 5,416 12.50 174,511 12.76 

Settled (1,177) 12.77 (2,298) 12.77 

Forfeited (1,228) 12.77 (2,886) 12.77 

Units outstanding, end of period 169,327 12.76 169,327 12.76 

Vested, end of period – – – – 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 15

8. Share capital (continued)

(d) Executive share unit plan 

Three months ended September 30 Nine months ended September 30

2011 

RSUs PSUs RSUs PSUs 

Number 

of units 

Weighted 

fair value 

Number 

of units 

Weighted 

fair value 

Number 

of units 

Weighted 

fair value 

Number 

of units 

Weighted 

fair value 

Units outstanding, 

beginning of period 250,844 13.95 260,214 13.79 187,875 13.73 199,486 13.90 

Granted – – – – 75,213 15.39 91,450 15.44 

Exercised (23,821) 14.36 – – (36,065) 16.09 – – 

Forfeited – – (1,205) 14.53 – – (31,927) 19.26 

Units outstanding, 

end of period 227,023 13.91 259,009 13.78 227,023 13.91 259,009 13.78 

Vested, end of 

period 43,348 14.41 22,948 14.16 43,348 14.41 22,948 14.16 

Three months ended September 30 Nine months ended September 30

2010 

 RSUs PSUs RSUs PSUs 

Number 

of units 

Weighted 

fair value 

Number 

of units 

Weighted 

fair value 

Number 

of units 

Weighted 

fair value 

Number 

of units 

Weighted 

fair value 

Units outstanding, 

beginning of period 147,060 13.91 196,074 13.91 143,461 14.10 191,276 14.10 

Granted – – – – 86,935 13.80 115,911 13.80 

Exercised – – – – (83,336) 14.13 (111,113) 14.13 

Units outstanding, 

end of period 147,060 13.91 196,074 13.91 147,060 13.91 196,074 13.91 

Vested, end of 

period 17,211 14.16 22,948 14.16 17,211 14.16 22,948 14.16 

(e) Share-based payment expense 

 The following table summarizes share-based payment expense for the Corporation’s equity-based plans:

Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Stock option plan 1,923 2,286 6,747 8,465 

Key employee and pilot plan 567 269 1,839 875 

Executive share unit plan 413 217 1,429 3,167 

Total share-based payment expense 2,903 2,772 10,015 12,507 

Presented on the consolidated interim statement of earnings as follows: 

Flight operations and navigational charges 1,738 2,000 5,788 6,807 

Marketing, general and administration 1,165 772 4,227 5,700 

Total share-based payment expense 2,903 2,772 10,015 12,507 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 16

9. Earnings per share 

The following reflects the share data used in the computation of basic and diluted earnings per share: 

Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Weighted average number of shares outstanding – basic 138,682,553 145,192,443 140,456,384 145,041,379

Effect of dilution 710,762 153,776 838,231 267,378

Weighted average number of shares outstanding – diluted 139,393,315 145,346,219 141,294,615 145,308,757

For the three and nine months ended September 30, 2011, 3,669,585 and 3,651,001 employee stock options, respectively, 

(three and nine months ended September 30, 2010 – 8,070,247 and 7,127,996 employee stock options, respectively) were not 

included in the calculation of dilutive shares outstanding as the result would be anti-dilutive. 

10. Financial instruments and risk management 

(a) Fair value of financial assets and financial liabilities 

The following tables set out the Corporation’s classification, carrying amount and fair value for each financial asset and liability as 

at September 30, 2011 and December 31, 2010: 

Fair value Amortized cost Totals 

September 30, 2011 

Through profit 

or loss Derivatives 

Loans and 

receivables 

Other financial 

liabilities 

Carrying 

amount 

Fair 

value 

Asset (liability): 

Cash and cash equivalents 1,320,091 – – – 1,320,091 1,320,091

Accounts receivable – – 30,859 – 30,859 30,859

Foreign exchange derivatives (i) – 9,440 – – 9,440 9,440

Fuel derivatives (ii) – 3,269 – – 3,269 3,269

Deposits (iii) 30,922 – – – 30,922 30,922

Accounts payable and accrued 

liabilities (iv) – – – (306,057) (306,057) (306,057)

Long-term debt (v) – – – (890,707) (890,707) (1,008,579)

Obligations under finance leases (vi) – – – (3,268) (3,268) (3,268)

 1,351,013 12,709 30,859 (1,200,032) 194,549 76,677
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 17

10. Financial instruments and risk management (continued)

(a) Fair value of financial assets and financial liabilities (continued)

Fair value Amortized cost Totals 

December 31, 2010 

Through profit 

or loss Derivatives 

Loans and 

receivables 

Other financial 

liabilities 

Carrying 

amount 

Fair 

value 

Asset (liability): 

Cash and cash equivalents 1,187,899 – – – 1,187,899 1,187,899

Accounts receivable – – 17,518 – 17,518 17,518

Foreign exchange derivatives (i) – (3,579) – – (3,579) (3,579)

Fuel derivatives (ii) – 4,889 – – 4,889 4,889

Deposits (iii) 28,258 – – – 28,258 28,258

Accounts payable and accrued 

liabilities (iv) – – – (264,136) (264,136) (264,136)

Long-term debt (v) – – – (1,026,802) (1,026,802) (1,141,961)

Obligations under finance leases (vi) – – – (3,357) (3,357) (3,357)

 1,216,157 1,310 17,518 (1,249,295) (59,310) (174,469)

(i) Includes $9,440 (December 31, 2010 – $nil) classified in prepaid expenses, deposits and other and $nil (December 31, 2010 – $3,579) classified in 

accounts payable and accrued liabilities. As at September 30, 2011, the average contracted rate on the forward contracts was 0.9859 (December 31, 

2010 – 1.0264) Canadian dollars to US dollars, and the average forward rate used in determining the fair value was 1.0503 (December 31, 2010 – 

0.9995) Canadian dollars to US dollars. (ii) Includes $3,269 (December 31, 2010 – $5,689) classified in prepaid expenses, deposits and other, and $nil (December 31, 2010 – $800) classified in 

accounts payable and accrued liabilities. As at September 30, 2011, for the period that the Corporation is hedged, the closing forward curve for crude 

oil averaged approximately US $80 per barrel (December 31, 2010 – US $93), with the average forward foreign exchange rate used in determining 

the fair value being 1.0531 (December 31, 2010 – 1.0032) Canadian dollars to US dollars. 

(iii) Includes $16,680 (December 31, 2010 – $14,752) classified in prepaid expenses, deposits and other, and $14,242 (December 31, 2010 – $13,506) 

classified in other assets. 

(iv) Excludes current portion of maintenance provisions of $16,022 (December 31, 2010 – $12,372) and deferred Frequent Guest Program (FGP) revenue 

of $14,967 (December 31, 2010 – $6,823), foreign exchange derivative liabilities of $nil (December 31, 2010 – $3,579), fuel derivative liabilities of 

$nil (December 31, 2010 – $800). 

(v) Includes current portion of long-term debt of $165,151 (December 31, 2010 – $178,337) and long-term portion of long-term debt of $725,556 

(December 31, 2010 – $848,465). As at September 30, 2011, rates used in determining the fair value on the Corporation’s fixed-rate long-term debt 

ranged from 1.16% to 1.70% (December 31, 2010 – 2.00% to 2.74%). 

(vi) Includes current portion of obligations under finance leases of $75 (December 31, 2010 – $108) and long-term portion of obligations under finance 

leases of $3,193 (December 31, 2010 – $3,249). 

(b) Gain (loss) on derivatives recorded at fair value 

The following table presents the components of loss on derivatives included on the consolidated interim statement of earnings 

for the three and nine months ended September 30, 2011 and 2010: 

Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Loss on designated fuel derivatives (1,233) (473) (7,649) (321) 

Loss on foreign exchange options − − − (78) 

(1,233) (473) (7,649) (399) 

(c) Risk management 

The Corporation is exposed to market, credit and liquidity risks associated with its financial assets and liabilities. From time to 

time, the Corporation will use various financial derivatives to reduce market risk exposures from changes in foreign exchange 

rates, interest rates and jet fuel prices. The Corporation does not hold or use any derivative instruments for trading or 

speculative purposes. 

Overall, the Corporation’s Board of Directors has responsibility for the establishment and approval of the Corporation’s risk 

management policies. Management continually performs risk assessments to ensure that all significant risks related to the 

Corporation and its operations have been reviewed and assessed to reflect changes in market conditions and the Corporation’s 

operating activities. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 18

10. Financial instruments and risk management (continued)

(c) Risk management (continued)

Fuel risk

The airline industry is inherently dependent upon jet fuel to operate and, therefore, the Corporation is exposed to the risk of

volatile fuel prices. Fuel prices are impacted by a host of factors outside the Corporation’s control, such as significant weather 

events, geopolitical tensions, refinery capacity, and global demand and supply. For the three and nine months ended September 

30, 2011, aircraft fuel expense represented approximately 33% and 33%, respectively, (three and nine months ended 

September 30, 2010 – 28% and 27%, respectively) of the Corporation’s total operating expenses. 

Under the Corporation’s fuel price risk management policy, the Corporation is permitted to hedge a portion of its future 

anticipated jet fuel purchases for up to 36 months, as approved by the Board of Directors. The hedging program is designed to 

mitigate the risk of sudden and substantial movements in fuel prices causing volatility in earnings and cash flows. Management 

continuously reviews and adjusts its strategy based on market conditions and competitors’ positions. Financial derivatives in 

crude-oil-based commodities (including a variety of crude oil, heating oil and jet fuel benchmarks) that are traded directly on

organized exchanges or are available over the counter can be useful in mitigating the risk of volatile fuel prices. 

As at September 30, 2011, the Corporation had Canadian-dollar West Texas Intermediate (WTI) call options to hedge 

approximately 21% (December 31, 2010 – 20%) of its anticipated jet fuel requirements for the next 12 months. The following 

table outlines, per year, as at September 30, 2011, the notional volumes per barrel (bbl.) along with the weighted average 

contract prices: 

Type Year Instrument Notional volumes (bbl.) 

WTI average call price 

($ CAD/bbl.) 

WTI 2011 Call options 390,000 112 

WTI 2012 Call options 1,030,000 113 

 The following table presents the financial impact and statement presentation of the Corporation’s fuel derivatives on the 

consolidated statement of financial position as at September 30, 2011 and December 31, 2010: 

Statement presentation 

September 

30 2011 

December 

31 2010 

Receivable from counterparties for fuel 

derivatives Accounts receivable − 445 

Fair value of fuel derivatives Prepaid expenses, deposits and other 3,269 5,244 

Payable to counterparties for fuel derivatives Accounts payable and accrued liabilities − (800) 

Unrealized gain from fuel derivatives Hedge reserves – before tax impact − (11) 

The following table presents the financial impact and statement presentation of the Corporation’s fuel derivatives on the 

consolidated statement of earnings for the three and nine months ended September 30, 2011 and 2010: 

Statement 

presentation 

Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Realized gain (loss) on designated fuel 

derivatives Aircraft fuel − ) ( 3,016 2,639 (7,661) 

Loss on designated fuel derivatives Loss on 

derivatives (1,233) ) ( 473 (7,649) ) ( 321

During the three and nine months ended September 30, 2011, the Corporation cash settled fuel derivatives in its favour of $nil 

and $2,706, respectively (three and nine months ended September 30, 2010 – $3,247 and $7,902, respectively, in favour of the 

counterparties). The Corporation paid cash premiums for option contracts of $1,420 and $5,753 for the three and nine months 

ended September 30, 2011, respectively (three and nine months ended September 30, 2010 – $1,774 and $3,951, respectively). 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 19

10. Financial instruments and risk management (continued) 

(c) Risk management (continued) 

Foreign exchange risk

The gain or loss on foreign exchange included in the Corporation’s consolidated interim statement of earnings is mainly 

attributable to the effect of the changes in the value of the Corporation’s US-dollar-denominated monetary assets and liabilities. 

As at September 30, 2011, US-dollar-denominated net monetary liabilities totalled approximately US $9,218 (December 31, 2010 

– US $12,618). 

As at September 30, 2011 the Corporation has entered into foreign exchange forward contracts for an average of US $13,293 

per month for the next 11 months for a total of US $146,220 at a weighted average contract rate of 0.9859 Canadian dollars to 

US dollars to offset a portion of its US-dollar-denominated aircraft lease payments. As at September 30, 2011, no portion of the 

forward contracts was considered ineffective. 

As at September 30, 2011, the fair value of the foreign exchange forward contracts was $9,440 (December 31, 2010 - $3,579 

included in accounts payable and accrued liabilities). For the three and nine months ended September 30, 2011, the Corporation 

realized a loss before tax on forward contracts of $1,944 and $5,561, respectively, (three and nine months ended September 30, 

2010 – $200 and $1,715, respectively) included in net earnings as an increase to aircraft leasing expense. The estimated amount

reported in hedge reserves that is expected to be reclassified to net earnings as a component of aircraft leasing expense in the 

next 11 months is a gain before tax of $9,440 (December 31, 2010 – $3,579 loss before tax). 

Credit risk 

(i) Cash and cash equivalents 

Cash and cash equivalents consist of bank balances and short-term investments with terms of up to one year, with the majority 

having terms less than 91 days. Credit risk associated with cash and cash equivalents is minimized substantially by ensuring that 

these financial assets are invested primarily in debt instruments with highly rated financial institutions, some with provincialgovernment-backed guarantees. The Corporation manages its exposure risk by assessing the financial strength of its 

counterparties and by limiting the total exposure to any one individual counterparty. As at September 30, 2011, the Corporation

had a total principal amount invested of $923,413 (December 31, 2010 – $913,167) in Canadian-dollar short-term investments 

and a total of US $nil (December 31, 2010 – US $45,157) invested in US-dollar short-term investments, all with terms ranging 

between 28 and 365 days. 

The Corporation performs an ongoing review to evaluate its risk associated with its cash and cash equivalent counterparties. As

at September 30, 2011, the Corporation does not expect any counterparties to fail to meet their obligations. 

(ii) Accounts receivable 

As at September 30, 2011, the Corporation’s accounts receivable included trade receivables of $14,962 (December 31, 2010 – 

$12,446) and receivables from travel agents, interline agreements and partnerships with other airlines of $18,201 (December 31,

2010 – $5,242). All significant counterparties are reviewed and approved for credit on a regular basis. Receivables are shortterm in nature, generally being settled within 30 to 60 days. 

As at September 30, 2011, the Corporation continues to dispute with a counterparty an accounts receivable balance relating to 

its cargo operations of $2,368 (December 31, 2010 − $2,368). The Corporation recorded a bad debt provision for the amount in 

2009. There were no new provisions recorded for bad debts during the three and nine months ended September 30, 2011. 

(iii) Derivative financial instruments 

The Corporation recognizes that it is subject to credit risk arising from derivative transactions that are in an asset position at the 

consolidated interim statement of financial position date. The Corporation carefully monitors this risk by closely considering the 

size, credit rating and diversification of the counterparty. As at September 30, 2011, fuel derivatives of $3,269 (December 31,

2010 − $5,689) and foreign exchange derivatives of $9,440 (December 31, 2010 – $nil) outstanding with the Corporation’s 

counterparties were in an asset position. The Corporation does not expect these counterparties to fail to meet their obligations. 

(iv) Deposits 

The Corporation is not exposed to counterparty credit risk on its deposits that relate to purchased aircraft, as the funds are held 

in a security trust separate from the assets of the financial institution. While the Corporation is exposed to counterparty credit 

risk on its deposit relating to airport operations, it considers this risk to be remote because of the nature and size of the 

counterparty. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 20

10. Financial instruments and risk management (continued) 

(c) Risk management (continued) 

Liquidity risk

The table below presents a maturity analysis of the Corporation’s undiscounted contractual cash flows for its non-derivative and 

derivative financial liabilities as at September 30, 2011. The analysis is based on foreign exchange and interest rates in effect at 

the consolidated interim statement of financial position date, and includes both principal and interest cash flows for long-term 

debt and obligations under finance leases. 

Total Within 1 year 1–3 years 3–5 years Over 5 years

Accounts payable and accrued liabilities (i) 306,057 306,057 − − −

Long-term debt 1,052,897 214,492 401,870 277,764 158,771 

Obligations under finance leases 5,657 245 490 490 4,432 

1,364,611 520,794 402,360 278,254 163,203 

(i) Excludes current portion of maintenance provisions of $16,022 and deferred FGP revenue of $14,967. 

A portion of the Corporation’s cash and cash equivalents balance relates to cash collected with respect to advance ticket sales, 

for which the balance at September 30, 2011 was $433,801 (December 31, 2010 – $336,926). Typically, the Corporation has 

cash and cash equivalents on hand to have sufficient liquidity to meet its liabilities, when due, under both normal and stressed 

conditions. As at September 30, 2011 the Corporation had cash and cash equivalents on hand of 3.04 times (December 31, 2010 

– 3.53) the advance ticket sales balance. The Corporation aims to maintain a current ratio, defined as current assets over current 

liabilities, of at least 1.00. As at September 30, 2011, the Corporation’s current ratio was 1.49 (December 31, 2010 – 1.53). As at 

September 30, 2011, the Corporation has not been required to post collateral with respect to any of its outstanding derivative 

contracts. 

11. Commitments and contingencies

(a) Purchased aircraft and live satellite television equipment 

As at September 30, 2011, the Corporation is committed to purchase 35 737-700 and two 737-800 aircraft for delivery between 

2012 and 2018. The remaining estimated amounts to be paid in deposits and purchase prices for the 37 aircraft, as well as 

amounts to be paid for live satellite television equipment on purchased and leased aircraft in US dollars and Canadian dollar 

equivalents are as follows: 

USD CAD 

Within 1 year 95,060 99,643 

1 – 3 years 342,576 359,095 

3 – 5 years 613,008 642,566 

Over 5 years 596,071 624,813 

1,646,715 1,726,117 

(b) Operating leases and commitments 

The Corporation has entered into operating leases and commitments for aircraft, land, buildings, equipment, computer hardware, 

software licenses and satellite programming. As at September 30, 2011 the future payments in US dollars, where applicable, and 

Canadian dollar equivalents under operating leases and commitments are as follows: 

USD CAD 

Within 1 year 194,440 226,823 

1 – 3 years 369,063 410,239 

3 – 5 years 281,907 308,457 

Over 5 years 237,528 291,647 

1,082,938 1,237,166 

As at September 30, 2011, the Corporation is committed to lease an additional two 737-800 aircraft for a term of eight years in

US dollars. These aircraft have been included in the above totals. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 21

11. Commitments and contingencies (continued) 

(c) Letters of guarantee 

As at September 30, 2011, the Corporation has available two revolving letter of credit facilities with a Canadian charter bank 

totalling $38,000 (December 31, 2010 – $38,000). One facility is unsecured for $8,000 and the other is a facility for $30,000 that 

requires funds to be assigned and held in cash security for the full value of letters of guarantee issued by the Corporation. As at 

September 30, 2011 $6,806 (December 31, 2010 – $6,691) of letters of guarantee were issued under these facilities. These 

facilities are secured by $6,806 (December 31, 2010 – $6,691) of restricted cash. 

(d) Operating line of credit 

Commencing in the third quarter of 2009, the Corporation has available a three-year revolving operating line of credit with a 

syndicate of three Canadian banks. The line of credit is available for up to a maximum of $76,500 (December 31, 2010 – 

$80,750) and is secured by the Corporation’s campus facility. The line of credit bears interest at prime plus 0.50% per annum, or 

a banker’s acceptance rate at 2.0% annual stamping fee or equivalent, and is available for general corporate expenditures and 

working capital purposes. The Corporation is required to pay a standby fee of 15 basis points, based on the average unused 

portion of the line of credit for the previous quarter, payable quarterly. As at September 30, 2011, no amounts were drawn 

(December 31, 2010 – $nil). 

(e) Contingencies 

The Corporation is party to legal proceedings and claims that arise during the ordinary course of business. It is the opinion of 

management that the ultimate outcome of these and any outstanding matters will not have a material effect upon the 

Corporation’s financial position, results of operations or cash flows. 

12. Related parties 

(a) Subsidiaries and partnership 

The condensed consolidated interim financial statements of WestJet Airlines Ltd., the parent company, include the accounts of 

the Corporation and its following three directly wholly-owned subsidiaries incorporated in Canada, as well as an indirectly whollyowned Alberta partnership: 

WestJet Investment Corp. 

WestJet Operations Corp. 

WestJet Vacations Inc. 

WestJet Partnership 

WestJet Partnership is the primary operating entity of the Corporation. 

The Corporation utilizes five SPEs to facilitate the financing of aircraft. The Corporation has no equity ownership in the SPEs, 

however, the substance of the relationship between the Corporation and the SPEs indicates that they are controlled by the 

Corporation. Accordingly, the accounts of the SPEs have been consolidated in the Corporation’s financial statements and all 

intercompany balances and transactions have been eliminated. 

(b) Key management personnel 

The Corporation has defined key management personnel as senior executive officers, as well as the Board of Directors, as they 

have the collective authority and responsibility for planning, directing and controlling the activities of the Corporation. The

following table outlines the total compensation expense for key management personnel for the three and nine months ended 

September 30, 2011 and 2010: 

 Three months ended 

September 30 

Nine months ended 

September 30 

2011 2010 2011 2010 

Short-term fees and other short-term benefits 1,082 502 3,273 2,323

Termination and post-employment benefits – – – 1,618

Share-based payment expense (i) 691 610 2,772 4,573

1,773 1,112 6,045 8,514

(i) Includes amounts expensed pursuant to the stock option plan, executive share unit plan, deferred share unit plan and employee share purchase plan. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

 WestJet Third Quarter 2011 │ 22

12. Related parties (continued) 

(c) Transactions with other related parties 

The Corporation has debt financing and investments in short-term deposits with a financial institution that is related through two 

common directors, one of whom is also the president of the financial institution. Included in cash and cash equivalents, as at 

September 30, 2011, are short-term investments of $177,004 (December 31, 2010 – $164,710) owing from the financial 

institution. In 2008, the Corporation signed a three-year revolving operating line of credit agreement with a banking syndicate, of 

which, one of the members is the related-party financial institution. See note 11, Commitments and contingencies, for further 

information. These transactions occurred in the normal course of operations on terms consistent with those offered to arm’slength parties and are measured at the exchange amount. 

During 2010, the Corporation engaged a relocation firm to purchase a single family residence from the President and Chief 

Executive Officer (CEO) for a guaranteed price of US $1,525 in accordance with the Corporation’s relocation policy, and in 

addition, granted RSUs pursuant to the Corporation’s ESU plan in connection with the relocation. On September 30, 2011, the 

residence was sold for US $1,050 to a third party. The Corporation recognized an expense of $475 plus closing charges of $90 

on the transaction, this difference was made payable to the relocation firm and recognized as of September 30, 2011, under 

marketing, general and administrative expense. 

13. Transition to IFRS – Reconciliation of Canadian GAAP to IFRS

The following tables illustrate the principal adjustments made by the Corporation in restating its Canadian GAAP consolidated 

interim financial statements to IFRS for the three and nine months ended September 30, 2010. For a detailed explanation of the 

IFRS adjustments refer to the Corporation’s consolidated interim financial statements for the three months ended March 31, 

2011 and 2010. 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share data) (Unaudited) 13. Transition to IFRS (continued) 

Reconciliation of Consolidated Statement of Financial Position as at September 30, 2010 

Canadian GAAP 

balance IAS 16 IAS 37 IAS 39 

Assets 

 Current assets  Cash and cash equivalents 1,218,063 –

–

–

 Accounts receivable 27,259 –

–

–

 Prepaid expenses, deposits and other 34,151 – 15,322 – 

 Inventory 15,329 –

–

– 

 Future income tax 1,086 –

–

– 

1,295,888 – 15,322 – 

Property and equipment 2,238,573 (227,172) 

–

–

Intangible assets 13,012 –

–

–

Other assets 58,699 – 41,673 –

 3,606,172 (227,172) 56,995 – 

Liabilities and shareholders’ equity 

Current liabilities 

 Accounts payable and accrued liabilities 288,067 – 15,151 859 

 Advance ticket sales 350,267 – (58) –

Non-refundable guest credits 38,906 – (780) –

Current portion of long-term debt 184,252 –

– (5,540) 

Current portion of obligations under capital leases 329 –

– – 

861,821 – 14,313 (4,681) 

Maintenance provisions – – 103,458 – Long-term debt 906,601 –

– (16,304) 

Obligations under capital leases 3,268 –

–

– 

Other liabilities 19,067 (5,677) – – 

Deferred income tax 318,990 (56,196) (15,418) 5,433 

2,109,747 (61,873) 102,353 (15,552) 

Shareholders’ equity 

Share capital 658,226 –

–

– 

 Equity reserves 59,334 –

–

– 

Hedge reserves (9,149) –

–

– 

Retained earnings 788,014 (165,299) (45,358) 15,552 

1,496,425 (165,299) (45,358) 15,552 

 3,606,172 (227,172) 56,995 – 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share data) (Unaudited) 13. Transition to IFRS (continued) Reconciliation of Consolidated Statement of Earnings for the three months ended September 30, 2010 

Canadian GAAP 

balance IAS 16 IAS 37 IAS 39 

Revenues: 

 Guest 636,182 – (3,523) –

 Other 48,382 – 3,058 –

684,564 – (465) – 

Expenses: 

Aircraft fuel 170,828 –

–

–

Airport operations 94,134 – (83) – 

Flight operations and navigational charges 84,149 – – – 

Sales and distribution 64,938 – (10) – 

Marketing, general and administration 44,483 – (131) – 

Depreciation and amortization 34,021 8,577 – – 

Aircraft leasing 36,469 – – – 

Maintenance 26,085 (79) 4,567 – 

Inflight 30,680 –

–

–

Employee profit share 8,567 –

–

–

594,354 8,498 4,343 – 

Earnings from operations 90,210 (8,498) (4,808) – 

Non-operating income (expense): 

Interest income 2,531 –

–

–

Interest expense (14,893) – (1,163) (1,614) Gain (loss) on foreign exchange (1,563) – 2,004 –

Loss on disposal of property and equipment (113) 102 

–

–

Loss on derivatives (473) 

–

–

–

(14,511) 102 841 (1,614) 

Earnings before income taxes 75,699 (8,396) (3,967) (1,614) 

Income tax expense: 

Current 383 –

–

–

Deferred 21,333 (2,131) (1,020) (417) 

21,716 (2,131) (1,020) (417) 

Net earnings 53,983 (6,265) (2,947) (1,197) Earnings per share:

Basic 0.37 

Diluted 0.37 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share data) (Unaudited) 13. Transition to IFRS (continued) Reconciliation of Consolidated Statement of Earnings for the nine months ended September 30, 2010 

Canadian GAAP 

balance IAS 16 IAS 37 IAS 39 

Revenues: 

 Guest 1,763,376 – (11,938) –

 Other 153,070 – 10,567 –

1,916,446 – (1,371) –

Expenses: 

Aircraft fuel 495,332 – – –

Airport operations 288,036 – (210) –Flight operations and navigational charges 245,288 – – – Sales and distribution 188,729 – (33) –Marketing, general and administration 142,899 – (624) – Depreciation and amortization 100,208 27,688 – – 

Aircraft leasing 105,555 – – – 

Maintenance 74,464 (170) 12,761 – 

Inflight 92,414 – – – 

Employee profit share 14,780 – – – 

1,747,705 27,518 11,894 – 

Earnings from operations 168,741 (27,518) (13,265) – 

Non-operating income (expense): 

Finance income 6,303 – – – 

Finance costs (45,862) – (3,494) (4,677) 

Gain on foreign exchange 567 – 1,186 –

Gain on disposal of property and equipment 285 310 – –Loss on derivatives (399) – – 

–

(39,106) 310 (2,308) (4,677) 

Earnings before income taxes 129,635 (27,208) (15,573) (4,677) 

Income tax expense: 

Current 1,115 – – – Deferred 39,708 (6,880) (3,986) (1,210) 

40,823 (6,880) (3,986) (1,210) 

Net earnings 88,812 (20,328) (11,587) (3,467) Earnings per share:

Basic 0.61 

Diluted 0.61 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share data) (Unaudited) 13. Transition to IFRS (continued) Reconciliation of Consolidated Statement of Cash Flows for the three months ended September 30, 2010

Canadian GAAP 

balance IAS 16 IAS 37 IAS 39 

Operating activities 

Net earnings 53,983 (6,265) (2,947) (1,197) 

Items not involving cash: 

Depreciation and amortization 34,021 8,577 

–

–

Change in long-term maintenance provisions – – 7,292 – Change in other liabilities (452) –

–

– 

Amortization of hedge settlements 350 – 

–

–

Loss on derivatives 473 – 

–

–

Loss (gain) on disposal of property and equipment 113 (181) 

–

–

Stock-based compensation expense 3,031 – 

–

– 

Deferred income tax expense 21,333 (2,131) (1,020) (417) 

Unrealized foreign exchange loss 2,075 – (2,004) –

Change in non-cash working capital 48,427 – 124 93 

Change in other assets – – (1,445) 

–

163,354 – – (1,521) 

Investing activitiesAircraft additions (3,938) –

–

–

Other property and equipment and intangible additions (6,817) –

–

–

(10,755) –

–

–

Financing activities Repayment of long-term debt (42,843) –

– 1,521 

Decrease in obligations under capital leases (87) –

–

–

Change in other assets 77 –

–

–

Change in non-cash working capital 1,679 –

–

–

(41,174) – – 1,521 

Cash flow from operating, financing and investing activities 111,425 –

–

–

Effect of foreign exchange on cash and cash equivalents (1,525) –

–

–

Net change in cash and cash equivalents 109,900 –

–

–

Cash and cash equivalents, beginning of period 1,108,163 –

–

–

Cash and cash equivalents, end of period 1,218,063 – – – 
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 (Stated in thousands of Canadian dollars, except share and per share data) (Unaudited) 13. Transition to IFRS (continued) Reconciliation of Consolidated Statement of Cash Flows for the nine month ended September 30, 2010

Canadian GAAP 

balance IAS 16 IAS 37 IAS 39 

Operating activities: Net earnings 88,812 (20,328) ( ) 11,587) ( 3,467 

Items not involving cash: 

Depreciation and amortization 100,208 27,688 

–

–

Change in long-term maintenance provisions – – 20,849 – 

Change in other liabilities (1,436) –

–

– 

Amortization of hedge settlements 1,049 –

–

–

Loss on derivatives 399 –

–

–

Gain on disposal of property and equipment (264) ) ( 480

–

–

Share-based payment expense 12,462 –

–

– 

Income tax credit (1,667) –

–

– 

Deferred income tax expense 39,708 ) ( 6,880 ( ) 3,986) ( 1,210 

Unrealized foreign exchange loss 1,408 – ( – 1,186) 

Change in non-cash working capital 132,681 

– 184 20 

Change in other assets – – ( – 4,274) 

373,360 –

– ( 4,657) 

Investing activities: Aircraft additions (18,727) 

–

–

–

Other property and equipment and intangible additions (12,064) –

–

–

(30,791) –

–

–

Financing activities: Repayment of long-term debt (128,346) –

– 4,657 

Decrease in obligations under finance leases (505) –

–

–

Change in other assets (4,411) –

–

–

Issuance of common shares 520

–

–

–

Change in non-cash working capital 2,621 –

–

–

(130,121) – 

– 4,657 

Cash flow from operating, financing and investing activities 212,448 –

–

–

Effect of foreign exchange on cash and cash equivalents 434 –

–

–

Net change in cash and cash equivalents 212,882 –

–

–

Cash and cash equivalents, beginning of year 1,005,181 –

–

–

Cash and cash equivalents, end of year 1,218,063 –

–

–
Notes to Condensed Consolidated Interim Financial Statements 

For the three and nine months ended September 30, 2011 and 2010 

(Stated in thousands of Canadian dollars, except share and per share data) 

(Unaudited) 

WestJet Third Quarter 2011 │ 28

13. Transition to IFRS (continued) 

Reconciliation of Consolidated Statement of Comprehensive Income for the three months ended September 30, 2010 

Canadian GAAP 

balance Adjustments 

IFRS 

balance 

Net earnings 53,983 ) ( 10,152 43,831 

 

Other comprehensive income, net of tax: 

Amortization of hedge settlements to aircraft leasing 350 − 350 

Net unrealized loss on foreign exchange derivatives under cash flow 

hedge accounting (i) ( 2,271) − ( 2,271)

Reclassification of net realized loss on foreign exchange derivatives to 

net earnings (ii) 145 − 145 

Net unrealized loss on fuel derivatives under cash flow hedge 

 accounting (iii) ( 221) − ( 221)

Reclassification of net realized loss on fuel derivatives to net earnings (iv) 2,192 − 2,192 

195 − 195 

 

Total comprehensive income 54,178 ) ( 10,152 44,026 

(i) Net of income taxes of $809. 

(ii) Net of income taxes of $(55). 

(iii) Net of income taxes of $83. 

(iv) Net of income taxes of $(825). 

Reconciliation of Consolidated Statement of Comprehensive Income for the nine months ended September 30, 2010 

Canadian GAAP 

balance Adjustments 

IFRS 

balance 

Net earnings 88,812 ) ( 35,783 53,029 

 

Other comprehensive income, net of tax: 

Amortization of hedge settlements to aircraft leasing 1,049 − 1,049 

Net unrealized loss on foreign exchange derivatives under cash flow 

hedge accounting (i) ( 88) − ( 88)

Reclassification of net realized loss on foreign exchange derivatives to 

net earnings (ii) 1,246 − 1,246 

Net unrealized loss on fuel derivatives under cash flow hedge 

 accounting (iii) ( 2,070) − ( 2,070)

Reclassification of net realized loss on fuel derivatives to net earnings (iv) 5,566 − 5,566 

5,703 − 5,703 

 

Total comprehensive income 94,515 ) ( 35,783 58,732 

(i) Net of income taxes of $29. 

(ii) Net of income taxes of $(469). 

(iii) Net of income taxes of $779. 

(iv) Net of income taxes of $(2,095). 
STAYING TRUE

WESTJET ANNUAL REPORT 2010
STAYING TRUE

WESTJET ANNUAL REPORT 2010

Staying true doesn’t mean staying the same. To WestJet, it means 

remaining as committed as ever to what matters and selecting 

opportunities to grow in a measured way. 

In 2010, we stayed true by printing less paper for this report. Visit 

westjet.com/stayingtrue to read the story of how WestJet stayed 

true to its solid foundation and the principles that have continued to 

make our airline successful.
2010

TABLE OF CONTENTS

Financial overview 3

President’s message to shareholders 4

Management’s discussion and analysis of fi nancial results 2010 6

Management’s report to shareholders 59

Independent auditor’s report 60 

Consolidated fi nancial statements 61

Notes to consolidated fi nancial statements 66

Corporate information Inside Back Cover
2 WestJet 2010 Annual Report
WestJet 2010 Annual Report 3

FINANCIAL OVERVIEW

RASM vs. CASM*

(cents)

RASM (revenue per available seat mile)

 CASM (cost per available seat mile)

Revenue

(millions of dollars)

Cash and 

cash equivalents

(millions of dollars)

2006 2007 2008 2009 2010

12.1 12.1 12.4

13.2

11.8

14.0

14.6 14.9

13.0 13.4

2006 2007 2008 2009 2010

378

654

820

1,005

1,188

($ in thousands, except per share data) 2010 2009 2008 2007 2006

Consolidated fi nancial information

Revenue $ 2,609,261 $ 2,281,120 $ 2,549,506 $ 2,127,156 $ 1,751,269 

Earnings before income taxes* $ 196,667 $ 136,796 $ 254,749 $ 233,313 $ 164,783 

Net earnings* $ 136,720 $ 98,178 $ 178,506 $ 189,048 $ 116,631 

Cash and cash equivalents $ 1,187,899 $ 1,005,181 $ 820,214 $ 653,558 $ 377,517 

Earnings per share*

 Basic $ 0.94 $ 0.74 $ 1.39 $ 1.46 $ 0.90 

 Diluted $ 0.94 $ 0.74 $ 1.37 $ 1.44 $ 0.90 

Operational highlights

Available seat miles (ASM) 19,535,291,313 17,587,640,902 17,138,883,465 14,544,737,340 12,524,379,943 

Revenue passenger miles (RPM) 15,613,121,610 13,834,761,211 13,730,960,234 11,739,063,003 9,791,878,403 

Load factor 79.9% 78.7% 80.1% 80.7% 78.2%

Yield (cents) 16.71 16.49 18.57 18.12 17.88 

Revenue per ASM (cents) 13.36 12.97 14.88 14.62 13.98 

Cost per ASM (cents)* 12.09 11.77 13.17 12.36 12.10 

Cost per ASM, excluding fuel

 and employee profi t share (cents)* 8.52 8.45 8.29 8.57 8.54 

*2006 to 2008 restated. 2007 excludes reservation system impairment of $31.9 million.

2006 2007 2008 2009 2010

1,751

2,127

2,550

2,281

2,609
4 WestJet 2010 Annual Report

PRESIDENT’S MESSAGE

TO SHAREHOLDERS

Since my appointment as President and Chief Executive Officer 

in April 2010, my appreciation for the power and effectiveness 

of an engaged workforce and its ability to execute on a solid 

business plan has only grown. I am honoured to be associated 

with and lead a team of exceptional WestJetters, and 2010 was 

another example of the great results that are achievable by 

staying true to the things that have made WestJet a success 

since its inception in 1996. 

Along with my new title and responsibilities came questions 

about what I might plan to change or how I would shake things 

up with the airline. Well, the fact of the matter is that there is no 

revolution required at WestJet. The formula of providing caring 

guest experiences, keeping costs low and offering high value 

has been working for 15 years and I believe that WestJet will 

continue to be the envy of the airline industry.

In a year filled with economic uncertainty, 2010 followed one of 

the worst recessions in recent history. Despite these challenging 

conditions, the airline industry saw demand for air travel and 

consumer confidence gradually return. With an operating margin 

of 9.5 per cent and an earnings before tax margin of 7.5 per cent 

in 2010, WestJet was again one of the top-performing airlines in 

North America. 

Our business model, founded on a single fleet type strategy, 

continued to demonstrate value by staying true to our low-cost 

philosophy, our people and our guests. We haven’t made cost 

reduction an official program at WestJet because keeping a 

close eye on costs is fundamental to the way that WestJetters do 

business every day. 

I’m proud of WestJetters and the caring way that we safely 

flew more than 15 million guests in 2010. WestJetters are the 

foundation of the WestJet brand and we have a steadfast focus on 

maintaining our strong culture and excellent guest experience. 

These foundational strengths were exemplified by our 2010 

induction into Canada’s Most Admired Corporate Cultures 

Hall of Fame and winning the Airline Staff Service Excellence 

Award North America at the World Airline Awards in Hamburg, 

Germany. Just last month, we were named a J.D. Power 2011 

Customer Service Champion by the prestigious global marketing 

information services company, J.D. Power and Associates. 

Last year, we began to capitalize on the significant investments 

made in our reservations systems, and we started to benefit from 

some of the revenue growth opportunities that these investments 

afford us. We implemented our first code-share agreement and 

added additional interline partners. We launched the WestJet 

Frequent Guest Program and WestJet Credit Card Program with 

rewards that are easy to understand and redeem. 

We continued growing our WestJet Vacations business and its 

brand by leveraging our existing scheduled network. With the 

introduction of many new sun destinations in the last few years, 

WestJet Vacations has become a significant player in the Canadian 

tour operator industry. In four short years, WestJet Vacations has 

become the number one Canadian provider of hotel rooms to 

Las Vegas, with additional strength into the Orlando, California 

and Hawaii markets, along with the popular Caribbean and 

Mexico markets. WestJet Vacations is important to our growth as 

an airline and will be a key component of our future success.

In 2010, we made the decision to introduce a quarterly dividend 

and a share buy-back program. These initiatives speak to our 

confidence to consistently generate positive cash flow while 

maintaining a healthy balance sheet. 

Outlook

As we move forward, we will stay true to our strategy of 

profitable and measured growth. In 2011, we plan to increase our 

airline partnerships by implementing three to four code-share 

agreements and signing on additional interline partners. This 

will drive more guests into our network and expand our global 

reach by offering our guests access to new destinations. Our 

long-term objective is to have a code-share partner from each of 

the major geographic regions of the world.

In 2011, we will add fare products that increase flexibility for 

the business traveller and grow our schedule to make it even 

more convenient through improved frequencies and code-share 

relationships. With reservation system enhancements and 

frequent guest programs now firmly in place, we expect 2011 to 

be a banner year in attracting incremental business travellers.

Over the past several months, as part of our ongoing fleet 

planning review and strategy, we chose to defer the delivery of 
WestJet 2010 Annual Report 5

nine aircraft to 2017 and 2018 that were previously scheduled 

to be delivered between 2011 and 2015. The entirety of our order 

with Boeing remains intact, but the revisions allow us to better 

match the timing of aircraft deliveries with the dates for

potential lease returns. This allows us to accelerate or decelerate 

capacity growth, dependent on economic and market conditions, 

without deviating from our long-term growth strategy. 

Our long-term vision remains the same – to become one of the 

most successful airlines in the world by 2016. This does not 

mean that we will be among the largest, fly the most aircraft 

or go to the most destinations. Rather, we want to be top five in 

brand strength, on-time performance, profit margin, culture and 

guest loyalty and satisfaction.

As WestJet continues to grow, having just celebrated our 15th 

birthday, we will stay true to the business model that has 

produced 55 out of 57 profitable quarters. A low-cost structure 

and a caring guest experience will remain the foundations of 

success for WestJet as we move toward our 2016 vision. A culture 

of engagement, where doing the right things for our business 

happens each day, will be fostered by all WestJetters.

Staying true should not be misinterpreted as status quo. WestJet 

will continue to evolve as the complexity of the airline business 

changes with advancements in technology, ongoing consolidation, 

and ever-changing market and consumer demands. We will 

embrace change and always stay true to our people, our guests 

and our shareholders. 

In summary, WestJet’s 2010 results proved again that our 

measured growth strategy continued to deliver profitable 

results. We are confident in our business model and our ability 

to consistently generate positive cash flow, maintain a strong 

balance sheet and fund our growth objectives. WestJet’s brand 

strength and visibility are growing with additional frequencies 

in key Canadian business markets, further expansion in the 

vacations market and an expanding global reach with airline 

partnerships. Combined with the commitment of all WestJetters 

to the strong underlying fundamentals of our low-cost structure 

and the revenue opportunities that lie ahead with a strengthening

economy, we believe that 2011 will be another exciting year of 

growth, success and profitability for WestJet. 

On behalf of the Board of Directors, Executive team and more 

than 8,000 WestJetters, I thank all of our shareholders and 

guests for their ongoing support and loyalty. 

Gregg Saretsky

President and Chief Executive Officer

March 16, 2011

Caution regarding forward-looking statements

Certain information set forth in the above president’s message to shareholders, including 

information regarding our strategy of profitable and measured growth, increases in 

our airline partnerships and resulting increases in guest access to our network and 

geographic reach, new fare products and flight scheduling, our vision and related 

objectives regarding brand strength, on-time performance, profit margin, culture, and 

guest loyalty and satisfaction, our cost structure and guest experience, our ability to 

generate cash flow, maintain a strong balance sheet and fund our growth objectives, and

our expectations for growth, success and profitability in 2011, contain forward-looking 

statements. By their nature, forward-looking statements are subject to numerous risks 

and uncertainties, some of which are beyond WestJet’s control. These forward-looking 

statements are based on our existing strategy and currently available implementation 

plans, agreements and bookings, but may vary due to factors including, but not limited 

to, changes in fuel prices, changes in guest demand, general economic conditions, 

competitive environment, ability to effectively implement and maintain critical systems, 

ability to successfully negotiate and effectively implement new partnering relationships 

and obtain the necessary regulatory approvals relating thereto and other factors 

described in WestJet’s public reports and filings, which are available on WestJet’s 

profile at www.sedar.com. Readers are cautioned that undue reliance should not be 

placed on forward-looking statements as actual results may vary materially from the 

forward-looking statements. WestJet does not undertake to update, correct or revise 

any forward-looking statements as a result of any new information, future events or 

otherwise, except as may be required by applicable law.
6 WestJet 2010 Annual Report

MANAGEMENT’S

DISCUSSION AND ANALYSIS

OF FINANCIAL RESULTS 2010

Advisories

The following Management’s Discussion and Analysis of Financial

Results (MD&A), dated February 8, 2011, should be read in 

conjunction with the cautionary statement regarding forwardlooking information and statements below, as well as the 

consolidated financial statements and notes thereto, as at and 

for the years ended December 31, 2010 and 2009. The consolidated

financial statements have been prepared in accordance with 

Canadian generally accepted accounting principles (GAAP). All 

amounts in the following MD&A are in Canadian dollars unless 

otherwise stated. Certain prior-period balances in the consolidated 

financial statements have been reclassified to conform to current 

period’s presentation and policies. References to “WestJet,” 

“the Company,” “we,” “us” or “our” mean WestJet Airlines Ltd., 

its subsidiaries, partnership and special-purpose entities, 

unless the context otherwise requires. Additional information 

relating to WestJet filed with Canadian securities commissions, 

including periodic quarterly and annual reports and Annual

Information Forms (AIF), is available on SEDAR at www.sedar.com 

and our website at www.westjet.com. An additional advisory with 

respect to the use of non-GAAP measures is set out on page 52 

of this MD&A under the heading “Non-GAAP Measures.”

Cautionary statement regarding 

forward-looking information and statements 

This MD&A offers our assessment of WestJet’s future plans and 

operations and contains “forward-looking statements” as defined 

under applicable Canadian securities legislation, including our 

expectation that we will continue to develop our partnership 

strategy, referred to under the heading “Overview” on page10; our 

expectation that our partnership strategy will enable us to meet 

our strategic objective of becoming one of the top five airlines 

in the world by 2016, referred to under the heading “Overview” on 

page10; our plans to operate a leased Boeing 757-200 from North 

American Airlines to provide non-stop services between Calgary 

and Honolulu, Calgary and Maui, and Edmonton and Maui between

February 12 and April 30, 2011, referred to under the heading 

“Revenue” on page 17; our expectation that our temporary lease 

agreement will provide additional capacity for non-stop service 

from Alberta to Hawaii, referred to under the heading “Revenue” 

on page 17; our plans to have a WestJet service ambassador 

onboard each 757-200 flight to ensure that the WestJet guest 

experience is consistently delivered to our standards and

expectations, referred to under the heading “Revenue” on page 17; 

our expectation that our checked baggage policy will help offset 

the impact of rising fuel costs, referred to under the heading 

“Revenue” on page 17; our sensitivity to changes in crude oil and 

fuel pricing referred to under the heading “Aircraft fuel” on page 

21; our expected tax rate for 2011, referred to under the heading 

“Income taxes” on page 27; our expectation that we will continue 

introducing self-tagging at other airports during 2011, referred 

to under “Guest experience” on page 27; our belief that the new 

Aircraft Sector Understanding (ASU) will increase the cost of 

export-credit access for all eligible airlines, referred to under 

the heading “Liquidity and capital resources” on page 28; our 

belief that our strong balance sheet and credit will enable us to 

continue financing future aircraft deliveries at reasonable rates 

and terms, referred to under the heading “Liquidity and capital 

resources” on page 28; our assessment that the outcome of legal 

proceedings in the normal course of business will not have a 

material effect upon our financial position, results of operations 

or cash flow, referred to under the heading “Contingencies” on 

page 32; our intention to purchase shares pursuant to the normal 

course issuer bid on the open market through the facilities of 

the Toronto Stock Exchange (TSX), referred to under the heading 

“Normal course issuer bid” on page 32; our intention to cancel any

shares purchased under the normal course issuer bid, referred 

to under the heading “Normal course issuer bid” on page 32; our 

expectation that the relocation firm engaged will actively market 

the residence of our Chief Executive Officer (CEO), referred to 

under the heading “Related-party transactions” on page 33; our 

intention to remit taxes related to the CEO’s exercise of restricted 

share units (RSU) in connection with his relocation, referred 

to under the heading “Related-party transactions” on page 33; 

our expectation that our next purchased aircraft delivery will be 

in February 2012, referred to under the heading “Liquidity and 

capital resources” on page 28 and under the heading “Risks and 

uncertainties” on page 34; our plans to overhaul four engines 

and 11 sets of landing gear in 2011, referred to under the heading 

“Risks and uncertainties” on page 34; our expectation that a 

portion of our engine overhaul costs will be recoverable, referred 

to under the heading “Risks and uncertainties” on page 34; our 

expectations regarding WestJet’s transition to International 
WestJet 2010 Annual Report 7

Financial Reporting Standards (IFRS) and the impact of adopting 

IFRS on WestJet’s consolidated financial statements, referred 

to under the heading “Recent accounting pronouncements

and changes” on page 43; our expectation that in 2011 we will 

continue to build our key strategic initiatives that include

expanding airline partnerships, enhancing our focus on the 

business traveller, growing WestJet Vacations (WVI) revenue and 

increasing our market penetration for the co-branded WestJet 

Credit Card and WestJet Frequent Guest programs, referred to 

under the heading “Outlook” on page 51; our expectation that we 

will sign additional interline agreements, referred to under the 

heading “Outlook” on page 51; our expectations regarding first 

quarter 2011 fuel costs, referred to under the heading “Outlook” 

on page 51; our anticipation that, in the first quarter of 2011, 

cost per available seat mile (CASM), excluding fuel and profit 

share, will be flat year over year, referred to under the heading 

“Outlook” on page 51; our expectations around year-over-year 

capacity increases for the first quarter of 2011 and for the full 

year of 2011, referred to under the heading “Outlook” on page 

51; our belief that we will take delivery of three aircraft during 

the first three months of 2011 and three more throughout the 

remainder of the year, ending 2011 with a fleet of 97, referred to 

under the heading “Outlook” on page 51; our anticipation that 

we will continue to direct additional capacity into the transborder 

and international markets in the first quarter of 2011, referred 

to under the heading “Outlook” on page 51; our expectations 

regarding our overall domestic capacity, referred to under the 

heading “Outlook” on page 51; our expectations around our 

total 2011 capital expenditures and the majority of the spending 

relating to aircraft deposits and rotables, referred to under 

the heading “Outlook” on page 51; our expectations regarding 

WestJet’s ability to weather fuel price uncertainty, referred to 

under the heading “Outlook” on page 51; the expectation that 

we will continue to capitalize on the recent investments in our 

new revenue systems, referred to under the heading “Outlook” 

on page 51; and our confidence in WestJet’s ability to continue 

to achieve profitable growth, referred to under the heading 

“Outlook” on page 51. These forward-looking statements

typically contain the words “anticipate,” “believe,” “estimate,” 

“intend,” “expect,” “may,” “will,” “should,” “potential,” “plan” or 

other similar terms.

Readers are cautioned that our 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. 

With respect to forward-looking statements contained within 

this MD&A, we have made the following key assumptions: 

• our expectation that we will continue to develop our partnership 

strategy was based on our current strategic plan; 

• our expectation that our partnership strategy will enable us 

to meet our strategic objective of becoming one of the top five 

airlines in the world by 2016 was based on our past and current 

experiences and understanding of the airline industry;

• our plan to operate a leased Boeing 757-200 from North 

American Airlines to provide non-stop services between 

Calgary and Honolulu, Calgary and Maui, and Edmonton and 

Maui between February 12 and April 30, 2011 was based on 

an agreement entered into with North American Airlines and 

our current and forecasted commercial schedule;

• our expectation that our temporary lease agreement will 

provide additional capacity for non-stop service from 

Alberta to Hawaii was based on our current and forecasted 

commercial schedule;

• our sensitivity to changes in crude oil and fuel pricing was 

based on our fuel consumption for our existing schedule 

and historical fuel burn, as well as a Canadian-US dollar 

exchange rate similar to the current market rate; 

• our plan to have a WestJet service ambassador onboard each 

757-200 flight to ensure that the WestJet guest experience is 

consistently delivered to our standards and expectations was 

based on our strategic plan with respect to our 757-200 flights;

• our expectation that our checked baggage policy will help 

offset the impact of rising fuel costs was based on our 

preliminary financial analysis;
8 WestJet 2010 Annual Report

• our expected effective tax rate for 2011 was based on 

forecasted financial information, tax rates based on current

legislation, and expectations about the timing of when 

temporary differences between accounting and tax bases 

will occur; 

• our expectation that we will continue introducing self-tagging 

at other airports during 2011 was based on our current 

strategic plan;

• our belief that the new ASU will increase the cost of 

export-credit access for all eligible airlines was based on our 

understanding and analysis of the ASU;

• our belief that our strong balance sheet and credit will 

enable us to continue financing future aircraft deliveries 

at reasonable rates and terms was based on our current 

budget and forecasts;

• our assessment that the outcome of legal proceedings in 

the normal course of business will not have a material effect upon our financial position, results of operations or cash 

flow was based on a review of current legal proceedings 

by management and legal counsel;

• our intention to purchase shares pursuant to the normal 

course issuer bid on the open market through the facilities 

of the TSX was based on our current strategic plan;

• our intention to cancel any shares purchased under the normal 

course issuer bid was based on our current strategic plan;

• our expectation that the relocation firm engaged will actively 

market the residence of our CEO was based on our terms of 

engagement with the relocation firm;

• our intention to remit taxes related to the CEO’s exercise 

of RSUs in connection with his relocation was based on our 

relocation agreement with the CEO; 

• our expectation that our next purchased aircraft delivery will 

be in February 2012 was based on our current fleet plan and 

delivery schedule from Boeing; 

• our plans to overhaul four engines and 11 sets of landing gear 

in 2011 was based on our current fleet maintenance plan;

• our expectation that a portion of our engine overhaul costs will

be recoverable was based on our current lease agreements 

and our current fleet maintenance plan; 

• our expectations regarding WestJet’s transition to IFRS 

and the impact of adopting IFRS on WestJet’s consolidated 

financial statements was based on standards adopted by the 

International Accounting Standards Board (IASB) thus far 

and our assessment of Canadian GAAP and IFRS differences;

• our expectation that in 2011 we will continue to build our 

key strategic initiatives that include expanding airline 

partnerships, enhancing our focus on the business traveller, 

growing WestJet Vacations revenue and increasing our 

market penetration for the co-branded WestJet Credit Card 

and WestJet Frequent Guest programs was based on our 

current strategic plan;

• our expectation that we will sign additional interline 

agreements was based on our current strategic plan;

• our expectations regarding first quarter 2011 fuel costs 

were based on realized jet fuel prices for January 2011 and 

forward curve prices for February and March 2011, as well 

as the exchange rate for the Canadian dollar to the US dollar 

in the first quarter similar to the current market rate;

• our anticipation that, in the first quarter of 2011, CASM, 

excluding fuel and profit share, will be flat year over year was 

based on our current budget and forecast; 

• our expectation around year-over-year capacity for the first 

quarter of 2011 and the full year of 2011 was based on our 

actual and forecasted commercial schedules as well as the 

six aircraft to be delivered throughout 2011;

• our belief that we will take delivery of three aircraft during 

the first three months of 2011 and three more throughout the 

remainder of the year, ending 2011 with a fleet of 97, was 

based on our aircraft delivery schedule;

• our anticipation that we will continue to direct additional 

capacity into the transborder and international markets in the 

first quarter of 2011 is based on our current strategic plan and 

actual and forecasted commercial schedules and bookings;
WestJet 2010 Annual Report 9

• our expectations regarding our overall domestic capacity 

were based on our current strategic plan and actual and 

forecasted commercial schedules and bookings;

• our expectation of our total 2011 capital expenditures, with 

the majority of the spending relating to aircraft deposits and 

rotables, is based on our current budget and forecasts;

• expectations regarding WestJet’s ability to weather fuel 

price uncertainty were based on our expectations of fuel 

price fluctuations and the fuel consumption for our existing 

schedule and historical fuel burn, our fuel hedging program, 

as well as a Canadian-US dollar exchange rate similar to the 

current market rate;

• the expectation that we will continue to capitalize on the 

recent investments in our new revenue systems was based 

on our current experiences and our strategic plan; and

• our confidence in WestJet’s ability to continue to achieve 

profitable growth was based on our past financial results 

and experience.

Our actual results, performance or achievements could differ 

materially from those expressed in, or implied by, these forwardlooking statements. We can give no assurance that any of the 

events anticipated will transpire or occur or, if any of them do, 

what benefits or costs we will derive from them. By their nature, 

forward-looking statements are subject to numerous risks and 

uncertainties including, but not limited to, the impact of general 

economic conditions, changing domestic and international 

industry conditions, volatility of fuel prices, terrorism, pandemics,

currency fluctuations, interest rates, competition from other 

industry participants (including new entrants, capacity fluctuations 

and the pricing environment), labour matters, government 

regulations, stock-market volatility, the ability to access sufficient 

capital from internal and external sources and additional risk 

factors discussed in our Annual Information Form and other 

documents we file from time to time with securities regulatory 

authorities, which are available through the Internet on SEDAR 

at www.sedar.com or, upon request, without charge from us. 

Additional risks and uncertainties impacting WestJet and its 

business and operations are discussed in detail, under the heading 

“Risks and uncertainties,” commencing on page 34 of this MD&A.

The forward-looking statements contained in this MD&A are 

expressly qualified by this cautionary statement. Our assumptions 

relating to the forward-looking statements referred to above 

are updated quarterly and, except as required by law, we do not 

undertake to update any other forward-looking statements.

Definition of key operating indicators 

Our key operating indicators are airline industry metrics, which 

are useful in assessing the operating performance of an airline.

Flight leg: A segment of a flight involving a stopover, change of 

aircraft or change of airline from one landing site to another.

Segment guest: Any person who has been booked to occupy a 

seat on a flight leg and is not a member of the crew assigned to 

the flight.

Average stage length: The average distance of a non-stop flight 

leg between take-off and landing as defined by International Air 

Transport Association (IATA) guidelines.

Available seat miles (ASM): A measure of total guest capacity, 

calculated by multiplying the number of seats available for guest 

use in an aircraft by stage length.

Revenue passenger miles (RPM): A measure of guest traffic, 

calculated by multiplying the number of segment guests by 

stage length.

Load factor: A measure of total capacity utilization, calculated by 

dividing revenue passenger miles by total available seat miles. 

Yield (revenue per revenue passenger mile): A measure of unit 

revenue, calculated as the gross revenue generated per revenue 

passenger mile.

Revenue per available seat mile (RASM): Total revenues divided 

by available seat miles.

Cost per available seat mile (CASM): Operating expenses 

divided by available seat miles.

Cycle: One flight, counted by the aircraft leaving the ground 

and landing.

Utilization: Operating hours per day per operating aircraft.
10 WestJet 2010 Annual Report

OVERVIEW

Although economic uncertainty persisted throughout 2010, 

demand for air travel improved, which is reflected in our strong 

financial results for the year. The increase in demand resulted 

in improved yields year-over-year, particularly throughout 

the second half of 2010. Our 2010 earnings before tax (EBT) 

margin of 7.5 per cent was once again one of the best in the North 

American airline industry. In 2010 we began to capitalize on new 

reservations systems for both WestJet and WestJet Vacations, 

which were implemented in the prior year. In the first quarter 

of 2010, we launched our WestJet Frequent Guest and WestJet 

Credit Card programs, which reward our guests and make our 

airline even more attractive for frequent travellers. We continued 

to increase our self-service capabilities to enhance our guest 

experience, while improving efficiencies at our airports. In 2010 

we launched four additional interline agreements, including our 

first with a U.S. carrier, American Airlines. We were also able to 

further develop one of these interline agreements into our first 

code-share arrangement with Cathay Pacific Airlines. In February 

2011, we announced our second interline agreement with a U.S. 

carrier, Delta Airlines. We will continue to develop our partnership

strategy to enable us to meet our objective of becoming one of 

the five most successful airlines in the world by 2016. The fourth 

quarter of 2010 marks our 23rd consecutive quarter of profitability.

2010 highlights

• Recognized total revenues of $2.6 billion, an increase of 14.4 

per cent from 2009.

• Recorded RASM of 13.36 cents, up 3.0 per cent from 12.97 cents

in 2009.

• Increased capacity by 11.1 per cent and increased RPMs, 

a measure of guest traffic, by 12.9 per cent, compared to 

the prior year. 

• Realized CASM of 12.09 cents, up 2.7 per cent from 11.77 cents 

in 2009.

• Realized CASM, excluding fuel and employee profit share, 

of 8.52 cents for 2010, up 0.8 per cent over 2009.

• Recorded an operating margin of 9.5 per cent, up from 

9.2 per cent in 2009.

• Recorded an EBT margin of 7.5 per cent in 2010, an increase 

of 1.5 points over the 2009 EBT margin of 6.0 per cent. 

• Realized net earnings of $136.7 million, an increase of 

39.3 per cent from 2009.

• Excluding special items, realized net earnings of $142.8 million,

an increase of 53.3 per cent from net earnings, excluding 

special items, in 2009 of $93.1 million. 

• Reported diluted earnings per share of $0.94 for 2010, 

an increase of 27.0 per cent from $0.74 in 2009.

• Excluding special items, realized diluted earnings per share 

of $0.98, an increase of 38.0 per cent from $0.71 in 2009. 

• Generated cash flow from operations of $443.3 million, 

an increase from $318.7 million in 2009.

• Realized a trailing 12-month return on invested capital 

(ROIC) of 9.2 per cent, an increase from 7.8 per cent as at 

December 31, 2009.

• Declared our first-ever quarterly dividend of $0.05 per common 

voting share and variable voting share, paid on January 21, 2011, 

to shareholders of record on December 15, 2010. 

• Filed a notice with the TSX to make a normal course issuer 

bid (NCIB) to purchase up to 7.3 million outstanding shares 

on the open market and, in the fourth quarter of 2010, 

repurchased 2.3 million shares for total consideration of 

$31.4 million. 

Our culture and people continued to shine in 2010. In February 

2010, we were inducted into Canada’s Most Admired Corporate 

Culture Hall of Fame by Waterstone Human Capital. We are also 

proud to have been the highest ranked airline based on brand equity 

in an August 2010 syndicated study conducted by Harris/Decima. 

The other airlines measured in the study were Air Canada, 

American Airlines, British Airways, Porter Airlines, Southwest 

Airlines, United Airlines and Virgin Atlantic. In addition to being 

the highest ranked airline, we also rated in the top three per cent 
WestJet 2010 Annual Report 11

among all 890 brands studied in overall connection with customers.

This category measured emotional connection to the brand, 

practical and aspirational fit with the brand, and a company’s 

ability to deliver on brand expectations. 

Further, we won the Airline Staff Service Excellence Award for 

North America at the 2010 World Airline Awards. These awards 

are based on the World Airline Survey, and are recognized for 

being the only truly global, independent passenger survey of 

airline standards. WestJet was also named in Travel + Leisure

magazine’s annual “World’s Best” awards as one of the top 

10 domestic airlines for the second year in a row. 

These awards are a testament to our over 8,000 WestJetters 

who remain committed to providing a fun, friendly and caring 

world-class guest experience. Our receipt of the prestigious 

International Make-A-Wish® Corporate Partner Award also

demonstrates our culture of caring and our commitment to 

community investment.

We have generously rewarded the dedication of our people with 

approximately $200 million of total profit share distributions since 

our airline’s inception. Our continued strength, both financially 

and operationally, would not be possible without each and every 

one of our WestJetters. 

Operational highlights Three months ended December 31 Twelve months ended December 31

2010 2009 Change 2010 2009 Change

ASMs 5,021,010,134 4,412,573,833 13.8% 19,535,291,313 17,587,640,902 11.1%

RPMs 3,941,660,897 3,460,905,058 13.9% 15,613,121,610 13,834,761,211 12.9%

Load factor 78.5% 78.4% 0.1 pts. 79.9% 78.7% 1.2 pts.

Yield (cents) 17.58 16.47 6.7% 16.71 16.49 1.3%

RASM (cents) 13.80 12.92 6.8% 13.36 12.97 3.0%

CASM (cents) 12.23 12.10 1.1% 12.09 11.77 2.7%

CASM, excluding fuel and employee 

profi t share (cents) 8.51 8.67 (1.8%) 8.52 8.45 0.8%

Fuel consumption (litres) 242,620,920 216,871,585 11.9% 950,341,292 859,115,698 10.6%

Fuel costs per litre (dollars) 0.74 0.69 7.2% 0.71 0.66 7.6%

Segment guests 3,803,550 3,515,168 8.2% 15,173,581 14,038,827 8.1%

Average stage length (miles) 982 923 6.4% 968 923 4.9%

Utilization (hours) 11.7 11.4 2.6% 11.6 11.7 (0.9%)

Number of full-time equivalent employees

at period end 6,877 6,291 9.3% 6,877 6,291 9.3%

Fleet size at period end 91 86 5.8% 91 86 5.8%

We are pleased with the significant improvement in results from 

2009. Our year-over-year RASM increase was 3.0 per cent, on a 

capacity increase of 11.1 per cent from the prior year. 

During the fourth quarter of 2010, we launched seasonal 

service to three new destinations: New Orleans, Louisiana; 

Grand Cayman Island; and Santa Clara, Cuba. In addition, we 

launched service this year to Kindley Field, Bermuda; Windsor, 

Ontario; and Samana, Dominican Republic, which brought our 

total number of destinations to 70 as at December 31, 2010. 

In January 2011, in conjunction with the release of our 2011 

summer schedule, we announced new non-stop service from 

Vancouver and Calgary to Orange County, California, beginning 

in the summer of 2011. The summer schedule also includes 

expanded service across our existing network. 

Our 2010 load factor was up by 1.2 points to 79.9 per cent in 2010 

from 78.7 per cent in 2009. Our fourth quarter load factor of 

78.5 per cent remained relatively consistent, as compared to 

the same quarter of the prior year. We are encouraged by our 
12 WestJet 2010 Annual Report

strong oad factor, particularly with the significant quarterover-quarter capacity increase of 13.8 per cent. This reflects 

the improvement in the demand environment during the fourth 

quarter. Our quarterly load factors over the 2009 and 2010 years 

are depicted on the following chart. 

During the fourth quarter of 2010, we broke our record for number 

of guests flown in one day. On December 23, 2010, we flew over 

50,000 guests on 434 flights. In addition, our on-time performance 

statistic of 75.4 per cent during the fourth quarter of 2010 was our 

best recorded performance since the fourth quarter of 2007. 

Cost control remains a key priority for us, and we have continued 

with our disciplined approach to cost management. For the year 

ended December 31, 2010, our realized CASM was 12.09 cents, 

an increase of 2.7 per cent from a CASM of 11.77 cents in the 

prior year. Excluding fuel and employee profit share, our CASM 

increased slightly to 8.52 cents, up 0.8 per cent from 2009. 

We maintained one of the strongest balance sheets in the North 

American airline industry during 2010, as evidenced by our 

significant cash and cash equivalents balance of $1,187.9 million 

as at December 31, 2010, an increase of 18.2 per cent from 

December 31, 2009. The increase in our cash position was a result 

of our positive cash flow from operations. Our current ratio, 

defined as current assets over current liabilities, improved 

to 1.52 compared to 1.48 as at December 31, 2009, and our 

adjusted debt-to-equity ratio improved by 2.8 per cent to 1.39 

from 1.43 as at December 31, 2009. Similarly, our adjusted net 

debt to earnings before interest, taxes, depreciation, aircraft rent 

and other items (EBITDAR) ratio improved by 19.1 per cent to 

1.78 compared to 2.20 as at December 31, 2009. 

Our ROIC calculation is used to assess our efficiency at allocating 

our capital to generate profitable returns. As at December 31, 

2010, our trailing 12-month ROIC improved to 9.2 per cent from 

7.8 per cent at December 31, 2009. This increase is primarily 

attributable to improved earnings in 2010 versus 2009, and is 

moving towards our target of a 12 per cent ROIC. 

Operating cash flow for the year ended December 31, 2010, was 

$443.3 million, an increase of 39.1 per cent from $318.7 million 

in 2009. This increase is related primarily to improved earnings 

from operations, as well as a positive year-over-year change in 

non-cash working capital. Similarly, our diluted operating cash 

flow per share increased to $3.05, as compared to $2.41 in 2009, 

representing an increase of 26.6 per cent year over year. 

During 2010, we increased our fleet size by five, ending the year 

with 91 aircraft. With an average age of 5.2 years, we continue to 

operate one of the youngest fleets of any large North American 

commercial airline. 

Quarterly load factor

84%

82%

80%

78%

76%

74% 

72%

70%

Q1 Q2 Q3 Q4

 2009

 2010
WestJet 2010 Annual Report 13

Please refer to page 52 of this MD&A for a reconciliation of 

the non-GAAP measures, including CASM, excluding fuel and 

employee profit share; net earnings and diluted earnings per 

share, excluding special items; ROIC; adjusted debt-to-equity and 

adjusted net debt to EBITDAR ratios; and diluted operating cash 

flow per share, to the nearest measure under Canadian GAAP. 

SELECTED ANNUAL AND QUARTERLY FINANCIAL INFORMATION

Annual audited financial information

Quarterly unaudited financial information

($ in thousands, except per share data) 2010 2009 2008

Restated

Total revenues $ 2,609,261 $ 2,281,120 $ 2,549,506 

Net earnings $ 136,720 $ 98,178 $ 178,506 

Basic earnings per share $ 0.94 $ 0.74 $ 1.39 

Diluted earnings per share $ 0.94 $ 0.74 $ 1.37 

Total assets $ 3,562,844 $ 3,493,702 $ 3,268,702 

Total long-term fi nancial liabilities(i) $ 866,745 $ 1,051,912 $ 1,201,382 

Shareholders' equity $ 1,507,679 $ 1,388,928 $ 1,075,990 

(i) Includes long-term portion of long-term debt, obligations under capital s and fuel derivative liabilities.

Three months ended

($ in thousands, except per share data) Dec. 31, 2010 Sept. 30, 2010 Jun. 30, 2010 Mar. 31, 2010

Total revenues $ 692,815 $ 684,564 $ 612,117 $ 619,765 

Net earnings $ 47,908 $ 53,983 $ 21,029 $ 13,800 

Basic earnings per share $ 0.33 $ 0.37 $ 0.14 $ 0.10 

Diluted earnings per share $ 0.33 $ 0.37 $ 0.14 $ 0.10 

Three months ended

($ in thousands, except per share data) Dec. 31, 2009 Sept. 30, 2009 Jun. 30, 2009 Mar. 31, 2009

Total revenues $ 570,042 $ 600,630 $ 531,163 $ 579,285 

Net earnings $ 20,175 $ 31,418 $ 9,153 $ 37,432 

Basic earnings per share $ 0.14 $ 0.24 $ 0.07 $ 0.29 

Diluted earnings per share $ 0.14 $ 0.24 $ 0.07 $ 0.29 

Our business is seasonal in nature with varying levels of activity 

throughout the year. We experience increased domestic travel 

in the summer months (second and third quarters) and more 

demand for sun destinations over the winter period (fourth and first

quarters). With our transborder and international destinations, 

we have been able to partially alleviate the effects of seasonality 

on our net earnings.
14 WestJet 2010 Annual Report

FOURTH QUARTER

The 2010 year ended with a strong fourth quarter. We saw 

significant improvement in our financial results, as reported in 

our revenues and net earnings, as well as operational strength 

with a record number of guests flown in one day and improved 

on-time performance, all resulting in our 23rd consecutive quarter 

of profitability. 

Quarterly highlights

• Recognized total revenues of $692.8 million, an increase of 

21.5 per cent from the fourth quarter of 2009.

• Recorded RASM of 13.80 cents, up 6.8 per cent from the 

comparable period of 2009. 

• Increased capacity by 13.8 per cent and increased RPMs by 

13.9 per cent, over the three months ended December 31, 2009.

• Realized CASM of 12.23 cents, up 1.1 per cent from the fourth 

quarter of 2009.

• Realized CASM, excluding fuel and employee profit share, of 

8.51 cents, down 1.8 per cent over the three months ended 

December 31, 2009.

• Recorded an operating margin of 11.4 per cent, compared to 

6.3 per cent in the same period last year. 

• Recorded an EBT margin of 9.7 per cent, up 5.7 points from 

the 4.0 per cent reported in the fourth quarter of 2009. 

• Reported net earnings of $47.9 million, an increase of 

137.5 per cent from the three months ended December 

31, 2009, and an increase of 216.8 per cent when excluding 

special items.

• Realized diluted earnings per share of $0.33 for the fourth 

quarter of 2010, an increase of 135.7 per cent compared to 

the same period of 2009.

• Generated cash flow from operations of $69.9 million, an 

increase from $64.6 million in the fourth quarter of 2009. 

Please refer to page 52 of this MD&A for a reconciliation of 

non-GAAP measures, including CASM, excluding fuel and employee 

profit share, and net earnings, excluding special items, to the 

nearest measure under Canadian GAAP.

FOURTH QUARTER RESULTS OF OPERATIONS

Fourth quarter 2010 revenue

Three months ended December 31

($ in thousands) 2010 2009 Change

Guest $ 641,905 $ 528,104 21.5%

Other 50,910 41,938 21.4%

 $ 692,815 $ 570,042 21.5%

RASM (cents) 13.80 12.92 6.8%

During the quarter ended December 31, 2010, total revenues 

increased by 21.5 per cent to $692.8 million from $570.0 million 

in the same period of 2009, largely attributable to improved pricing 

and demand in the market. Guest revenues from our scheduled 

flight operations increased by 21.5 per cent during the fourth 

quarter to $641.9 million, compared to $528.1 million in the 

fourth quarter of 2009. This was due primarily to the 13.8 per cent 

increase in capacity quarter over quarter, in conjunction with 

increased traffic of 13.9 per cent and improvement in our yield. 
WestJet 2010 Annual Report 15

Our RASM increased by 6.8 per cent for the fourth quarter of 

2010 to 13.80 cents, compared to 12.92 cents in 2009. This RASM 

increase related primarily to an increase in yield of 6.7 per cent 

for the fourth quarter of 2010, as our quarter-over-quarter load 

factor remained relatively consistent. We had significant capacity 

increases into the transborder and international markets in the 

fourth quarter as compared to the prior year, with domestic 

capacity remaining relatively flat. Despite this higher percentage 

of lower-yielding ASMs in the longer-haul routes, our yields 

improved across our network as compared to the same quarter 

of the prior year. Please refer to the table below for details on our 

quarter-over-quarter capacity variances.

For the fourth quarter of 2010, other revenues, which include 

charter, cargo, ancillary, WestJet Vacations non-air and other 

revenue, increased by 21.4 per cent to $50.9 million. This increase

was attributable primarily to an increase in WestJet Vacations 

non-air revenue. Since the prior year, WestJet Vacations tour 

package revenues have increased due to a significant increase 

in the number of bookings, as well as from improved average 

value per booking. 

We continued to see improvements in our ancillary fees per 

guest, as seen in our fourth quarter ancillary fee per guest 

of $6.43, up 23.7 per cent from $5.20 per guest in the same 

quarter of the prior year. During the fourth quarter of 2010, we 

redesigned our corporate website, www.westjet.com, and, as a 

result of amending the booking flow to make the pre-reserved 

seating option more prominent, we have seen increases in these 

ancillary fees from the same period of last year. Our reservation 

system implementation during the fourth quarter of 2009 also 

resulted in a period whereby certain fees were being temporarily 

waived to accommodate our guests during the adjustment to the 

new system. 

Three months ended December 31

(in millions) 2010 2009 Change

ASMs % of total ASMs % of total ASMs

Domestic 2,834.2 56.4% 2,850.2 64.6% (0.6%)

Charter and scheduled transborder 

and international 2,186.8 43.6% 1,562.4 35.4% 40.0%

Total 5,021.0 100.0% 4,412.6 100.0% 13.8%

Fourth quarter 2010 expenses

Three months ended December 31

CASM (cents) 2010 2009 Change

Aircraft fuel 3.57 3.37 5.9%

Airport operations 2.00 2.08 (3.8%)

Flight operations and navigational charges 1.60 1.66 (3.6%)

Sales and distribution 1.33 1.14 16.7%

Marketing, general and administration 1.04 1.24 (16.1%)

Aircraft leasing 0.73 0.57 28.1%

Depreciation and amortization 0.65 0.83 (21.7%)

Infl ight 0.64 0.61 4.9%

Maintenance 0.52 0.54 (3.7%)

Employee profi t share 0.15 0.06 150.0%

 12.23 12.10 1.1%

CASM, excluding fuel and employee profi t share 8.51 8.67 (1.8%)
16 WestJet 2010 Annual Report

For the fourth quarter of 2010, our CASM increased by 1.1 per cent 

to 12.23 cents compared to 12.10 cents in the same quarter 

of 2009. Our CASM, excluding fuel and employee profit share, 

decreased by 1.8 per cent to 8.51 cents from 8.67 cents in the 

same quarter of 2009.

Aircraft fuel 

In the fourth quarter of 2010, aircraft fuel expenses increased 

by 20.4 per cent from the prior year to $179.3 million. We saw 

a significant increase in jet fuel prices, with the average market 

price for jet fuel being US $100 per barrel in the fourth quarter 

of 2010, versus US $84 per barrel in the fourth quarter of 2009, 

an increase of 19.0 per cent. Our fuel costs per ASM increased by 

5.9 per cent to 3.57 cents in the fourth quarter of 2010, up from 

3.37 cents in the same period in 2009. Our fourth quarter unhedged 

fuel costs were $0.73 per litre, an increase of 9.0 per cent 

from last year. Including costs related to fuel hedging, our 

fourth quarter fuel costs were $0.74 per litre, up 7.2 per cent 

from $0.69 per litre in the same quarter of 2009. The increase 

in our fuel costs were partially offset by favourable foreign 

exchange rates this quarter, as compared to the same quarter 

in the prior year. 

The following table displays our fuel costs per litre, including 

and excluding fuel hedging, for the three months ended

December 31, 2010 and 2009. Please refer to page 52 of this 

MD&A for a discussion of the use of non-GAAP measures, 

including aircraft fuel expense, excluding hedging, which is 

reconciled to GAAP in the following table.

Three months ended December 31

($ in thousands, except per litre data) 2010 2009 Change

Aircraft fuel expense – GAAP $ 179,276 $ 148,853 20.4%

Realized loss on designated fuel derivatives – effective portion (1,512) (3,707) (59.2%)

Aircraft fuel expense, excluding hedging – Non-GAAP $ 177,764 $ 145,146 22.5%

Fuel consumption (thousands of litres) 242,621 216,872 11.9%

Fuel costs per litre (dollars) – including fuel hedging 0.74 0.69 7.2%

Fuel costs per litre (dollars) – excluding fuel hedging 0.73 0.67 9.0%

Sales and distribution 

Our fourth quarter sales and distribution expense per ASM was 

1.33 cents, an increase of 16.7 per cent from 1.14 cents in the 

same quarter of the prior year. Sales and distribution expenses 

increased to $67.0 million from $50.4 million in the same period 

of 2009, representing an increase of 33.1 per cent. The growth 

of WestJet Vacations represented approximately 40 per cent 

of this increase. The increase in WestJet Vacations costs were 

due to the significant increases in the number of tour package 

bookings made compared to the same quarter of the prior year. 

This resulted in increased commissions and incentive payments, 

as the majority of WVI bookings were made indirectly through the 

travel agency community. As well, sales expenses increased from

the fourth quarter of 2009, which related primarily to increased 

WestJet travel agency commission and incentive payments. 

The percentage of our airline’s bookings made through the 

travel trade has increased, which drives higher commission and 

incentive expenses, but also contributes higher average fares. 

The remainder of the variance was due to increased distribution 

costs, resulting primarily from increased global distribution 

system (GDS) fees and credit card fees, which are in line with 

the rate of increase of our bookings, as well as costs associated 

with the redesign of our corporate website. These increases are 

offset by the $2.4 million bad debt provision recorded in the 

fourth quarter of 2009 related to accounts receivable from our 

previous cargo service provider. Since January 2010, we have 

had a new cargo partner in place. 

Marketing, general and administration

During the fourth quarter of 2010, our marketing, general and 

administration expense decreased by $2.4 million from the same 

quarter of 2009 to $52.3 million. The marketing, general and 
WestJet 2010 Annual Report 17

During 2010, total revenues increased by 14.4 per cent to

$2,609.3 million from $2,281.1 million in 2009. The increase in 

revenues is primarily attributable to the increased capacity since 

the prior year, along with positive variances in both load factor and 

yield. Our traffic growth of 12.9 per cent outpaced our 11.1 per cent 

capacity growth during the year. One of our key revenue 

measurements is RASM, as it takes into consideration load factor 

and yield. Our RASM increased by 3.0 per cent to 13.36 cents 

for 2010, compared to 12.97 cents in 2009. Average stage length 

growth of 4.9 per cent from 2009 placed downward pressure on 

RASM. As average stage length increases, revenue per available 

seat mile typically decreases. Despite the growth in stage length 

2010 RESULTS OF OPERATIONS

Revenue

Twelve months ended December 31

($ in thousands) 2010 2009 Change

Guest $ 2,405,281 $ 2,067,860 16.3%

Other 203,980 213,260 (4.4%)

 $ 2,609,261 $ 2,281,120 14.4%

RASM (cents) 13.36 12.97 3.0%

administration charge per ASM decreased by 16.1 per cent to 

1.04 cents, compared to 1.24 cents in the same period of 2009. 

This decrease was mainly attributable to the reclassification in 

2010 of our onboard product costs from marketing expense to our 

airport operations. Our advertising expenses have also decreased, 

on an ASM basis, from the same quarter of the prior year. 

Aircraft leasing 

Our aircraft leasing costs in the fourth quarter of 2010 increased 

by 28.1 per cent to 0.73 cents per ASM from 0.57 cents per ASM 

in the same quarter of 2009. During the fourth quarter of 2009, 

we assumed delivery of five leased aircraft and, in addition, 

during 2010 an additional five leased aircraft were added to our 

fleet. Leased aircraft now represent 42 per cent of our total fleet, 

with a total of 38 aircraft under operating lease, as compared to 

38 per cent of our fleet at the end of 2009. Our ASM growth from 

the fourth quarter of the prior year is attributable to the addition 

of these leased aircraft. As well, our foreign exchange forward 

hedging program contributed to the decrease in costs per ASM 

for the fourth quarter of 2010, as compared to the prior year, 

as we had not hedged the foreign currency exposure on aircraft 

leasing expenses during the fourth quarter of 2009. 

Depreciation and amortization 

Our depreciation and amortization charge per ASM was 0.65 cents, 

a reduction of 21.7 per cent from 0.83 cents in the prior year. The 

decrease in depreciation and amortization expense in the current 

quarter versus the same quarter of 2009 is primarily attributable 

to the change in our fleet mix, where a smaller percentage of our 

total aircraft fleet was comprised of owned aircraft. As such, the 

number of cycles flown by owned aircraft versus those that are 

under operating lease has decreased from the prior year. 

Income taxes

Our effective consolidated income tax rate for the three months 

ended December 31, 2010, was 28.5 per cent, as compared to 

12.4 per cent for the same period in 2009. This difference in our 

effective tax rate for the three month period ended December 31, 

2010, was primarily due to a corporate income tax rate reduction 

enacted by the Ontario provincial government occurring in the 

comparative period. The current period’s effective rate is in line 

with expectations previously set for the quarter.
18 WestJet 2010 Annual Report

and the significant increase in ASMs year over year, we saw an 

improvement in load factor of 1.2 points, as well as an improvement

in yield of 1.3 per cent year over year. 

Beginning in the third quarter of 2010, we realized year over year 

yield increases, driven heavily by strong domestic market 

performance over the busy summer months. Throughout the 

fourth quarter, we continued to experience strong yields across 

our network. This trend is encouraging, as it is an indication that 

the demand environment is improving.

At the end of the second quarter of 2010, we adjusted our 

fare structure to offer everyday low fares, with the objective of 

encouraging guests to purchase flights when they are ready to 

book, rather than waiting for a seat sale. Our top-end fares were 

reduced by an average of 25 per cent, designed to offer excellent 

value for guests who need to book close to departure date. 

The volume of guests booking in these higher fare classes has 

grown significantly year over year. We believe that our new fare 

structure provides our guests with value and has contributed to 

our overall yield improvement. 

Our aircraft utilization remained relatively consistent with the 

prior year, with a slight decrease of 0.9 per cent to 11.6 operating 

hours per day. The flexibility of our fleet deployment strategy 

allows us to react to demand changes by adjusting our schedule 

for more profitable flying. During the year, we continued with 

tactical adjustments to our schedule. During the peak winter 

months, we have allocated more than half of our system 

capacity outside of Canada to the high-demand transborder and 

international markets, as depicted in the following chart. 

Charter and scheduled transborder and international as a percentage of total ASMs Apr. 09 May 09 Jun. 09 Jul. 09 Aug. 09 Sept. 09 Oct. 09 Nov. 09 Dec. 09 Jan. 10 Feb. 10 Mar. 10 Apr. 10

May 10

Jun. 10

Jul. 10

Aug. 10

Sept. 10

Oct. 10

Nov. 10

Dec. 10

60%

55%

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
WestJet 2010 Annual Report 19

Twelve months ended December 31

(in millions) 2010 2009 Change

ASMs % of total ASMs % of total ASMs

Domestic 12,415.0 63.6% 12,506.9 71.1% (0.7%)

Charter and scheduled transborder and international 7,120.3 36.4% 5,080.7 28.9% 40.1%

Total 19,535.3 100.0% 17,587.6 100.0% 11.1%

On average, long-haul routes have lower yields; however, even 

with the substantial capacity increase in the transborder and 

international markets, we experienced overall yield improvement. 

This is due to stronger yields and slightly higher load factors in the 

domestic market, as compared to the prior year, on a relatively 

consistent level of capacity in the domestic market. Our guest 

traffic remained relatively consistent year over year in our

domestic market, with strong increases in our transborder and 

international markets consistent with our ASM growth in those 

markets. Our capacity in the transborder and international

markets increased by 40.1 per cent from 2009, with a consistent 

load factor and a flat year-over-year yield.

As announced in late 2010, we will be operating a leased

Boeing 757-200 from North American Airlines to provide non-stop

services between Calgary and Honolulu, Calgary and Maui, and 

Edmonton and Maui between February 12 and April 30, 2011. This 

temporary lease agreement will allow us to provide additional 

capacity for non-stop service from Alberta to Hawaii. We will have 

a WestJet service ambassador onboard each 757-200 flight to 

ensure that the WestJet guest experience is consistently delivered 

to our standards and expectations. This initiative once again 

demonstrates our WestJet spirit and our ability to meet the 

service needs of our guests. 

For 2010, other revenues decreased by 4.4 per cent to $204.0 million

from $213.3 million in 2009. We saw significant increases in 

WestJet Vacations non-air revenue, offset by decreases in our 

charter revenues due to the termination of our charter agreement 

with Transat, effective May 10, 2009. Despite the absence of this 

agreement in 2010, our strong load factor and traffic growth 

indicate that our increased capacity is being profitably absorbed 

by the market. 

WestJet Vacations experienced significant revenue growth in 

2010. Vacation package revenue increased over 70 per cent 

from the prior year. Growth was largely to our Southern winter 

destinations in Mexico and the Caribbean, in line with WestJet’s 

network expansion into these regions. This growth, along with 

longer stays in these markets, provided significant year-overyear growth in our other revenues. WestJet Vacations continues 

to be successful in generating an additional revenue stream and 

supporting our network expansion to vacation destinations. 

Ancillary revenues, which include service fees, onboard sales, 

and partner and program revenue, provide an opportunity to 

maximize our profits through the sale of higher-margin goods 

and services, while enhancing our overall guest experience by 

providing guests with additional products and services to meet 

their needs. For 2010, ancillary revenues were $91.1 million, 

representing a slight decrease from $91.7 million in 2009. 

Ancillary fees per guest for the year decreased by 9.5 per cent to 

$6.03 per guest from $6.66 per guest in 2009. 

After the October 2009 implementation of our Sabre reservation 

system, we experienced lower pre-reserved seating, change and 

cancellation fees. The variance in pre-reserved seating fees 

was experienced throughout the first three quarters of 2010, as 

compared to 2009, mainly due to the shift in distribution methods to 

more indirect channels, such as the use of travel agents. With our 

new reservation system, we had limited ability to sell pre-reserved 

seating through these channels. We have implemented plans 

to increase the availability of pre-reserved seating through all 

booking channels, and have seen these fees per guest continue 

to improve throughout 2010. In addition, during the fourth quarter

of 2010, our corporate website redesign helped to improve 

our conversion rates on pre-reserved seating fees, as the 

booking flow now highlights this option more prominently than 

in the past. We are now realizing levels of pre-reserved seating 

fees per guest that are higher than those experienced prior to 

our reservation system implementation. Lastly, for a period 
20 WestJet 2010 Annual Report

subsequent to our reservation system cutover, certain fees were 

temporarily waived in order to accommodate guests during the 

adjustment to the new system. We are now back to normal levels 

of charging fees; however, there have been fewer change and 

cancellation fees as a result of our fare structure adjustment in 

the second quarter of 2010. With everyday low fares, guests are 

less likely to change their flights prior to departure date. 

In November 2010, we announced a charge of $20 to guests 

checking a second bag, effective for travel on or after 

January 19, 2011. Concurrent with this change, we reduced our 

fee for the third and fourth bag from $75 to $50. This checked 

baggage policy better aligns us with standard industry practice 

and will help to offset the impact of rising fuel costs. 

Also included in ancillary revenues are revenues related to our 

WestJet Frequent Guest and WestJet Credit Card programs, both 

of which were launched during the first quarter of 2010. These 

programs have performed well and continue to contribute to our 

objective of providing high value to our guests.

Expenses

2010 2009 2008 2007 2006

CASM (cents) Restated Restated Restated

Aircraft fuel 3.45 3.24 4.69 3.46 3.40 

Airport operations 1.99 2.00 2.00 2.06 2.02 

Flight operations and navigational charges 1.67 1.70 1.64 1.77 1.83 

Sales and distribution 1.30 0.98 1.00 1.03 0.98 

Marketing, general and administration 1.00 1.19 1.23 1.22 1.17 

Aircraft leasing 0.73 0.59 0.50 0.52 0.57 

Depreciation and amortization 0.68 0.80 0.80 0.87 0.89 

Infl ight 0.64 0.64 0.62 0.59 0.54 

Maintenance 0.51 0.55 0.50 0.51 0.54 

Employee profi t share 0.12 0.08 0.19 0.33 0.16 

 12.09 11.77 13.17 12.36* 12.10 

CASM, excluding fuel and employee profi t share 8.52 8.45 8.29 8.57* 8.54 

*Excludes reservation system impairment of $31.9 million in 2007.

Twelve months ended December 31

CASM (cents) 2010 2009 Change

Aircraft fuel 3.45 3.24 6.5%

Airport operations 1.99 2.00 (0.5%)

Flight operations and navigational charges 1.67 1.70 (1.8%)

Sales and distribution 1.30 0.98 32.7%

Marketing, general and administration 1.00 1.19 (16.0%)

Aircraft leasing 0.73 0.59 23.7%

Depreciation and amortization 0.68 0.80 (15.0%)

Infl ight 0.64 0.64 —

Maintenance 0.51 0.55 (7.3%)

Employee profi t share 0.12 0.08 50.0%

 12.09 11.77 2.7%

CASM, excluding fuel and employee profi t share 8.52 8.45 0.8%
WestJet 2010 Annual Report 21

During 2010, our CASM increased by 2.7 per cent due to 

increases in aircraft fuel, sales and distribution, as well as 

aircraft leasing costs. These increases were largely offset by 

decreases in marketing, general and administration, as well as 

depreciation and amortization expense. Our CASM, excluding 

fuel and employee profit share, grew slightly to 8.52 cents, 

representing an increase of 0.8 per cent over 2009. 

We remain diligent in our efforts to control expenses in order 

to maintain our low-cost advantage. As part of our ongoing 

focus to achieve sustainable cost savings, we constantly evaluate 

alternatives to improve the effectiveness and efficiency of

our airline. 

Aircraft fuel

Aircraft fuel expense for 2010 was $674.6 million, representing 

an increase of 18.2 per cent from the prior year. The average 

market price for jet fuel rose to US $91 per barrel in 2010 versus 

US $71 per barrel in 2009, representing an increase of 28.2 per cent. 

With the Canadian dollar strengthening versus the US dollar in 

2010, the average market price for jet fuel in Canadian dollars 

was $94 per barrel versus $81 per barrel in 2009, an increase 

of 16.0 per cent. 

The increase in fuel costs was primarily due to increases in 

US-dollar West Texas Intermediate (WTI) crude oil prices and 

refining costs, partially offset by a higher Canadian dollar and 

lower fuel hedging charges in 2010. Fuel remains our most 

significant cost, representing approximately 29 per cent of total 

operating costs for the year, as compared to approximately

28 per cent in 2009. 

Under our fuel price risk management policy, we are permitted 

to hedge a portion of our future anticipated jet fuel purchases for 

up to 36 months, as approved by our Board of Directors. The policy 

establishes hedging limits based on time horizon. Management 

continually reviews and adjusts its strategy based on market 

conditions and competitors’ positions. Our hedging program is 

designed to mitigate the risk of sudden and substantial movements 

in fuel prices causing volatility in our earnings and cash flows. 

We do not hold or use any derivative instruments for speculative 

purposes. Financial derivatives in crude-oil-based commodities 

(including a variety of crude oil, heating oil and jet benchmarks) 

that are traded directly on organized exchanges or are available 

over the counter, can be useful in mitigating the risk of volatile 

fuel prices. During the year ended December 31, 2010, we 

purchased Canadian-dollar WTI call options and Canadian-dollar

jet fuel swaps, call options and collars. The cash premium paid 

during the year related to option-style contracts was $6.2 million 

(2009 – $nil). 

As at December 31, 2010, we had a mixture of Canadian-dollar 

WTI and jet fuel call options and collars to hedge approximately 

20 per cent (2009 – 14 per cent) of our anticipated jet fuel 

requirements for the next 12 months. The following tables outline, 

per type, as at December 31, 2010, the notional volumes per 

barrel (bbl.) or per gallon (gal.), along with the weighted average 

contract prices. 

Type Year Instrument Notional volumes (bbl.) WTI average call price (CAD/bbl.)

WTI 2011 Call options 1,230,000 $ 97

Type Year Instrument Notional volumes (gal.)

Jet average call 

price (CAD/gal.)

Jet average put 

price (CAD/gal.)

Jet 2011 Collars 1,260,000 $ 2.50 $ 2.00
22 WestJet 2010 Annual Report

Upon proper qualification, we account for our fuel derivatives 

as cash flow hedges. Under cash flow hedge accounting, the 

effective portion of the change in the fair value of the hedging 

instrument is recognized in accumulated other comprehensive 

loss (AOCL), while the ineffective portion is recognized in 

non-operating income (expense). Upon maturity of the derivative 

instrument, the effective gains and losses previously recognized 

in AOCL are recorded in net earnings as a component of aircraft 

fuel expense. 

Our policy for fuel derivatives is to measure effectiveness based 

on the change in the intrinsic value of the fuel derivatives versus 

the change in the intrinsic value of the anticipated jet fuel 

purchase. We elect to exclude time value from the measurement 

of effectiveness; accordingly, changes in time value are recognized

in non-operating income (expense) during the period the change 

occurs. As a result, a significant portion of the change in fair 

value of our options may be recorded as ineffective.

Ineffectiveness is inherent in hedging jet fuel with derivative 

instruments in other commodities, such as crude oil, particularly 

given the significant volatility observed in the market on crude 

oil and related products. Because of this volatility, we are unable 

to predict the amount of ineffectiveness for each period. This 

may result in increased volatility in our results.

If the hedging relationship ceases to qualify for cash flow hedge 

accounting, any change in fair value of the instrument from the 

point it ceases to qualify is recorded in non-operating income 

(expense). Amounts previously recorded in AOCL will remain in 

AOCL until the anticipated jet fuel purchase occurs, at which time, 

the amount is recorded in net earnings under aircraft fuel expense. 

If the transaction is no longer expected to occur, amounts

previously recorded in AOCL will be reclassified to non-operating 

income (expense). For the years ended December 31, 2010

and 2009, there were no amounts reclassified as a result of 

transactions no longer expected to occur. 

The following table displays our fuel costs per litre, including and 

excluding fuel hedging, for the years ended December 31, 2010 

and 2009. Please refer to page 52 of this MD&A for a discussion 

on the use of non-GAAP measures, including aircraft fuel 

expense, excluding hedging, which is reconciled to GAAP in the 

table below.

On an ASM basis, aircraft fuel expense increased by 6.5 per cent 

to 3.45 cents from 3.24 cents in the prior year. Our fuel costs per 

litre, including fuel hedging, increased to $0.71 per litre during 

2010, representing an increase of 7.6 per cent from $0.66 per 

litre in 2009. Excluding the effects of the realized loss on fuel 

derivatives designated in an effective hedging relationship, our 

fuel costs per litre were $0.70 for 2010, an increase of 11.1 per cent 

from 2009. 

The following table presents the financial impact and statement 

presentation of our fuel derivatives on the consolidated balance 

sheet as at December 31, 2010 and 2009.

Twelve months ended December 31

($ in thousands, except per litre data) 2010 2009 Change

Aircraft fuel expense – GAAP $ 674,608 $ 570,569 18.2%

Realized loss on designated fuel derivatives – effective portion (9,172) (28,411) (67.7%)

Aircraft fuel expense, excluding hedging – Non-GAAP $ 665,436 $ 542,158 22.7%

Fuel consumption (thousands of litres) 950,341 859,116 10.6%

Fuel costs per litre (dollars) – including fuel hedging 0.71 0.66 7.6%

Fuel costs per litre (dollars) – excluding fuel hedging 0.70 0.63 11.1%
WestJet 2010 Annual Report 23

($ in thousands) Statement presentation 2010 2009

Receivable from counterparties for fuel derivatives Prepaid expenses, deposits and other $ 445 $ 96 

Fair value of fuel derivatives Prepaid expenses, deposits and other 5,244 — 

Fair value of fuel derivatives Accounts payable and accrued liabilities — (7,521)

Payable to counterparties for fuel derivatives Accounts payable and accrued liabilities (800) (1,242)

Unrealized (gain) loss from fuel derivatives AOCL – before tax impact (11) 6,713 

($ in thousands) Statement presentation 2010 2009

Realized loss on designated fuel derivatives – 

effective portion Aircraft fuel $ (9,172) $ (28,411)

Gain on designated fuel derivatives Gain (loss) on derivatives 44 5,617 

The following table presents the financial impact and statement 

presentation of our fuel derivatives on the consolidated 

statement of earnings for the years ended December 31, 2010 

and 2009.

During the year ended December 31, 2010, we net settled fuel 

derivatives in favour of the counterparties for $9.0 million 

(2009 – $29.6 million). The estimated amount reported in AOCL 

that is expected to be reclassified to net earnings as a component 

of aircraft fuel expense, when the underlying jet fuel is consumed 

during the next 12 months, is a gain before tax of $0.01 million 

(2009 – loss before tax of $6.7 million). 

The fair value of the fuel derivatives designated in an effective 

hedging relationship is determined using inputs, including

quoted forward prices for commodities, foreign exchange rates 

and interest rates, which can be observed or corroborated in 

the marketplace. The fair value of the fixed swap agreements is 

estimated by discounting the difference between the contractual 

strike price and the current forward price. The fair value of 

the collar structures and call option contracts are estimated 

by the use of a standard option valuation technique. As at

January 31, 2011, for the period we are hedged, the closing 

forward curve for crude oil ranged from approximately US $92 to 

US $100 per barrel with the average foreign exchange rate being 

1.0051 Canadian to US dollars. 

For 2011, excluding the impact of fuel hedging, we estimate 

our sensitivity of fuel costs to changes in crude oil to be 

approximately $6 million annually for every one US-dollar

change per barrel of WTI crude oil. Additionally, we estimate 

our sensitivity to changes in fuel pricing to be approximately 

$10 million for every one-cent change per litre of fuel. 

Sales and distribution

Included in sales and distribution expenses are commissions 

and incentives paid to travel agents, credit card settlement fees, 

GDS fees, transaction fees related to our reservation system, 

costs of our call centre, as well as sales and distribution costs 

associated with WestJet Vacations.

Sales and distribution expenses increased to $255.8 million in 

2010, representing an increase of 48.4 per cent from $172.3 million 

in 2009. Our costs per ASM rose by 32.7 per cent to 1.30 cents 

in 2010, as compared to 0.98 cents in the prior year. Sales and 

distribution expenses related to WestJet Vacations contributed 

to approximately 40 per cent of the dollar increase. Increased 

distribution expenses year over year contributed to approximately 

40 per cent of the increase, with the balance attributable to the 

increase in our sales expenses. The increases in WestJet Vacations 

sales and distribution expenses, as well as the increases in 

the airline’s sales expenses, are due largely to increases in 

commissions and incentive payments paid to travel agents. The 

increase in commissions is due to an increase in travel trade 

sales since the prior year. The implementation of our new

reservations systems allows for greater ease of use by travel 
24 WestJet 2010 Annual Report

agents and, as such, a higher proportion of our sales are sourced 

through this indirect channel. The increase in incentive payments 

during the year is directly related to the improvement in the 

economy and in our revenues. Incentive payments are structured 

so that certain revenue targets must be achieved by the agents 

and, with the economic recession in 2009, targets were rarely 

achieved in the prior year. The growth of WestJet Vacations from 

the prior year has contributed to a significant year-over-year 

increase in WVI sales and distribution expenses; however, we 

are realizing margin improvements from the prior year. The 

increase in distribution expense relates to costs associated with 

our new reservation system, such as system transaction fees, as 

well as higher GDS fees from the increased use of indirect sales 

channels. 

Marketing, general and administration

Marketing largely consists of expenses such as advertising and 

promotions and live satellite television licensing fees. General and 

administration costs consist of our corporate office departments, 

professional fees and insurance costs. 

Marketing, general and administration expenses decreased from 

the prior year by $13.1 million, from $208.3 million in 2009 to 

$195.2 million in 2010, representing a decrease of 6.3 per cent. 

On an ASM basis, our marketing, general and administration 

expenses decreased by 16.0 per cent, to 1.00 cent in 2010.

Marketing expenses decreased from the prior year primarily 

due to a reclassification of our onboard product costs to airport 

operations. We also incurred lower information technology (IT) 

costs from the prior year due to lower IT consulting and software 

costs. In 2009, we had significant IT consulting expenses related 

to the implementation of our new reservation system. Software 

support costs were also reduced due to the reservation system 

implementation, as our new system is outsourced to a third 

party and, therefore, our internal IT support costs are reduced. 

The reservation system transaction fees are now recorded under 

the sales and distribution expense line item. These decreases 

were offset by an increase in general and administrative expenses 

due to increased compensation expense related to the change 

in our CEO during the year, as well as higher general and

administrative consulting costs year over year. 

Aircraft leasing

Our most significant infrastructure cost is our aircraft. To support 

our growth initiatives, we investigate various alternatives for 

financing, with the intention of achieving optimal balance sheet 

flexibility while realizing the benefits of low-cost financing. 

Leasing is often an attractive alternative to debt-financed aircraft 

for reasons such as alleviation of obsolescence risk and the 

significantly reduced up-front cash outlay required for deposits 

on purchased aircraft. During the year ended December 31, 2010, 

we assumed delivery of two leased 737-700 aircraft and three 

leased 737-800 aircraft. As at December 31, 2010, we had a total 

of 38 leased aircraft. This represents approximately 42 per cent 

of our total fleet. At the end of 2009, we had a total of 33 aircraft 

under operating leases, representing approximately 38 per cent 

of our total registered fleet. 

Our aircraft leasing costs per ASM increased by 23.7 per cent in 

2010 to 0.73 cents, from 0.59 cents in 2009. The variance was due 

to incremental leasing costs on the five leased aircraft delivered 

since the end of 2009, as well as a full period of aircraft leasing 

costs for the 10 leased aircraft delivered during 2009. This was 

partially offset by a stronger Canadian dollar versus the US dollar 

compared to the prior year. We have an active foreign exchange 

hedging program to offset our US-dollar-denominated aircraft 

lease payments on a portion of our leased aircraft. Please refer 

to Results of operations – Foreign exchange on page 26 of this 

MD&A for further information.

Depreciation and amortization 

During the year ended December 31, 2010, depreciation and 

amortization expense decreased by $8.4 million or 6.0 per cent 

to $132.9 million. On an ASM basis, the depreciation and 

amortization charge was 0.68 cents, as compared to 0.80 cents 

in the prior year. The decrease in depreciation and amortization 

expense per ASM from the prior year is attributable to the fact 

that our ASM growth during 2010 has been a result of incremental 

leased aircraft in our fleet, rather than owned aircraft. As at 

December 31, 2010, our percentage of owned aircraft to aircraft 

under operating lease was 58 per cent, a decrease from 62 per cent 

as at the end of 2009. As this percentage decreases, the number 
WestJet 2010 Annual Report 25

Salaries and benefits are determined via a framework of job 

levels based on internal experience and external market data. 

During 2010, salaries and benefits increased by 12.0 per cent 

to $439.8 million from $392.7 million in 2009. This increase 

was due primarily to an increase in our total number of fulltime equivalent employees of 9.3 per cent to 6,877 employees; 

higher pilot salaries and benefits resulting from the new pilot 

agreement effective July 1, 2009; a cash payout of $1.5 million 

related to the departure of our previous CEO; and annual market 

and merit increases. Salaries and benefits expense for each 

department is included in the respective department’s operating 

expense line item.

Employee share purchase plan (ESPP)

Our ESPP encourages employees to become owners of WestJet 

shares. Under the terms of the ESPP, WestJetters may acquire 

voting shares of WestJet at the current fair market value up 

to a maximum of 20 per cent of their gross pay, and these 

acquisitions are matched by WestJet. As at December 31, 2010, 

84 per cent of our eligible active employees participated in the 

ESPP, contributing an average of 13 per cent. During the year 

ended December 31, 2010, we matched contributions for every 

dollar contributed by our employees. Under the terms of the 

ESPP, we have the option to acquire voting shares on behalf of 

employees through open market purchases or to issue shares 

from treasury at the current market price, which is determined 

based on the volume-weighted average trading price of the 

common shares for the five trading days preceding the issuance. 

For the year ended December 31, 2010, all ESPP matching 

shares were acquired through the open market. For the year 

ended 2010, our matching expense was $52.6 million, an

11.9 per cent increase from 2009, driven primarily by an increase 

in salary expense, as well as a greater number of participating 

WestJetters in the ESPP versus a year ago. 

Employee profit share

All employees are eligible to participate in the employee profit 

sharing plan. As the profit share system is a variable cost,

employees receive larger awards when we are more profitable. 

Conversely, the amount distributed to employees is reduced and 

adjusted in less profitable periods. Our profit share expense for the 

year ended December 31, 2010, was $22.2 million, a 51.4 per cent 

increase from $14.7 million in 2009. This increase was directly 

attributable to higher earnings eligible for profit share versus 

the prior year. As a result of our continued profitability, we were 

pleased that our WestJetters earned a bonus payout of over 

5 per cent of their salaries and benefits in 2010. This brings our 

total profit share payout since 1996 to approximately $200 million.

Twelve months ended December 31

($ in thousands) 2010 2009 Change

Salaries and benefi ts $ 439,750 $ 392,749 12.0%

Employee share purchase plan 52,643 47,030 11.9%

Employee profi t share 22,222 14,675 51.4%

Stock option plan 11,103 12,045 (7.8%)

Key employee and pilot plan 977 — N/A

Executive share unit plan 3,588 1,395 157.2%

 $ 530,283 $ 467,894 13.3%

of our aircraft cycles flown attributable to our owned aircraft is 

reduced as a percentage of our total cycles flown. 

Compensation

Our compensation philosophy is designed to align corporate 

and personal success. We have designed a compensation plan 

whereby a portion of our expenses are variable and are tied to 

our financial results. Our compensation strategy encourages 

employees to become owners in WestJet, which creates a personal 

vested interest in our financial results and accomplishments.
26 WestJet 2010 Annual Report

Stock option plan

Pilots, senior executives and certain non-executive employees 

participate in the stock option plan. As new options are granted, 

the fair value of these options, as determined by the Black-Scholes 

option pricing model on the date of grant, is expensed over the 

vesting period, with an offsetting entry to contributed surplus. 

Stock-based compensation expense related to stock options for 

the year ended December 31, 2010, was $11.1 million, representing 

a decrease of 7.8 per cent over 2009. This decrease in stock 

option expense was related primarily to the introduction of 

the key employee and pilot plan (KEP), as described below. 

Non-executive employees and pilots eligible under the KEP plan 

are now granted restricted share units (RSU) in lieu of a portion 

of the stock options that they would have otherwise been granted. 

This decrease was also related to the implementation of a new 

retirement policy in the prior year, which resulted in a greater 

number of employees being eligible for retirement. Under

the accounting policy for stock-based compensation, for any 

employees eligible to retire during the vesting period of the 

award, the compensation expense is recognized over the period 

from the grant date to the retirement eligibility date. In instances 

where an employee is eligible to retire on the grant date of 

the stock-based award, compensation expense is recognized 

immediately. As a result of the new retirement policy, a one-time 

catch-up adjustment was recognized during 2009 in relation 

to retirement-eligible employees. Stock-based compensation 

expense related to pilots’ options is included in flight operations 

and navigational charges, while the expense related to senior 

executives’ and certain non-executive employees’ options is 

included in marketing, general and administration expense.

Key employee and pilot plan (KEP)

During the year ended December 31, 2010, the KEP plan, a 

new stock-based compensation plan, was approved by our 

shareholders, whereby RSUs are issued to certain non-executive 

employees and pilots. In 2010, $1.0 million of compensation 

expense was recognized in relation to the KEP plan.

Executive share unit (ESU) plan

We have an equity-based ESU plan, whereby RSUs and 

performance share units (PSU) may be issued to our senior 

executive officers. Each RSU and PSU entitles the senior 

executive to receive payment upon exercise in the form of voting 

shares. We determine compensation expense for the RSUs and 

PSUs based on the fair market value of our voting shares at the 

time of grant, which is equal to the weighted average trading 

price of our voting shares for the five trading days immediately 

preceding the grant date. The RSUs time vest at the end of a 

three-year period, with compensation expense being recognized 

in net earnings over the vesting period. PSUs time vest at the 

end of a three-year term and incorporate performance criteria 

based on achieving compounded average diluted earnings per 

share growth rate targets established at the time of grant. For 

PSUs, compensation expense is recognized in net earnings 

over the vesting period based on the number of units expected 

to vest. For the year ended December 31, 2010, $3.6 million in 

compensation expense was recognized in relation to the ESU 

plan, an increase of $2.2 million from 2009. The increase was 

primarily attributable to the acceleration of expense due to the 

former CEO leaving the Company; additional share units granted 

under the plan, including units granted in relation to our current 

CEO’s relocation; as well as revised probabilities related to 

performance criteria achievement for the PSUs. Stock-based 

compensation expense related to the ESU plan is included in 

marketing, general and administration expense. 

Foreign exchange 

Foreign exchange risk is the risk that the fair value of recognized 

assets and liabilities or future cash flow would fluctuate as a 

result of changes in foreign exchange rates. We are exposed 

to foreign currency exchange risks arising from fluctuations in 

exchange rates on our US-dollar-denominated net monetary assets 

and certain operating expenditures, mainly aircraft fuel, aircraft 

leasing expense, certain maintenance costs and a portion of airport 

operations costs. During the year ended December 31, 2010, 

the average US-dollar exchange rate was 1.0302 (2009 – 1.1425), 

with the year-end exchange rate at 0.9946 (2009 – 1.0510).

The gain or loss on foreign exchange included in our consolidated 

statement of earnings is mainly attributable to the effect of the 

changes in the value of our US-dollar-denominated net monetary

assets. As at December 31, 2010, US-dollar-denominated 

net monetary assets totalled approximately US $53.0 million 
WestJet 2010 Annual Report 27

(2009 – US $19.9 million). These net monetary assets consist 

mainly of US-dollar cash and cash equivalents and security 

deposits on various leased and financed aircraft, US-dollar 

accounts payable and accrued liabilities, and our US-dollar 

long-term debt facility signed in the fourth quarter of 2009. We 

hold US-dollar-denominated cash and short-term investments 

to reduce the foreign currency risk inherent in our US-dollar 

expenditures. We reported a foreign exchange loss of $0.8 million 

in 2010, as compared to a foreign exchange loss of $12.3 million 

in 2009, on the revaluation of our US-dollar-denominated net 

monetary assets.

We periodically use financial derivatives to manage our exposure 

to foreign exchange risk. As at December 31, 2010, we entered into 

foreign exchange forward contracts for an average US $11.5 million

per month for the period of January to December 2011. These 

contracts totalled US $138.4 million at a weighted average 

contract rate of 1.0264 per US dollar to offset a portion of our 

US-dollar-denominated aircraft lease payments. Upon proper 

qualification, we designated the forward contracts as effective 

cash flow hedges for accounting purposes. Under cash flow 

hedge accounting, the effective portion of the change in the fair 

value of the hedging instrument is recognized in AOCL, while 

the ineffective portion is recognized in non-operating income 

(expense). Upon maturity of the derivative instrument, the effective 

gains and losses previously recognized in AOCL are recorded 

in net earnings as a component of aircraft leasing expense. As 

at December 31, 2010, no portion of the forward contracts was 

considered ineffective. 

As at December 31, 2010, the fair value of the foreign exchange 

forward contracts was $3.6 million (2009 – $1.2 million), 

included in accounts payable and accrued liabilities and $nil 

(2009 – $0.2 million) recorded in prepaid expenses, deposits and 

other. For the year ended December 31, 2010, we realized a loss 

before tax on the forward contracts of $2.1 million (2009 – gain 

of $5.6 million), included in net earnings as an increase 

(2009 – decrease) to aircraft leasing expense. The estimated 

amount reported in AOCL that is expected to be reclassified to net 

earnings as a component of aircraft leasing expense in the next 

12 months is a loss before tax of $3.6 million (2009 – $1.0 million). 

The fair value of the foreign exchange forward contracts is 

measured based on the difference between the contracted rate 

and the current forward price obtained from the counterparty, 

which can be observed and corroborated in the marketplace. 

Income taxes

Our operations span several Canadian tax jurisdictions, subjecting 

our income to various rates of taxation. As such, the computation 

of the provision for income taxes involves judgments based on the 

analysis of several different pieces of legislation and regulation. 

Our effective consolidated income tax rate for 2010 was

30.5 per cent, as compared to 28.2 per cent in 2009. The variance 

was driven primarily by corporate income tax rate reductions 

enacted by various provincial governments in 2009, offset 

by unfavourable revisions to the measurement of previously 

recognized future tax assets also in the comparative period. 

Although our year-to-date effective rate fell within our expected 

range of 29 to 31 per cent at the beginning of the year, revisions 

to the measurement of future income tax assets and liabilities, 

revised expectations of when certain temporary differences are 

anticipated to reverse, and the acceleration of non-deductible 

stock-based compensation expense due to the departure of the 

former CEO resulted in a net $2.0 million unfavourable increase 

to future income tax expense. Excluding these items, our effective 

rate would have been reduced to 29.5 per cent, which is still 

within our expected range. For 2011, our expected effective tax 

rate should remain within the range of 29 to 31 per cent.

Guest experience 

At WestJet, we are focused on meeting the needs of our guests 

while maintaining the highest safety standards. We are committed 

to delivering a positive guest experience at every stage of our 

service, from the time the flight is booked to its completion. 

Key performance indicators

On-time performance and completion rates are calculated 

based on the U.S. Department of Transportation’s standards of 

measurement for the North American airline industry. Our bag 

ratio represents the number of delayed or lost baggage claims 

made per 1,000 guests.
28 WestJet 2010 Annual Report

On-time performance, indicating the percentage of flights that 

arrive within 15 minutes of their scheduled time, is a key factor 

in measuring our guest experience. During 2010, our on-time 

performance declined slightly by 0.8 points. Our fourth quarter 

2010 on-time performance improved by 11.6 points to 75.4 per cent,

which represents our highest level of on-time performance since 

the fourth quarter of 2007. In the fourth quarter of 2009, our 

new reservation system cutover contributed to a decline in our 

on-time performance. We experienced delays due to increased 

times at our check-in counters and at our boarding gates while 

we adapted to our new system. As well, we saw fewer flight 

departure delays due to weather conditions in this quarter versus 

the same quarter last year. 

During 2010, we introduced a new self-service option for

baggage tagging in Calgary, Toronto, Vancouver, Montreal and 

Edmonton. Self-serve baggage tagging allows for our guests to 

use mobile, web or airport kiosk to check in for their flight and 

print their own baggage tags when they arrive at the airport. 

Once the tags have been attached, guests drop baggage off 

at the appropriate location. This self-serve option improves

efficiencies at our airport counters and allows our guest service 

agents a greater opportunity for meaningful interactions with our 

guests. We expect to continue introducing self-tagging at other 

airports during 2011. Our focus on providing self-service tools 

enhances the travel experience of our guests while improving 

operational efficiencies. 

Our completion rates remained strong for 2010 at 99.1 per cent 

versus 98.9 per cent in 2009. This indicator represents the 

percentage of flights completed from flights originally scheduled. 

We also saw a significant improvement in our bag ratio for the 

fourth quarter compared to the same period in the prior year. 

LIQUIDITY AND CAPITAL RESOURCES 

The airline industry is highly sensitive to unpredictable 

circumstances and, as such, maintaining a strong financial 

position is imperative to an airline’s success. We continued 

to maintain one of the most favourable balance sheets in the 

airline industry and produced our 23rd consecutive quarter of 

profitability in the fourth quarter of 2010.

We completed 2010 with a significant cash and cash equivalents 

balance of $1,187.9 million, compared to $1,005.2 million as 

at December 31, 2009. This increase resulted primarily from 

improved cash flow from operations. Part of our cash and cash 

equivalents balance relates to cash collected with respect to 

advance ticket sales, for which the balance at December 31, 2010, 

was $308.0 million, as compared to $286.4 million at December 

31, 2009. Typically, we have cash and cash equivalents on hand to 

have sufficient liquidity to meet our liabilities, when due, under 

both normal and stressed conditions. As at December 31, 2010, 

we had cash on hand of 3.86 (2009 – 3.51) times the advance 

ticket sales balance. Additionally, the increase in our working 

capital ratio to 1.52 from 1.48 as at December 31, 2009, further 

demonstrates our financial stability and strong financial position. 

Credit risk associated with cash and cash equivalents is managed 

by ensuring that these financial assets are invested primarily 

in debt instruments from highly rated financial institutions, 

many with provincial-government-backed guarantees. As at 

December 31, 2010, we have not been required to post collateral 

with respect to any of our outstanding derivative contracts. 

We monitor capital on a number of measures, including adjusted 

debt-to-equity and adjusted net debt to EBITDAR ratios. Our 

adjusted debt-to-equity ratio improved by 2.8 per cent to 1.39, as 

at December 31, 2010, which took into consideration $1,066.8 million

in off-balance-sheet aircraft operating leases. This compared 

Three months ended December 31 Twelve months ended December 31

2010 2009 Change 2010 2009 Change

On-time performance 75.4% 63.8% 11.6 pts. 77.8% 78.6% (0.8 pts).

Completion rate 99.2% 99.1% 0.1 pts. 99.1% 98.9% 0.2 pts.

Bag ratio 3.02 4.36 30.7% 3.39 3.57 5.0%
WestJet 2010 Annual Report 29

favourably to our adjusted debt-to-equity ratio of 1.43 at 

December 31, 2009, mainly due to the increase in shareholders’ 

equity as a result of net earnings more than offsetting the net 

increase in our aircraft financing. As at December 31, 2010, our 

adjusted net debt to EBITDAR ratio improved by 19.1 per cent to 1.78, 

compared to 2.20 as at December 31, 2009, mainly attributable 

to the increase in cash and cash equivalents and EBITDAR. 

Both of these ratios remain strong, relative to the airline industry, 

and have exceeded our internal targets for December 31, 2010 

and 2009, of an adjusted debt-to-equity measure and an adjusted 

net debt to EBITDAR ratio of no more than 3.00. 

Operating cash flow 

Our ability to generate positive cash flow from operations has 

allowed us to meet our working capital requirements throughout 

the year. During 2010, cash from operations increased to 

$443.3 million compared to $318.7 million in 2009, representing 

an improvement of 39.1 per cent. This year-over-year increase 

is related primarily to higher earnings from operations and a 

positive year-over-year change in non-cash working capital.

Financing cash flow

During 2010, our financing cash outflow of $210.2 million consisted

primarily of long-term debt repayments of $171.1 million, largely 

related to our aircraft, as well as share repurchases of $31.4 million.

In the prior year, the financing cash inflow of $34.7 million 

was attributable to the net proceeds from the equity offering of 

$165.0 million and the proceeds from the US $32.0 million term 

loan, offset by $165.8 million in long-term debt repayments. 

As at December 31, 2010, we had 38 remaining purchased aircraft 

commitments, for delivery between 2011 and 2017. In January 2011, 

subsequent to year end, we took delivery of the one purchased 

aircraft planned for 2011, which was funded by cash from

operations. Our next purchased aircraft delivery is scheduled for 

February 2012. We regularly review financing alternatives available

to us for our future direct aircraft deliveries. 

We have grown through aircraft acquisitions financed by 

low-interest-rate debt supported by the Export-Import Bank of 

the United States (Ex-Im Bank). The loan guarantees from the 

U.S. government represent approximately 85 per cent of the 

purchase price of these aircraft. The total number of aircraft 

financed with loan guarantees is 52, with an outstanding debt 

balance of $1,005.7 million associated with those aircraft. All of 

this debt has been financed in Canadian dollars at fixed interest 

rates, eliminating all future foreign exchange and interest rate 

exposure on these US-dollar aircraft purchases. 

To facilitate the financing of our Ex-Im Bank–supported aircraft, 

we utilize five special-purpose entities (SPE). We have no equity 

ownership in the SPEs; however, we are the beneficiary of their 

operations. The accounts of the SPEs have been consolidated in 

the financial statements.

The rules applying to export credit support granted for the purchase

and sale of aircraft is governed by a gentlemen’s agreement 

between a number of participating Organisation for Economic 

Co-operation and Development (OECD) and non-OECD countries, 

commonly known as the Aircraft Sector Understanding (ASU). 

The ASU sets forth a number of key terms and conditions related 

to export credit for aircraft, including minimum premium and 

interest rates, the maximum allowable term of the export-credit 

supported loan and the advance rate (or loan to value), among 

other standards. We are aware that the ASU has been renegotiated 

and a new ASU has been adopted as of February 1, 2011. The 

new ASU will likely increase the cost of export-credit access for 

all eligible airlines, including WestJet; however, we are confident 

that our strong balance sheet and credit will enable us to finance 

future aircraft deliveries at reasonable rates and terms. 

We have entered into nine arrangements whereby we participate 

under contract in fuel facility corporations, along with other 

airlines, to procure fuel services at major Canadian airports. 

The fuel facility corporations operate on a cost-recovery basis. The 

purpose of these corporations is to own and finance the system 

that distributes fuel to the contracting airlines, including the 

leasing of land rights, while providing the contracting airlines with

preferential service and pricing over non-participating entities. 

The operating costs, including the debt service requirements, 

of the fuel facility corporations are shared pro rata among the 

contracting airlines. The nine fuel facility corporations are 

considered variable interest entities and have not been consolidated 

within our accounts. In the remote event that all other contracting

airlines withdraw from the arrangements and we remained as 
30 WestJet 2010 Annual Report

sole member, we would be responsible for the costs of the fuel 

facility corporations, including debt service requirements. As 

at November 30, 2010, the nine fuel facility corporations have 

combined total assets of approximately $345.5 million and debt 

of approximately $312.6 million. 

Investing cash flow

Cash used in investing activities for 2010 totalled $48.6 million, 

as compared to $166.7 million in 2009. In 2009, cash was used for 

aircraft additions of $118.7 million for the purchase of one leased 

aircraft during the year as well as deposits paid to Boeing on 

future owned aircraft deliveries. In 2010, we incurred $29.9 million

in aircraft addition costs related to deposits paid, as no additional 

aircraft were purchased during the year. Furthermore, in 2010, 

we incurred $18.7 million in other property and equipment 

additions as compared to $48.0 million in the prior year. 

Free cash flow 

Free cash flow is a measure that represents the cash that a 

company is able to generate after meeting its requirements to 

maintain or expand its asset base. It is a calculation of operating 

cash flow, less the amount of cash used in investing activities 

related to property and equipment. Our free cash flow for the 

year ended December 31, 2010, was $394.7 million, as compared 

to $152.0 million in the prior year, representing an increase of 

159.7 per cent. This increase was due to higher operating cash 

flow relative to the prior year, as well as lower investments in 

property and equipment as compared to 2009. Our 2010 free 

cash flow per share was $2.72, as compared to $1.15 in 2009, a 

year-over-year increase of 136.5 per cent. 

Please refer to page 52 of this MD&A for a reconciliation of 

the non-GAAP measures listed above, including free cash flow 

and free cash flow per share, to the nearest measure under 

Canadian GAAP. 

Contractual obligations and commitments

Our contractual obligations for each of the next five years, which 

do not include commitments for goods and services required in the

ordinary course of business, are indicated in the following table:

($ in thousands) Total 2011 2012 2013 2014 2015 Thereafter

Long-term debt repayments $ 1,047,177 $ 183,681 $ 169,642 $ 169,358 $ 169,626 $ 132,170 $ 222,700 

Capital lease obligations(i) 5,878 282 245 245 245 245 4,616 

Operating leases and commitments(ii) 1,366,015 206,983 202,085 195,222 190,423 166,189 405,113 

Purchase obligations(iii) 1,647,046 72,217 182,961 270,436 287,597 401,406 432,429 

Total contractual obligations $ 4,066,116 $ 463,163 $ 554,933 $ 635,261 $ 647,891 $ 700,010 $ 1,064,858 

(i) Includes weighted average imputed interest at 5.28 per cent totalling $2,521.

(ii) Relates to operating leases and commitments for aircraft, land, buildings, equipment, computer hardware, software licences and satellite programming. The obligations of 

these operating leases, where applicable, in US dollars are: 2011 – $186,454; 2012 – $188,807; 2013 – $185,535; 2014 – $184,359; 2015 – $161,149; and thereafter $361,979.

(iii) Relates to purchases of aircraft, as well as amounts to be paid for live satellite television systems on purchased and leased aircraft. These purchase obligations in 

US dollars are: 2011 – $72,607; 2012 – $183,949; 2013 – $271,896; 2014 – $289,150; 2015 – $403,574; and thereafter $434,764.

We currently have 38 aircraft under operating leases. We have 

entered into agreements with independent third parties to lease 

three additional 737-700 aircraft and three additional 737-800 

aircraft for terms ranging between eight and 10 years, to be 

delivered throughout 2011 and 2012. Although the current

obligations related to our aircraft operating lease agreements 

are not recognized on our balance sheet, we include these 

commitments in assessing our overall leverage through our 

adjusted debt-to-equity and adjusted net debt to EBITDAR ratios. 

We signed an agreement with Bell ExpressVu to provide satellite 

programming. The agreement commenced in 2004, expires

in July 2011, and can be renewed for an additional four years. 

During 2009, we amended our agreement with LiveTV to install, 

maintain and operate live satellite television for all of our aircraft 

for a term of 10 years. The minimum commitment amounts 

associated with these agreements have been included in the 

operating leases and commitments caption in the table above.
WestJet 2010 Annual Report 31

In 2008, we signed an agreement with Sabre to provide us with a 

licence to access and use its reservation system, SabreSonic, for 

a term of eight years. The minimum contract amounts associated 

with the reservation system have been included in the operating 

leases and commitments caption in the table on the previous page.

As at December 31, 2010, our future payments to 2016 and 

thereafter relating to operating leases and commitments were 

$1,366.0 million (US $1,268.3 million), to be funded through our 

operating cash flow. 

Subsequent to year end, we deferred the deliveries of six aircraft 

from the years 2012 to 2015, into 2017 and 2018. The total number

of our aircraft purchase commitments remains unchanged at 38 

aircraft. These deferrals have not been reflected in the table on 

the previous page under “Purchase obligations.”

Capital resources

During 2010, we took delivery of five leased aircraft, two 737-700s 

and three 737-800s, increasing our total registered fleet to 91 aircraft 

as at December 31, 2010. During the fourth quarter of 2010, 

we amended the terms of one of our lease agreements for the 

delivery of a 737-700 aircraft in the fourth quarter of 2011 to 

instead take delivery of a 737-800 series aircraft. Under our current 

fleet plan, we have 33 aircraft leases expiring between 2013 

and 2018, each with the option to renew, and commitments to 

take delivery of an additional 44 aircraft, as depicted in the table 

below. This provides us with the flexibility to end 2018 with a fleet 

size between 102 and 135 aircraft, dependent on the exercise of 

the lease renewal options. 

Subsequent to year end, in January 2011, we purchased a new 

737-700 series aircraft, funded by cash from operations. Further, 

as part of our ongoing fleet planning process, we announced the 

deferral of six aircraft deliveries from 2012 (2), 2013 (1), 2014 (2) 

and 2015 (1) to 2017 (3) and 2018 (3). The deferral of these aircraft 

deliveries increases the flexibility in our fleet plan, as the revised 

delivery schedule allows us to better match the timing of the 

deliveries with the dates for potential lease returns. The entirety of 

our order with Boeing remains intact. The table below illustrates 

our fleet commitments to 2018, based on the revised schedule. 

Series Lease expires 

with option to 

600s 700s 800s Total fl eet renew

Leased Owned Total Leased Owned Total Leased Owned Total Leased Owned Total Total

Fleet at December 31, 2009 — 13 13 25 38 63 8 2 10 33 53 86 — 

Fleet at December 31, 2010 — 13 13 27 38 65 11 2 13 38 53 91 — 

Commitments:

 2011 — — — 3 1* 4 2 — 2 5 1 6 —

 2012 — — — — 2* 2 1 — 1 1 2 3 — 

 2013 — — — — 5* 5 — — — — 5 5 (3)

 2014 — — — — 4* 4 — — — — 4 4 —

 2015 — — — — 9* 9 — — — — 9 9 (12)

 2016 — — — — 8* 8 — — — — 8 8 (8)

 2017 — — — — 6* 6 — — — — 6 6 (6)

 2018 — — — — 3* 3 — — — — 3 3 (4)

Total commitments — — — 3 38 41 3 — 3 6 38 44 

Committed fl eet as of 2018 — 13 13 30 76 106 14 2 16 44 91 135 (33)

*We have an option to convert any of these future aircraft to 737-800s.
32 WestJet 2010 Annual Report

We have available a three-year revolving operating line of credit with

a syndicate of three Canadian banks. The line of credit is available 

to a maximum of $80.8 million (December 31, 2009 – $85 million); 

it is secured by our Campus facility and expires in May 2012. 

The line of credit bears interest at prime plus 0.50 per cent 

per annum, or a banker’s acceptance rate at 2.0 per cent annual 

stamping fee, and is available for general corporate expenditures 

and working capital purposes. We are required to pay an annual 

standby fee of 15 basis points, based on the average unused portion

of the line of credit for the previous quarter, payable quarterly. 

As at December 31, 2010, no amounts were drawn on this facility. 

Contingencies

We are party to certain legal proceedings 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 our financial position, results of operations or cash flow.

Quarterly dividend policy 

On November 2, 2010, the Board of Directors authorized us to 

initiate a quarterly dividend of $0.05 per common voting share and 

variable voting share. In the fourth quarter of 2010, we declared 

our initial quarterly dividend of $0.05 per common voting 

share and variable voting share to shareholders of record on 

December 15, 2010. This dividend was paid on January 21, 2011. 

On February 8, 2011, our Board of Directors declared our second 

quarterly dividend of $0.05 per common voting share and variable 

voting share to shareholders of record on March 16, 2011, to be 

paid on March 31, 2011. 

We believe that this dividend policy is consistent with our 

objective of creating and returning value to shareholders.

Normal course issuer bid

On November 2, 2010, we filed a notice with the TSX to make a 

normal course issuer bid to purchase outstanding shares on the 

open market. As approved by the TSX, we are authorized to purchase 

up to 7,264,820 common voting shares and variable voting shares 

(representing 5 per cent of our issued and outstanding shares at 

the time of the bid) during the period of November 5, 2010 to 

November 4, 2011, or until such time as the bid is completed or 

terminated at our option. Any shares purchased under this bid 

will be purchased on the open market through the facilities of the 

TSX at the prevailing market price at the time of the transaction. 

Shares acquired under this bid will be cancelled.

A shareholder may obtain a copy of the notice filed with the TSX in 

relation to the bid, free of charge, by contacting the Vice-President, 

Legal Services of WestJet, 22 Aerial Place N.E., Calgary, 

Alberta, T2E 3J1, (telephone (403) 444-2600 or by faxing a 

written request to (403) 444-2604).

During 2010, we repurchased 2,338,730 shares under the bid for 

total consideration of $31.4 million. The book value of the shares 

repurchased of $10.6 million was charged to share capital, with 

the $20.8 million excess of the market price over the average book 

value, including transaction costs, charged to retained earnings. 
WestJet 2010 Annual Report 33

Share capital 

Our issued and outstanding voting shares, along with voting 

shares potentially issuable, are as follows:

Related-party transactions

We have debt financing and investments in short-term deposits 

with a financial institution that is related through two common 

directors, one of whom is also the president of the financial 

institution. As at December 31, 2010, total long-term debt 

includes an amount of $5.6 million (2009 – $6.4 million) due to 

the financial institution. Included in cash and cash equivalents, 

as at December 31, 2010, are short-term investments of 

$164.7 million (2009 – $143.3 million) owing from the financial 

institution. In 2008, we signed a three-year revolving operating 

line of credit agreement with a banking syndicate, of which one 

of the members is the related-party financial institution. These 

transactions occurred in the normal course of operations on 

terms consistent with those offered to arm’s-length parties and 

are measured at the exchange amount.

During 2010, we engaged a relocation firm to purchase a 

single-family residence from the CEO for a guaranteed price of 

US $1.5 million in accordance with our relocation policy. The 

relocation firm will actively market the residence to locate an 

outside buyer. If the proceeds of the sale of the home to a third 

party are less than or greater than the guaranteed price, the 

difference between the guaranteed price and the proceeds will 

accrue to us. We paid the relocation firm fees and expenses in 

connection with this transaction, and also agreed to reimburse 

the officer for certain related tax and relocation expenses. The 

residence is located in the United States and the transaction was 

as a result of the officer’s move to Canada in conjunction with 

his appointment to President and CEO, effective April 1, 2010. 

In connection with the relocation, we granted 38,256 RSUs 

pursuant to the ESU plan with a total value of US $0.5 million, 

which are scheduled to wholly vest on April 1, 2011, the anniversary 

of the officer’s appointment to President and CEO. Upon exercise 

of the RSUs, we will remit, on his behalf, an amount sufficient to 

satisfy any withholding or other tax requirements of such RSUs, 

limited to the withholding tax on the original award amount. 

Transactions have been measured at the exchange amount.

Number of shares

January 31, 2011 December 31, 2010

Issued and outstanding:

 Common voting shares 137,583,946 137,489,456 

 Variable voting shares 5,380,752 5,468,958 

Total voting shares issued and outstanding 142,964,698 142,958,414 

Voting shares potentially issuable:

 Stock options 8,047,082 8,083,431 

 RSUs – KEP Plan 168,286 171,129 

 RSUs – ESU Plan 187,875 187,875 

 PSUs 199,486 199,486 

Total voting shares potentially issuable 8,602,729 8,641,921 

Total outstanding and potentially issuable voting shares 151,567,427 151,600,335 
34 WestJet 2010 Annual Report

RISKS AND UNCERTAINTIES

The risks described below are not intended to be an exhaustive 

list of all risks facing the Company. Other risks of which we are 

not currently aware or which we currently deem immaterial may 

surface and have a material adverse impact on our business. 

Management performs a risk assessment on a continual basis 

to ensure that significant risks related to our airline have been 

reviewed and assessed. 

RISKS RELATING TO THE BUSINESS

We are dependent on the price and availability of jet fuel. 

Continued periods of high fuel costs, volatility of fuel prices 

and/or significant disruptions in the supply of fuel could 

adversely affect our results of operations.

Fuel price volatility continues to represent a significant risk, as 

the cost of fuel has seen historically elevated levels throughout 

the past few years and is largely unpredictable. Fuel prices are 

affected by a host of factors outside our control, such as significant 

weather events, geopolitical tensions, refinery capacity and 

global demand and supply. A small change in the price of fuel 

can significantly affect profitability. Our ability to react to fuel 

price volatility may be delayed and affected by factors outside 

our control.

Our fuel costs constitute our largest single expense category, 

representing approximately 29 per cent of operating costs in 

2010 and approximately 28 per cent in 2009. Therefore, the price 

of fuel has affected, and could continue to affect, the timing and 

nature of our growth initiatives.

In the event of a fuel supply shortage or significantly higher 

fuel prices, a curtailment of scheduled service could result. A 

significant increase in the price of aircraft fuel could result in 

a disproportionately higher increase in our average total costs 

in comparison to those of our competitors, if their hedging 

programs are more effective in mitigating the risk of the increasing 

costs of jet fuel. 

Failure to achieve our growth strategy could have a material 

adverse effect on our financial condition and results of operations.

Our growth strategy involves increasing the number of markets 

served and increasing the frequency of flights to the markets we 

already serve. During the initial phases of implementing service 

in a new market, we are more vulnerable to the effects of fare 

discounting in that market by competitors already operating in that

market or by new entrants. There can be no assurance that we 

will be able to identify and successfully establish new markets.

The failure of critical systems on which we rely could harm 

our business.

We depend on automated systems to operate our business 

and support our initiatives, including our computerized airline 

reservation systems, telecommunication systems, aircraft 

maintenance system and website. Our website and reservation 

systems must be able to accommodate a high volume of 

traffic and deliver important and accurate flight information. Any 

disruption in these systems could result in the loss of important 

data, reallocation of personnel, failure to meet critical deadlines, 

increased expenses, and could generally harm our business. 

Key technology systems, including our revenue accounting system 

and reservation systems, are outsourced to third parties on whom 

we are reliant for timely and accurate processing of information 

critical to our business. 

Integration of complex systems and technology presents

significant challenges in terms of costs, human resources and 

development of effective internal controls. In the ordinary

course of business, our systems will require modifications and 

refinements to address our growth and business requirements. 

We could be adversely affected if we are unable to modify our 

systems as necessary.

As a company that processes, transmits and stores credit card 

data, we are subject to compliance with certain requirements 

established by credit card companies. Non-compliance with these 

requirements, whether through system breaches or limitations, 

may result in substantial fines or temporary or permanent exclusion

from one or more credit card acceptance programs. The inability 
WestJet 2010 Annual Report 35

to process one or more credit card brands could have a material 

adverse impact on our guest bookings, revenue and profitability. 

We are dependent on single aircraft and engine suppliers. Any 

interruption in the provision of goods and services from these 

suppliers, or other significant third party suppliers, as well as 

mechanical or regulatory issues associated with their equipment, 

could have a material adverse effect on our business, operating 

results and financial condition.

We secure goods and services from a number of third party 

suppliers. Any significant interruption in the provision of goods 

and services from such suppliers, some of which would be beyond

our control, could have a material adverse effect on our business, 

operating results and financial condition.

We are dependent on Boeing as our sole supplier for aircraft and 

many of our aircraft parts. If we were unable to acquire additional 

aircraft from Boeing, or if Boeing was unable or unwilling to 

provide adequate support for its products, our operations would 

be materially adversely affected. If Boeing was unable to adhere 

to its contractual obligations in meeting scheduled delivery 

dates for our owned and leased aircraft, we would be required 

to find another supplier of aircraft to fulfill our growth plans. 

Acquiring aircraft from another supplier would require significant

transition costs and, additionally, aircraft may not be available 

at similar prices or received during the same scheduled delivery 

dates, which could adversely affect our business, operating results 

and financial condition. In addition, we would be materially 

adversely affected in the event of a mechanical or regulatory issue 

associated with the Boeing 737 aircraft type, including negative 

perceptions from the travelling community. 

We are also dependent on General Electric as our sole supplier 

of aircraft engines and would therefore be materially adversely 

affected in the event of a mechanical or regulatory issue associated 

with our engines.

Inability to retain key personnel could harm our business.

Our success will depend, in part, on the retention of members of 

our management and key personnel. If any of these individuals 

become unable to continue in their present role, we may have 

difficulty replacing these individuals, which could adversely affect 

our business.

Our business is labour intensive and requires large numbers of 

pilots, flight attendants, mechanics and other personnel. Our 

growth and general turnover requires us to locate, hire, train and 

retain a significant number of new employees each year. There 

can be no assurance that we will be able to locate, hire, train 

and retain the qualified employees that we need to meet our 

growth plans or replace departing employees. If we are unable 

to hire and retain qualified employees at a reasonable cost, our 

business, operating results and financial condition could be 

adversely affected.

Our financial results are affected by foreign exchange and 

interest rate fluctuations.

We are exposed to foreign exchange risks arising from fluctuations 

in exchange rates on our US-dollar-denominated net monetary 

assets and our operating expenditures, mainly aircraft fuel, 

aircraft leasing expense, certain maintenance costs and a portion 

of airport operations costs. Since our revenues are received 

primarily in Canadian dollars, we are exposed to fluctuations in the

US-dollar exchange rate with respect to these payment obligations.

We are exposed to fluctuations in the US-dollar exchange rate 

relating to the purchase of the remaining 37 737 aircraft for which 

we have purchase commitments. Historically, the purchase of 

our aircraft is financed by funds drawn in Canadian dollars; 

however, the aircraft are paid for in US funds at the date of each 

aircraft delivery. As a result, we are exposed to foreign currency 

fluctuations prior to each delivery date. In July 2008, we took 

delivery of the final aircraft under our previous facility with 

Ex-Im Bank, which was subsequently closed. We took delivery of 

one purchased 737-700 in January 2011, which was funded by cash 

from operations. We continually review financing alternatives 

available to us for our future direct aircraft deliveries. Our next 

purchased aircraft delivery is not expected until February 2012. 

There is no guarantee we will be able to secure similar financing 

arrangements for the remaining 37 aircraft to be delivered 

between 2012 to 2018.
36 WestJet 2010 Annual Report

We are also exposed to general market fluctuations of interest 

rates, as we have future aircraft purchase commitments that 

will be financed at prevailing market rates.

Our maintenance costs will increase as our fleet ages.

The average age of our fleet as at December 31, 2010, was 5.2 years. 

These aircraft require less maintenance now than they will in 

the future. We have incurred lower maintenance expenses on 

these aircraft because most of the parts on these aircraft are 

under multi-year warranties. Our maintenance costs will increase 

as our fleet ages and warranties expire. At December 31, 2010, 

63 aircraft have come off warranty, with an additional seven 

coming off warranty in 2011. 

In 2011, we expect to overhaul four engines and 11 sets of landing 

gear, at an estimated cost of US $14 to $16 million. The engines that

are scheduled for overhaul in 2011 are leased, and in conjunction 

with our lease agreements, we have paid maintenance reserve 

amounts related to the maintenance of these engines. As such, a 

portion of these costs is expected to be recoverable from the lessor. 

A significant change in our unique corporate culture or 

guest experience could have adverse operational and 

financial consequences.

Our strong corporate culture is one of our fundamental competitive

advantages. We strive to maintain an innovative culture where all 

employees are committed to, and passionately pursue, our values, 

mission and vision. We also foster a unique culture of caring 

and compassion for our guests and fellow employees that sets 

us apart from our competitors. Failure to maintain our unique 

corporate culture or guest experience could adversely affect our 

business and financial results.

We have significant financial obligations and will incur 

significantly more fixed obligations, which could harm our 

ability to meet our growth strategy. 

Our debt and other fixed obligations could impact our ability to 

obtain additional financing to support capital expansion plans 

and working capital requirements on suitable terms. Our ability 

to make scheduled payments on our debt and other fixed 

obligations will depend on our future operating performance and 

cash flow. The failure to generate sufficient operating cash flow 

to meet our fixed obligations could harm our business. Changes 

in the conditions of the equity capital markets, the debt capital 

markets and the commercial bank market, as well as regulatory 

or other government-imposed changes, could adversely impact 

WestJet’s access to and cost of financing which could harm our 

ability to meet our growth strategy. 

A limited number of our current financing agreements require 

us to comply with specific financial covenants. There is no 

assurance that we can comply with these covenants in the future. 

These covenants may limit our ability to finance future operations 

or capital needs. If we were to default on these covenants and 

were unsuccessful in obtaining a waiver of the default, all 

amounts owing under the defaulted agreement could become 

immediately due and payable. In this event, we would require 

sufficient cash to meet the repayment obligation or require 

additional debt or equity financing, which may not be available. 

If unable to repay the debt, we would be required to liquidate 

certain assets in order to obtain the necessary funds or be 

subject to the risk of having our aircraft repossessed, which 

could adversely impact our business.

Loss of contracts, changes to our pricing agreements or 

access to travel suppliers’ products and services could have an 

adverse impact on WestJet Vacations.

We depend on third parties to supply us with certain components 

of the travel packages sold through WestJet Vacations. We are 

dependent, for example, on a large number of hotels in our sun 

destinations in the United States, Mexico and the Caribbean. 

In general, these suppliers can terminate or modify existing 

agreements with us on relatively short notice. The potential 

inability to replace these agreements, to find similar suppliers 

or to renegotiate agreements at competitive rates could have an 

adverse effect on the results of WestJet Vacations. Furthermore, 

any decline in the quality of products or services provided by 

these suppliers, or any perception by travellers of such a decline, 

could adversely affect our reputation or the demand for the 

products and services of WestJet Vacations. 
WestJet 2010 Annual Report 37

As the airline industry is labour intensive, significant increases 

in labour costs could have an adverse impact on WestJet. 

The airline business is labour intensive. Salaries and benefits 

represented approximately 19 per cent of WestJet’s operating 

expenses for the year ended December 31, 2010. Employmentrelated issues that may impact WestJet’s results of operations 

include hiring/retention rates, pay rates, outsourcing costs and 

the costs of employee benefits. Significantly increased labour 

costs, combined with curtailed growth, could negatively impact 

WestJet’s competitive position.

RISKS RELATING TO THE AIRLINE INDUSTRY

Any major safety incident involving our aircraft or similar 

aircraft of other airlines could materially and adversely affect 

our service, reputation and profitability. 

A major safety incident involving our aircraft during operations 

could cause substantial repair or replacement costs to the 

damaged aircraft, a disruption in service, significant claims 

relating to injured guests and others, and a negative impact on our 

reputation for safety, all of which may adversely affect our ability 

to attract and retain guests. We have an Emergency Response 

Plan (ERP) in the event of an incident occurring.

An air carrier’s liability is limited by applicable conventions, 

including the Montreal and Warsaw Conventions. Any changes 

to these or other conventions or treaties could increase our 

potential liability to guests. 

We carry insurance similar to other scheduled airlines operating 

in the North American market. While we believe our insurance 

is adequate, there can be no assurance that such coverage will 

fully protect us against all losses that we might sustain, which 

could have a material adverse effect on our results of operations. 

There is no assurance that we will be able to obtain insurance 

on the same terms as we have in the past. 

There is a possibility that a significant terrorist attack, pandemic or

geological event could have a material impact on our operations, 

which could also negatively impact the insurance market and 

our ability to obtain coverage at current terms. 

There is a risk that the Government of Canada may not continue 

to provide indemnity for third party war risk coverage, which it 

currently provides to certain scheduled carriers, including WestJet. 

In the event that the Government of Canada does not continue 

to provide such coverage, such coverage may not be available to 

us in the commercial markets, and the costs and impact of such 

costs are, as yet, undetermined.

Worldwide economic conditions may adversely affect our 

business, operating results and financial condition. A 

weak economy could decrease our bookings. A reduction in 

discretionary spending could decrease amounts our guests 

are willing to pay.

General worldwide economic conditions have experienced a 

downturn due to the effects of the subprime lending crisis in 

the United States, general credit market crisis, collateral effects 

on the finance and banking industries, concerns about inflation, 

slower economic activity, decreased consumer confidence, 

reduced corporate profits and capital spending, adverse 

business conditions and liquidity concerns. The airline industry 

is particularly sensitive to changes in economic conditions, which 

affect guest travel patterns and related revenues. For example, 

the recent unfavourable worldwide economic conditions have 

reduced spending for both leisure and business travel. As such, 

a weak economy could reduce our bookings, and a reduction in 

discretionary spending could also decrease amounts our guests 

are willing to pay. Unfavourable economic conditions can also 

impact the ability of airlines to raise fares to help offset increased 

fuel, labour and other costs. These factors could adversely affect 

our revenues and results of operations. 

The airline industry is intensely competitive. Reduced market 

growth rates can create heightened competitive pressures, 

impacting the ability to increase fares and increasing competition 

for market share.

The airline industry is highly competitive and particularly 

susceptible to price discounting, since airlines incur only nominal 

costs to provide services to guests occupying otherwise unsold 

seats. We primarily compete with a small number of Canadian 
38 WestJet 2010 Annual Report

airlines in our domestic market, and the same Canadian airline 

and numerous U.S. carriers in the transborder and international 

markets. We face significant competition from other airlines that 

are serving most of our existing and potential markets. Other 

airlines regularly meet or price their fares below our fares, 

potentially preventing us from attaining a share of the guest 

traffic necessary to maintain profitable operations. Our ability to 

meet price competition depends on our ability to operate at costs 

lower than that of our competitors or potential competitors over 

the medium to long term.

In addition, consumers are able to more effectively shop for 

travel services through websites and, particularly, wholesale 

travel sellers to more effectively compare pricing information. 

The growth and competitiveness of Internet distribution

channels have pushed air carriers to more aggressively price 

their products. This, in turn, reduces yield and may have an 

impact on our revenue and profitability, as more and more 

consumers utilize this distribution network.

With the aggressive and competitive nature of our industry, we turn

inwards to realize cost efficiencies and competitive advantages. 

Conventional airline profits are sensitive to the general level of 

economic activity, taxes, interest rates, demographic changes, 

price levels, special circumstances or events occurring in the 

locations served, and to external factors such as foreign 

exchange rates and international political events. A significant 

portion of an airline’s costs, such as labour, aircraft ownership 

and facilities charges, cannot be easily adjusted in the short 

term to respond to market changes. 

Government intervention, regulations, rulings or decisions 

rendered that impose additional requirements and restrictions 

on operations could increase operating costs or disrupt 

our operations.

The airline industry is subject to extensive laws relating to, among 

other things, airline safety and security, provision of services, 

competition, environment and labour concerns. Government 

entities such as Transport Canada, the Competition Bureau, the 

Canadian Transportation Agency, and other domestic or foreign 

government entities may implement new laws or regulatory 

schemes, or render decisions, rulings or changes in policy that 

could have a material adverse impact on the airline industry in 

general by significantly increasing the cost of airline operations, 

imposing additional requirements on operations or reducing the 

demand for air travel.

Laws relating to data collection on guests and employees for 

security purposes and counterbalancing privacy legislation have 

increased costs of operations. Any material changes that add 

additional requirements to collecting, processing and filing data 

with, or otherwise reporting data to, government agencies may 

materially impact our business.

The increase in security measures and clearance times required 

for guest travel could have a material adverse effect on guest 

demand and the number of guests we carry. A reduction in guest 

numbers could have a negative impact on our revenues and 

results of operations.

Numerous jurisdictions around the world have implemented or 

announced measures to penalize for greenhouse gas emissions 

as a means to deal with climate change. Certain of these 

measures cover the airline industry or may do so in the future. 

We may be directly exposed to such measures, which could 

result in additional costs that could adversely affect our margins 

and results of operations.

Terrorist attacks or military involvement in unstable regions 

may harm the airline industry. 

After the terrorist attacks of September 11, 2001, the airline 

industry experienced a substantial decline in guest traffic and 

revenue, and increased security and insurance costs. In late 

2009, certain incidents again heightened the concern regarding 

terrorist attacks. Any future incidents causing a heightened 

concern over potential terrorist attacks could cause a further 

decrease in guest traffic and yields, and an increase in security 

measures and related costs for the airline industry generally. 

Additional terrorist attacks would likely have a further significant 

negative impact on our business and the airline industry. Should 

such an attack occur in Canada, the adverse impact could be 

very significant.
WestJet 2010 Annual Report 39

Our operations are affected by a number of external factors that

are beyond our control such as weather conditions and special 

circumstances or events occurring in the locations we serve.

Delays or cancellations due to weather conditions and work 

stoppages or strikes by airport workers, baggage handlers, air 

traffic controllers and other workers not employed by us could 

have a material adverse impact on our financial condition and 

operating results. Delays contribute to increased costs and 

decreased aircraft utilization, which negatively affect profitability.

Our business is dependent on its ability to operate without 

interruption at a number of key airports, including Toronto 

Pearson International Airport and Calgary International Airport. 

An interruption or stoppage in service at a key airport could have a 

material adverse impact on our business, results from operations 

and financial condition.

A localized epidemic or a global pandemic may adversely affect 

our business.

A widespread outbreak of influenza, SARS, the H1N1 influenza 

virus or any other widespread illness (whether domestic or 

international) or any governmental or World Health Organization 

travel advisories (whether relating to Canadian or international 

cities or regions) could affect our ability to continue full operations 

and could materially adversely affect demand for air travel. We 

cannot predict the likelihood of such a public health emergency 

or the effect that it may have on our business or the market price 

of our securities. However, any significant reduction in guest 

traffic on our network could have a material adverse effect on 

our business, results from operations and financial condition. 

Governmental fee increases discourage air travel.

All commercial service airports in Canada are regulated by the 

federal government. Airport authorities continue to implement 

or increase various user fees that impact travel costs for guests, 

including landing fees for airlines and airport improvement fees. 

Airport authorities generally have the unilateral discretion to 

implement and adjust such fees. The combined increased fees, 

and increases in rents under various lease agreements between 

airport authorities and the Government of Canada, which in many 

instances are passed through to air carriers and air travellers, 

may negatively impact travel, in particular, discretionary travel. 

Increases in air navigation fees in Canada could have a negative 

impact on our business and our financial results. 

Please refer to Accounting – Financial instruments and risk 

management below for a further discussion on risks.

ACCOUNTING

Financial instruments and risk management

Our financial assets and liabilities consist primarily of cash and 

cash equivalents, accounts receivable, derivatives both designated 

and not designated in an effective hedging relationship, deposits, 

accounts payable and accrued liabilities, long-term debt, and 

capital lease obligations.

We are exposed to market, credit and liquidity risks associated 

with our financial assets and liabilities. From time to time, we 

use various financial derivatives to reduce market risk exposures

from changes in foreign exchange rates, interest rates and jet 

fuel prices. We do not hold or use any derivative instruments for 

trading or speculative purposes. 

Overall, our Board of Directors has responsibility for the 

establishment and approval of our risk management policies. 

Management continually performs risk assessments to ensure 

that all significant risks related to us and our operations have been

reviewed and assessed to reflect changes in market conditions 

and our operating activities.

Fuel risk

The airline industry is inherently dependent upon jet fuel to 

operate and, therefore, we are exposed to the risk of volatile fuel 

prices. Fuel prices are affected by a host of factors outside our 

control, such as significant weather events, geopolitical tensions, 

refinery capacity, and global demand and supply. To provide 

management with reasonable foresight and predictability into 

operations and future cash flows, we periodically use short-term 

and long-term financial derivatives. Upon proper qualification, we 

designate our fuel derivatives as cash flow hedges for accounting 

purposes. For a discussion of the nature and extent of our use of 
40 WestJet 2010 Annual Report

fuel derivatives for the years ended December 31, 2010 and 2009, 

including the business purposes they serve; risk management 

activities; the financial statement classification and amount of 

income, expense, gain and loss associated with the instruments; 

and the significant assumptions made in determining their fair 

value, please refer to Results of operations – Aircraft fuel on 

page 16 of this MD&A. 

Foreign exchange risk

Foreign exchange risk is the risk that the fair value of recognized 

assets and liabilities or future cash flows would fluctuate as a 

result of changes in foreign exchange rates. We are exposed to 

foreign exchange risks arising from fluctuations in exchange 

rates on our US-dollar-denominated net monetary assets and 

our operating expenditures, mainly aircraft fuel, aircraft leasing 

expense, certain maintenance costs and a portion of airport 

operations costs. To manage our exposure, we periodically use 

financial derivative instruments, including US-dollar foreign 

exchange forward contracts and option arrangements. Upon 

proper qualification, we designate our foreign exchange forward 

contracts as cash flow hedges for accounting purposes. For 

a discussion of the nature and extent of our use of US-dollar 

foreign exchange forward contracts and option arrangements, 

including the business purposes they serve; risk management 

activities; the financial statement classification and amount of 

income, expense, gain and loss associated with the instruments; 

and the significant assumptions made in determining their fair 

value, please refer to Results of operations – Foreign exchange 

on page 26 of this MD&A. 

Interest rate risk

Interest rate risk is the risk that the value of financial assets 

and liabilities or future cash flows will fluctuate as a result of 

changes in market interest rates. We are exposed to interest rate 

fluctuations on short-term investments included in our cash and 

cash equivalents balance. We are also exposed to interest rate 

fluctuations on our deposits that relate to purchased aircraft 

and airport operations which, as at December 31, 2010, totalled 

$28.3 million (2009 – $27.3 million). The fixed-rate nature of the 

majority of our long-term debt reduces the risk of interest rate 

fluctuations over the term of the outstanding debt. Additionally, 

we are exposed to interest rate fluctuations on our variable-rate 

long-term debt, which as at December 31, 2010, totalled $6.8 million 

(2009 – $8.6 million) or 0.6 per cent (2009 – 0.7 per cent) of our 

total long-term debt. 

Credit risk

Credit risk is the risk that one party to a financial instrument will 

cause a financial loss for the other party by failing to discharge 

an obligation. As at December 31, 2010, our credit exposure 

consisted primarily of the carrying amounts of cash and cash 

equivalents, accounts receivable, deposits, as well as the fair value 

of derivative financial assets. Cash and cash equivalents consist 

of bank balances and short-term investments with terms of up 

to one year, with the majority having terms of less than 91 days. 

Credit risk associated with cash and cash equivalents is 

minimized substantially by ensuring that these financial assets 

are invested primarily in debt instruments with highly rated 

financial institutions, many with provincial-government-backed 

guarantees. Furthermore, we manage our exposure risk by 

assessing the financial strength of our counterparties and by 

limiting the total exposure to any one individual counterparty. As 

at December 31, 2010, we had a total principal amount invested 

of $913.2 million (2009 – $813.2 million) in Canadian-dollar 

short-term investments with terms ranging between five

and 365 days, and a total of US $45.2 million (2009 – US $nil) 

invested in US-dollar short-term investments. We perform an 

ongoing review to evaluate our risk associated with cash and 

cash equivalent counterparties. As at December 31, 2010, we do 

not expect any counterparties to fail to meet their obligations.

As at December 31, 2010, our trade receivables accounted 

for $12.4 million (2009 – $8.7 million) of total receivables. The 

remainder is related to receivables from travel agents, interline 

agreements with other airlines and partnerships. All significant 

services and counterparties are reviewed and approved for 

credit on a regular basis. Receivables are short-term in nature, 

generally being settled within 30 to 60 days. 

We recognize that we are subject to credit risk arising from 

derivative transactions that are in an asset position at the balance 

sheet date. We carefully monitor this risk by closely considering 

the size, credit rating and diversification of the counterparty. 
WestJet 2010 Annual Report 41

As at December 31, 2010, fuel derivatives of $5.7 million

(2009 – $0.1 million) and foreign exchange derivatives of $nil 

(2009 – $0.2 million) outstanding with our counterparties were 

in an asset position. We do not expect these counterparties to fail 

to meet their obligations.

We are not exposed to counterparty credit risk on our deposits 

that relate to purchased aircraft, as the funds are held in a security 

trust separate from the assets of the financial institution. While 

we are exposed to counterparty credit risk on our deposits 

relating to airport operations, we consider this risk as remote 

because of the nature of the deposit and the credit risk rating of 

the counterparty.

Liquidity risk

Liquidity risk is the risk that we will encounter difficulty in meeting

obligations associated with financial liabilities. We maintain 

a strong liquidity position and sufficient financial resources to 

meet our obligations as they fall due.

The table below presents a maturity analysis of our undiscounted 

contractual cash flow for our non-derivative and derivative 

financial liabilities as at December 31, 2010. The analysis, based 

on foreign exchange and interest rates in effect at the balance 

sheet date, includes both principal and interest cash flows for 

long-term debt and obligations under capital leases.

A portion of our cash and cash equivalents balance relates to 

cash collected on advance ticket sales, for which the balance at 

December 31, 2010, was $308.0 million (2009 – $286.4 million). 

Typically, we have cash and cash equivalents on hand to have 

sufficient liquidity to meet our liabilities when due, under both 

normal and stressed conditions. As at December 31, 2010, 

we had cash on hand of 3.86 (2009 – 3.51) times the advance 

ticket sales balance. We aim to maintain a current ratio of at 

least 1.00. As at December 31, 2010, our current ratio was

1.52 (2009 – 1.48). As at December 31, 2010, we have not been 

required to post collateral with respect to any of our outstanding 

derivative contracts.

Fair value of financial instruments

Fair value represents a point-in-time estimate. The carrying 

amount of cash and cash equivalents, accounts receivable, and 

accounts payable and accrued liabilities included in the balance 

sheet approximate their fair values because of the short-term 

nature of the instruments. The fair value of deposits, which relate 

to purchased aircraft and airport operations, approximates their 

carrying amounts as they are at a floating market rate of interest. 

At December 31, 2010, the fair value of our fixed-rate long-term 

debt was approximately $1,142.0 million (2009 – $1,323.1 million).

($ in thousands)

Carrying 

Amount Within 1 year 1–3 years 4–5 years Over 5 years

Accounts payable and accrued liabilities (i) $ 299,204 $ 299,204 $ — $ — $ — 

Foreign exchange derivatives 3,579 3,579 — — — 

Fuel derivatives 800 800 — — — 

Long-term debt 1,232,319 235,215 414,455 341,920 240,729 

Obligations under capital leases 5,878 282 490 490 4,616 

Total $ 1,541,780 $ 539,080 $ 414,945 $ 342,410 $ 245,345 

(i) Excludes foreign exchange derivatives of $3,579 and fuel derivatives of $800.
42 WestJet 2010 Annual Report

The fair value of our fixed-rate long-term debt is determined 

by discounting the future contractual cash flow under current 

financing arrangements at discount rates obtained from the 

lender, which represent borrowing rates presently available to 

us for loans with similar terms and remaining maturities. As 

at December 31, 2010, rates used in determining the fair value 

ranged from 2.00 per cent to 2.74 per cent (2009 – 2.28 per cent 

to 3.27 per cent). The fair value of our variable-rate long-term 

debt approximates its carrying value, as it is at a floating market 

rate of interest. Please refer to Results of operations – Aircraft 

fuel and Results of operations – Foreign exchange on pages 

21 and 26, respectively, of this MD&A for a discussion of the 

significant assumptions made in determining fair value of

derivatives both designated and not designated in an effective 

hedging relationship.

Critical accounting estimates

Our significant accounting policies are described in note 1 to 

our consolidated financial statements for the year ended 

December 31, 2010. The preparation of financial statements in 

conformity with Canadian GAAP requires management to make 

estimates and assumptions regarding significant items that affect 

the amounts reported in the consolidated financial statements 

and accompanying notes. Changes in facts and circumstances 

may result in revised estimates, and actual results may differ 

from these estimates.

We have identified the following areas that contain critical 

accounting estimates utilized in the preparation of our consolidated

financial statements:

Depreciation and amortization, asset retirement obligations and 

impairment assessments of long-lived assets

We make estimates about the expected useful lives, depreciation 

and amortization methods, projected residual values, asset 

retirement obligations, and the potential for impairment of our 

property and equipment and intangible assets. 

In estimating the useful lives and expected residual values of 

our property and equipment and intangible assets, we rely on 

third party industry market valuations, recommendations from 

Boeing and actual experience with the asset. Revisions to the 

estimates for our fleet can be caused by changes in the utilization 

of the aircraft or changing market prices of used aircraft of the 

same type. 

We provide for asset retirement obligations to return leased 

aircraft to certain standard conditions specified within our 

lease agreements. 

We evaluate our estimates and potential impairment on all 

property and equipment and intangible assets when events or 

changes in circumstances indicate that the carrying value may 

not be recoverable. 

Non-refundable guest credits

We make estimates in accounting for our liability related to certain

types of non-refundable guest credits. We issue future travel 

credits to guests for flight changes and cancellations, as well 

as for gift certificates. Where appropriate, future travel credits 

are also issued for flight delays, missing baggage and other 

inconveniences. All credits are non-refundable and expire based 

on the nature of the credit, except for gift certificates, which 

do not expire. We record a liability depending on the nature of 

the credit at either the full value or at the incremental cost of a 

one-way flight in the period the credit is issued. The utilization of 

guest credits is recorded as revenue when the guest has flown 

or upon expiry.

Future income tax

We use the asset and liability method of accounting for future 

income taxes. Under this method, current income taxes are 

recognized for the estimated income taxes payable for the current

year. Future income tax assets and liabilities are recognized for 

temporary differences between the tax and accounting bases of 

assets and liabilities, calculated using the currently enacted or 

substantively enacted tax rates anticipated to apply in the period 

that the temporary differences are expected to reverse. Future 

income tax inflow and outflow are subject to estimation in terms 

of both timing and amount of future taxable earnings. Should 

these estimates change, the carrying value of income tax assets 

or liabilities may change.
WestJet 2010 Annual Report 43

Stock-based compensation expense

Grants under our stock-based compensation plans are accounted 

for in accordance with the fair-value-based method of accounting. 

For stock-based compensation plans that will settle through 

the issuance of equity, the fair value of the option or unit is 

determined on the grant date using a valuation model and 

recorded as compensation expense over the period that the stock 

option or unit vests, with a corresponding increase to contributed 

surplus. The fair value of stock options is estimated on the 

date of grant using the Black-Scholes option pricing model, 

and the fair value of our other equity-based share unit plans 

is determined based on the market value of our voting 

shares on the date of the grant. Upon the exercise of stock 

options or units, consideration received, together with amounts 

previously recorded in contributed surplus, are recorded as 

an increase in share capital. The Black-Scholes option pricing 

model was developed for use in estimating the fair value of 

short-term traded options that have no vesting restrictions 

and are fully transferable. In addition, option valuation models 

require the input of somewhat subjective assumptions, including 

expected share price volatility. Changes in estimates and 

assumptions would change the fair value of the options and

the related compensation expense recognized each period. 

Valuation of derivative financial instruments

The fair values of derivative financial instruments are calculated 

on the basis of information available at the balance sheet date. The

fair value of the foreign exchange forward contracts is measured 

based on the difference between the contracted rate and the 

current forward price obtained from the counterparty, which can 

be observed and corroborated in the marketplace. 

The fair value of the fuel derivatives designated in an effective 

hedging relationship is determined using inputs, including

quoted forward prices for commodities, foreign exchange rates 

and interest rates, which can be observed or corroborated in

the marketplace. The fair value of the call options and collars is 

estimated by the use of a standard option valuation technique. 

Ineffectiveness is inherent in hedging jet fuel with derivative 

instruments in other commodities, such as crude oil, given the 

significant volatility observed in the market on crude oil and 

related products. Because of this volatility, we are unable to 

predict the amount of ineffectiveness for each period. This may 

result in increased volatility in our results.

Fair value of awards and breakage associated with the frequent 

guest program (FGP)

It is necessary for management to utilize judgment and estimates 

in preparing the accounting transactions for the FGP. Fair value 

is management’s estimate of the expected awards for which 

the credit will be redeemed and is reduced by the proportion of 

credits that have been redeemed relative to the total number 

expected to be redeemed (breakage). Estimates are required in 

calculating the fair value of the dollars awarded, the revenue to 

be deferred, in estimating the expected redemption rates of the 

credits including accounting for breakage, and in determining 

the fair value of free companion flights. Given the nature and 

significance of many of the assumptions used in determining 

the accounting for the FGP, it may be common to have changes 

in estimates that affect the recorded amounts of the obligations 

or deferred revenue. Changes in estimates will be accounted 

for prospectively.

Recent accounting pronouncements and changes 

IFRS

On February 13, 2008, the Accounting Standards Board (AcSB) 

confirmed that the changeover to IFRS from Canadian GAAP will 

be required for publicly accountable enterprises for interim and 

annual financial statements, effective for fiscal years beginning 

on or after January 1, 2011, including comparatives for 2010. The 

objective is to improve financial reporting by having one single 

set of accounting standards that are comparable with other 

entities on an international basis.

We commenced our IFRS conversion project during 2008 and 

established a formal project governance structure, including an 
44 WestJet 2010 Annual Report

IFRS Steering Committee, to monitor the progress and critical 

decisions in the transition to IFRS. The Steering Committee 

consists of senior levels of management from Finance, Treasury 

and Investor Relations, among others. An external advisor has 

been engaged to work with our conversion project team to complete 

the conversion. Additionally, we have engaged our external 

auditors to review accounting policy determinations as they are 

assessed by the project team. Regular reporting is provided by 

the project team to senior management, the Steering Committee 

and the Audit Committee of the Board of Directors.

We have an IFRS transition plan that includes a timetable for 

assessing the impact on systems, internal controls over financial 

reporting (ICFR) and business activities. Our IFRS conversion 

project consists of three phases: Diagnostic, Solution Development, 

and Implementation and Execution. We completed the Diagnostic 

phase, which involved a high-level preliminary assessment of the 

differences between Canadian GAAP and IFRS, and the potential 

effects of IFRS to accounting and reporting processes, information 

systems, business processes and external disclosures. This 

assessment provided insight into the most significant differences 

applicable to us. We have also completed the second phase, 

Solution Development, which involved an in-depth analysis and 

evaluation of the financial impact of various alternatives provided 

for under IFRS; identification of effects on operational and business 

processes, analysis of disclosure requirements, analysis of the 

optional exemptions and mandatory exceptions of First-Time 

Adoption of International Financial Reporting Standards (IFRS 

1) for full retrospective application upon transition to IFRS; and 

development of solutions to address the issues identified.

Phase three, Implementation and Execution, is substantially 

complete. It involves the design and execution of changes 

to information systems and business processes, completion 

of formal authorization processes to approve recommended 

accounting policy changes, training programs across the Finance 

Department and other affected areas of the business, and 

addressing opening IFRS balances for January 1, 2010. This phase 

also involves the collection of financial information necessary to 

prepare comparative IFRS financial statements and reconciliations

for 2011 for approval by the Audit Committee, and embedding 

IFRS into day-to-day business processes.

Please see the table on page 45 for certain elements of our IFRS 

transition plan and an assessment of progress towards achieving 

these milestones. Given the progress of the project and outcomes 

identified, we could change our intentions between the time of 

communicating these key milestones and the changeover date. 

Further, changes in regulation or economic conditions at the 

date of the changeover or throughout the project could result in 

changes to the transition plan being communicated here.
WestJet 2010 Annual Report 45

Key activity Key milestones Status

Financial statement preparation

• Identify differences in Canadian GAAP/IFRS 

accounting policies

• Select ongoing IFRS policies

• Select IFRS 1 choices

• Develop fi nancial statement format

• Quantify effects of change in initial 

IFRS disclosure and 2010 comparative 

fi nancial statements

Senior management and Steering 

Committee sign-off for all key IFRS 

accounting policy choices to occur 

in early 2010.

Development of draft fi nancial 

statement format to occur during 

the fi rst half of 2010.

Completed the IFRS Diagnostic phase during 

2008, which involved a high-level review of the 

major differences between Canadian GAAP and 

IFRS. 

The Solution Development phase is complete, 

and the Implementation and Execution phase is 

substantially complete, as previously discussed.

Our preliminary assessment of the impact of 

the changeover to IFRS on fi nancial results is 

disclosed in this MD&A. 

Our external auditors have carried out certain 

initial audit procedures on the IFRS opening 

balance sheet, and have started their review 

of the IFRS 2010 quarterly impacts. 

 Training

Defi ne and introduce appropriate level of IFRS 

expertise for each of the following:

• Finance Department

• Audit Committee 

Training for the Finance Department 

throughout 2010. 

Regular Audit Committee updates 

are provided once per quarter. 

Project team expert resources and our external 

advisor were identifi ed to provide insights and 

training. Training for project team members is 

occurring throughout the project, and a detailed 

training plan created for the Finance Department 

was delivered in 2010. Additional ongoing 

training for the Finance Department and other 

departments will be delivered as needed.

Information technology (IT) infrastructure

Confi rm that business processes and systems 

are IFRS compliant, including:

• Program upgrades (including any interfaces) 

and changes

• Gathering data for disclosures

Confi rm that systems can address 

2010 dual reporting requirements 

in the fourth quarter of 2009.

Confi rm that business processes and 

systems are IFRS compliant throughout 

the project.

IT proof of concept for dual reporting during 

2010 has been completed, and testing and 

implementation occurred throughout 2010. 

We are confi dent that there are no signifi cant 

IT issues that cannot be addressed by our 

current systems. 

We continue to work with affected business units to 

address business process and IT changes required

to embed IFRS into day-to-day processes. 

Control environment

• For all accounting policy changes 

identifi ed, assess control design and 

effectiveness implications

• Implement appropriate changes

All key IFRS control design and 

effectiveness implications to be 

assessed as part of the key IFRS 

differences and accounting policy 

choices through to the end of 2010.

New control requirements have been developed 

for the opening balance sheet, dual reporting 

period and the maintenance of IFRS after 

the changeover date. The internal audit team 

is currently performing testing of these 

identifi ed controls. 

External communications

Assess the effects of key IFRS-related accounting

policy and fi nancial statement changes on 

external communications, in particular:

• Confi rm 2011 investor communications 

are IFRS compliant regarding guidance 

and fi nancial impact

• Monitor external communications package

• Confi rm investor relations process can 

respond to IFRS-related queries

Analyze and publish the effect of 

IFRS on the fi nancial statements 

throughout the project.

IFRS disclosure will be updated throughout 

the project.

Investor Relations is represented on the IFRS 

Steering Committee. An investor relations 

communications strategy has been formulated, 

and includes a strategy to analyze effects 

on management and employee compensation 

arrangements and plans, and the related 

communications necessary if changes are required.
46 WestJet 2010 Annual Report

The transition from Canadian GAAP to IFRS is a significant 

undertaking that will materially affect our reported financial 

position and results of operations. We continue to monitor standards 

development as issued by the IASB and the AcSB, as well as 

regulatory developments as issued by the Canadian Securities 

Administrators (CSA), which may affect the timing, nature or 

disclosure of our adoption of IFRS.

Our preliminary assessment of the impact of adopting IFRS 

based on the current standards has identified the following 

areas as potentially having the most significant impact on our 

consolidated financial statements. This should not be regarded 

as a complete list of changes that will result from the transition 

to IFRS, but rather is intended to highlight the areas we believe 

to be the most significant. As we finalize the Implementation 

and Execution phase, we will confirm additional changes. 

These assessments are based on available information and our 

expectations as of the date of this MD&A and, thus, are subject to 

change based on new facts and circumstances. 

IFRS 1 provides entities adopting IFRS for the first time with a 

number of optional exemptions and mandatory exceptions, in 

certain areas, to the general requirement of full retrospective 

application of IFRS. Most adjustments required on transition 

to IFRS will be made retrospectively against opening retained 

earnings in the first comparative balance sheet. We do not 

anticipate any changes to the previously reported cash flows as 

a result of adopting IFRS. 
WestJet 2010 Annual Report 47

Canadian 

GAAP

IFRS 

adjustments

IFRS

Assets

 Current assets(i) $ 1,118 $ 12 $ 1,129

 Property, equipment and intangibles(ii) 2,322 (199) 2,122

 Long-term assets(iii) 54 44 98

$ 3,494 $ (144) $ 3,350

Liabilities

 Current liabilities(iv) $ 754 $ 1 $ 756

 Long-term debt(v) 1,052 (20) 1,032

 Other long-term liabilities(vi) 20 81 101

 Future income tax(vii) 279 (54) 225

$ 2,105 $ 8 $ 2,113

Shareholders’ equity

 Share capital and AOCL $ 618 $ — $ 618 

 Contributed surplus(viii) 72 4 76

 Retained earnings 699 (156) 543 

$ 1,389 $ (152) $ 1,237 

$ 3,494 $ (144) $ 3,350 

(i) Total adjustment to current assets includes an increase of $9 million related to the current portion of maintenance reserves recoverable, an increase of $6 million related 

to expendable inventories not previously recognized, offset by a $3 million reclassifi cation of future income taxes from current to long term.

(ii) The property and equipment decrease is due to componentization of aircraft, as well as the change in depreciation methods.

(iii) The increase to other long-term assets is due to the recognition of the maintenance reserves recoverable.

(iv) Total adjustment to current liabilities is an $8 million increase related to the current portion of maintenance provisions, offset by a $6 million reduction in current portion 

of long-term debt related to the change in accounting for transaction costs, and a reduction of $1 million in non-refundable guest credits related to the change in accounting 

for soft dollar credit fi les.

(v) The reduction in long-term debt is related to the change in the accounting treatment for transaction costs.

(vi) Total adjustment to other long-term liabilities includes an increase of $86 million related to maintenance provisions, offset by a decrease of $5 million related to the 

removal of the deferred gain on a sale-leaseback transaction.

(vii) The reduction in future income tax liability results from the future tax impact of all accounting changes on changeover to IFRS, as well as the reclassifi cation of $3 million 

from current to long-term future income tax liability.

(viii) The increase to contributed surplus is related to the difference in the service period used to recognize share-based payments. 

Preliminary unaudited consolidated condensed balance sheet 

January 1, 2010

($ in millions)

Below is a summary of the preliminary unaudited estimated impact of IFRS adjustments on our 2010 opening consolidated 

balance sheet:
48 WestJet 2010 Annual Report

Preliminary unaudited impact to certain line items on the 2010 

statement of earnings

($ in millions)

The following illustrates our preliminary unaudited estimated 

pre-tax impact to specific items on our 2010 statement of earnings. 

This table does not present all of our 2010 IFRS adjustments, 

rather, only the most significantly affected expenses are included. 

The remaining adjustments are not expected to have a material 

net impact on our 2010 IFRS earnings before tax. 

As noted in the table below, our estimated 2010 IFRS depreciation

and maintenance charges are expected to be higher than those 

recorded under Canadian GAAP. This increase is due strictly to 

timing of expense recognition, and overall expenses related to 

the maintenance of our fleet will ultimately be the same under 

IFRS and Canadian GAAP. 

The increases in 2010 are related to the timing and recognition 

of major engine maintenance costs for both our owned and 

leased aircraft. Under Canadian GAAP, the costs of major engine 

maintenance are recognized as incurred. Because of the young 

age of our fleet, we have not performed significant levels of engine 

overhauls prior to 2011. Under our current maintenance plan, 

we anticipate that increasing levels of major maintenance will 

be performed beginning in 2013. For leased aircraft, under IFRS, 

these costs are recognized over the term of the lease based 

on usage of the aircraft, rather than being based on the actual 

maintenance event occurring. As a result, there will be timing 

differences in expense recognition between IFRS and Canadian 

GAAP, where in years when significant major maintenance 

events occur, IFRS maintenance costs would be otherwise lower, 

assuming a consistent fleet size and composition, than those 

recognized under Canadian GAAP. 

Depreciation expense under IFRS is also increased as compared 

to that recognized under Canadian GAAP in 2010, due to the fact 

that major maintenance events are recognized as a separate 

component of the overall aircraft cost, and depreciated 

over a shorter useful life until the next scheduled overhaul. 

Under Canadian GAAP, these overhaul expenses would not have 

been capitalized, rather, they would have been recognized as 

maintenance expense when incurred. 

These differences are related to the accounting recognition of 

expenditures; therefore, we do not expect any changes in cash 

flows as a result of adopting IFRS. 

We expect that income tax expense for 2010 will decrease as a 

result of lower expected 2010 earnings before income tax under 

IFRS, as compared to under Canadian GAAP.

Significant accounting policy differences

We have identified the following significant differences between 

our current accounting policies and those required or expected 

to apply in preparing IFRS financial statements. The estimated 

impact for 2010 is discussed for certain of these differences. 

1. Property, plant and equipment 

 Componentization

 Canadian GAAP – Maintenance and repair costs for owned 

aircraft, including major overhauls, are currently charged to 

expense at the time maintenance is performed. 

 IFRS – Each item of property and equipment with a significant 

cost in relation to the total cost and/or a different useful life is 

required to be depreciated separately. The costs of activities 

($ in millions) Note

Canadian 

GAAP

IFRS 

adjustments IFRS

Depreciation and amortization 1 $ 133 $ 35–40 $ 168–173

Maintenance expense 2 100 15–20 115–120

Interest expense 2, 4 60 8–12 68–72

$ 58–72
WestJet 2010 Annual Report 49

that restore the service potential of airframes, engines and 

landing gear will be considered components of the aircraft 

and will be added to the carrying amount of the asset and 

amortized over the period until the next overhaul.

Depreciation 

Canadian GAAP – Currently, depreciation of our owned aircraft 

is based on aircraft cycles. 

 IFRS – As a result of componentization as described above, 

we have made an election to change the depreciation method 

of our aircraft to the straight-line method, which most closely 

reflects the expected pattern of consumption of the future 

economic benefits embodied in the assets, as we estimate 

that the aircraft will be retired after a specified time period 

rather than a specified number of cycles flown. Our policy will 

be to depreciate our aircraft on a straight-line basis over a 

period of 20 years. 

Estimated 2010 impact 

 Depreciation and amortization expense for the 2010 period 

is estimated to increase by approximately $35 to $40 million 

due to the increased depreciation expense related to the 

componentization of our aircraft, as well as the change in 

depreciation method from a units-of-production (cycles) to a 

straight-line method. 

2. Provisions, contingent liabilities and contingent assets

 Maintenance provision for leased aircraft 

 Canadian GAAP – For our aircraft under operating leases 

provisions for future maintenance expenses related to

aircraft lease return conditions are not currently recognized. 

Expenses for maintenance are recognized as incurred. 

 IFRS – A provision will be recognized during the lease term 

for the future obligation to return the aircraft to the lessor at 

or better than contractually specified maintenance levels.

Maintenance Reserves

 Canadian GAAP – A number of aircraft leases also require 

WestJet to pay maintenance reserves to the lessor. The purpose

of these payments is to provide the lessor with collateral 

should an aircraft be returned in a condition that does not 

meet the maintenance requirements of the lease. These 

payments are currently expensed when due under contract. If 

a maintenance event occurs that qualifies for reimbursement, 

a receivable is recognized at the same time the maintenance 

costs are recorded. 

 IFRS – As maintenance reserves are either refunded when 

qualifying maintenance is performed, these payments will 

be recognized as an asset. As qualifying maintenance is 

performed and reimbursed, the asset will be drawn down. 

At any time, where the amount of maintenance reserves paid 

exceeds the estimated amount recoverable from the lessor, 

the non-recoverable amount will be expensed. 

Soft dollar credit files

 Canadian GAAP – Soft dollar credit files are credits provided to 

guests as a sign of goodwill to be used towards future travel. 

These are recorded as an expense and as a liability at the 

issue date, and measured at incremental cost. 

 IFRS – The issuance of discretionary credit files does not 

require a performance obligation to be fulfilled by WestJet, 

nor is the issuance part of a sales transaction and, therefore, 

no obligation exists at the time of the issue. As such, soft 

dollar credit files will no longer be recognized as a liability 

upon issuance but rather recognized as a reduction to revenue

upon redemption.

 Estimated 2010 impact 

Maintenance expense for the 2010 period is expected to increase 

by approximately $15 to $20 million due to the recognition 

of maintenance provisions over the term of the aircraft lease, 

offset by the maintenance reserves recoverable related to the 

maintenance provisions. 

Interest expense for 2010 is expected to increase by 

approximately $3 to $5 million related to the accretion of the 

maintenance provision.
50 WestJet 2010 Annual Report

3. Leases 

 Canadian GAAP – The profit on sale-leaseback transactions 

from 2005 is currently being deferred and recognized on a 

straight-line basis over the lease term. 

 IFRS – There is a requirement to recognize the profit from 

these types of sale-leaseback transactions immediately into 

income.

4. Financial instruments – recognition and measurement

 Canadian GAAP – Transaction costs which are incremental 

and directly attributable to the acquisition, issue or disposal 

of a financial asset or liability are currently being expensed 

as incurred. Specifically, this difference relates to transaction 

costs on our long-term debt. 

IFRS – Transaction costs are required to be added to the initial 

measurement and recognition of the financial instrument. 

Using the effective interest method, the amount would then be 

recognized as a deduction to net earnings over the remaining 

terms of the long-term debt as interest expense.

 Estimated 2010 impact

 We expect that interest expense for 2010 will be increased by 

approximately $5 to $7 million due to the timing of expense 

recognition for transaction costs. 

5. Income taxes 

 The impact of IFRS on WestJet will be derived directly from 

the accounting policy decisions made under other standards. 

6. Share-based payments 

Canadian GAAP – Share-based awards are currently measured 

at fair value, with compensation expense being recognized 

over the vesting period. For equity-settled plans, we recognize 

a corresponding increase in equity, and for our cash-settled 

plans, we recognize a corresponding increase in a liability.

IFRS – The recognition period under IFRS is based on a service 

period and may commence prior to the date of a share-based 

grant. This represents a difference in the timing of expense 

recognition and ultimately does not impact the overall expense.

MANAGEMENT’S ANNUAL REPORT ON DISCLOSURE 

CONTROLS AND PROCEDURES AND INTERNAL CONTROL 

OVER FINANCIAL REPORTING

Disclosure controls and procedures (DC&P)

Disclosure controls and procedures are designed to provide 

reasonable assurance that all relevant information is gathered 

and reported to management, including the CEO and the Chief 

Financial Officer (CFO), on a timely basis so that appropriate 

decisions can be made regarding public disclosure. 

An evaluation of the design and operation of our DC&P was 

conducted, as at December 31, 2010, by management under the 

supervision of the CEO and the CFO. Based on this evaluation, the 

CEO and the CFO have concluded that, as at December 31, 2010, 

our DC&P, as defined by the CSA in National Instrument 52-109, 

Certification of Disclosure in Issuers’ Annual and Interim Filings, 

were effective. 

Internal control over financial reporting (ICFR)

ICFR is designed to provide reasonable assurance regarding the 

reliability of financial reporting and the preparation of financial 

statements in accordance with Canadian GAAP. Management is 

responsible for establishing and maintaining adequate ICFR. 

Our ICFR includes policies and procedures that pertain to the 

maintenance of records that provide reasonable assurance that 

transactions are recorded as necessary to permit preparation

of the financial statements in accordance with Canadian GAAP, 

and that receipts and expenditures are being made only in 

accordance with authorizations of management and directors; that 

pertain to the maintenance of records that in reasonable detail 

accurately and fairly reflect our transactions and dispositions of 

our assets; and that are designed to provide reasonable assurance 

regarding prevention or timely detection of unauthorized 

acquisition, use or disposition of our assets that could have 

a material effect on our annual and interim consolidated 

financial statements. 

Because of its inherent limitations, ICFR can provide only reasonable assurance and may not prevent or detect misstatements. 

Furthermore, projections of an evaluation of effectiveness to future 
WestJet 2010 Annual Report 51

periods are subject to the risk that controls may become inadequate 

because of changes in conditions, or that the degree of compliance 

with the policies and procedures may deteriorate. 

Management, under the supervision of the CEO and the CFO, 

has evaluated the design and operating effectiveness of our 

ICFR using the framework and criteria established in Internal 

Control – Integrated Framework, issued by the Committee of 

Sponsoring Organizations of the Treadway Commission (COSO). 

Based on this evaluation, the CEO and the CFO have concluded 

that, as at December 31, 2010, our ICFR as defined by the CSA 

in National Instrument 52-109, Certification of Disclosure in 

Issuers’ Annual and Interim Filings, was effective. 

Changes in internal controls over financial reporting

During the year ended December 31, 2010, we implemented a new 

Human Resource Information System (HRIS). The HRIS integrates 

the majority of the human resource and payroll functions into 

two new modules of our existing enterprise reporting software 

solution. Payroll processing was previously outsourced to a third 

party. The change in the human resource and payroll systems and 

the related processes has resulted in a change that materially 

affects our ICFR. 

Management has designed and implemented controls to ensure 

that all related accounting transactions associated with the system 

change have received the relevant designation requirements; 

a reasonable methodology has been established to determine 

the effectiveness of the HRIS; all related transactions have been 

accurately measured, reviewed and recorded; and all relevant 

presentation and disclosure requirements have been included in 

the financial statements in accordance with Canadian GAAP.

There have been no other changes to our ICFR during the year 

ended December 31, 2010, that have materially affected, or are 

reasonably likely to materially affect, our ICFR.

OUTLOOK 

Following one of the deepest recessions in recent history, 2010 

was a year characterized by economic uncertainty and speculation 

of a possible double-dip recession. But in the midst of this 

environment, consumer confidence showed signs of improvement, 

as did the overall demand for airline travel. We were happy with 

our 2010 financial results, in particular, the year-over-year 

growth we realized in our revenue and net earnings figures and 

our ability to keep our controllable costs relatively flat. 

In 2010, we began to capitalize on the investment in our new 

reservation systems. In 2011, we will continue this trend by 

building on our key strategic initiatives that include expanding 

our airline partnerships, enhancing our focus on the business 

traveller, growing WestJet Vacations revenue, and increasing 

our market penetration for the co-branded WestJet Credit Card 

and WestJet Frequent Guest programs. 

Expanding the number of our airline partnerships will afford 

WestJet and its guests an enhanced global reach and also 

attract more guests into our network. We implemented our first 

code-share agreement with Cathay Pacific Airways in the fourth 

quarter of 2010, and we are making good progress towards our goal 

of completing an additional three to four code-share agreements 

by the end of 2011. We also expect to sign additional interline 

agreements and our long-term goal is to partner with airlines 

from each of the major geographic regions around the world. 

The business traveller will benefit from a broader network 

afforded by the expanding number of airline partnerships. 

Additional initiatives aimed at enhancing the business traveller’s 

experience include higher daily frequencies in key business 

markets, additional flexibility for itinerary changes and the 

launch of fare-bundling options. By improving convenience and 

flexibility, our goal is to drive up our higher yielding traffic by 

increasing loyalty from existing guests and attracting new business 

travellers. We have started to see some traction in this area with 

the signing of some key corporate accounts during 2010. 

We expect our first-quarter 2011 fuel costs, excluding the impact 

of hedging, to range between $0.82 and $0.84 per litre, which 

represents a year-over-year increase of 21 to 24 per cent from 
52 WestJet 2010 Annual Report

the first quarter of 2010. As at December 31, 2010, we have 

hedged approximately 20 per cent of our anticipated jet fuel 

requirements for the next 12 months. 

For the first quarter of 2011, we anticipate that CASM, excluding 

fuel and profit share, will be flat to down year-over-year on 

an IFRS-comparable basis. From our inception, maintaining a 

low-cost structure has been one of the keys to success at WestJet

and is ingrained in the way we do business. Throughout 2011, 

we will roll out more self-tagging baggage functionality at nine 

additional domestic airports and also exploit some cost-saving 

opportunities we have identified in the procurement process. 

We expect year-over-year capacity to increase between 9 and 

10 per cent for the first quarter of 2011, and full-year capacity 

to increase between 6 and 8 percent as compared to 2010. We 

will take delivery of three aircraft during the first three months 

of 2011 and three more throughout the remainder of the year, 

ending 2011 with a fleet of 97. The additional capacity in the first 

quarter will continue to be directed into the transborder and 

international markets with domestic capacity slightly down. 

Our full-year domestic capacity is expected to grow modestly 

(1 to 2 per cent) in 2011, with increased frequencies within the 

eastern triangle, which includes Toronto, Montreal and Ottawa, 

and core transcontinental routes, including Vancouver-Toronto 

and Calgary-Toronto. We have also introduced year-round 

service on the Ottawa-Halifax and Ottawa-Vancouver routes. 

These capacity extensions align with our code-share and business 

traveller strategies. 

For 2011, we anticipate total capital expenditures of $95 to

$105 million, with the majority of the spending related to aircraft 

deposits and rotables. We purchased an aircraft in the first

quarter of 2011, which is the key reason for the increase in capital 

expenditures, when compared to 2010 when we added only 

leased aircraft.

As we move forward into 2011, we are encouraged by the 

strengthening yield trend that emerged in the second half of 2010 

and the growing optimism surrounding an economic recovery. 

We expect that first quarter year-over-year RASM improvements 

will be roughly in line with the positive change seen in the fourth 

quarter of 2010. We realize fuel costs may be a headwind in 2011, 

but we firmly believe that our fundamental low-cost structure 

and strong balance sheet positions us well to weather fuel price 

uncertainty. We will continue to capitalize on the recent investment 

in our new reservations systems. Momentum is building and 

our WestJet brand is stronger than ever. For 2011, we are 

confident in our ability to continue to achieve profitable growth, 

driven by the commitment of each and every one of our over 

8,000 WestJetters. 

NON-GAAP MEASURES

To supplement our consolidated financial statements presented 

in accordance with Canadian GAAP, we use various non-GAAP 

performance measures as discussed below. These measures 

are provided to enhance the reader’s overall understanding of 

our current financial performance; they are included to provide 

investors and management with an alternative method for 

assessing our operating results in a manner that is focused 

on the performance of our ongoing operations and to provide a 

more consistent basis for comparison between quarters. These 

measures are not in accordance with, or an alternative to, Canadian 

GAAP and do not have standardized meanings. Therefore, they 

are not likely to be comparable to similar measures presented 

by other entities. 

The following non-GAAP measures are used to monitor our 

financial performance:

Adjusted debt: The sum of long-term debt, obligations under 

capital leases and off-balance-sheet aircraft operating leases. 

Our practice, consistent with common industry practice, is to 

multiply the trailing 12 months of aircraft leasing expense by 7.5 

to derive a present value debt equivalent. This measure is used 

in the calculation of adjusted debt-to-equity and adjusted net 

debt to EBITDAR, as defined below.

Adjusted equity: The sum of share capital, contributed surplus 

and retained earnings, excluding AOCL. This measure is used in 

the calculation of adjusted debt-to-equity.
WestJet 2010 Annual Report 53

Adjusted net debt: Adjusted debt less cash and cash equivalents. 

This measure is used in the calculation of adjusted net debt to 

EBITDAR, as defined below.

EBITDAR: Earnings before interest, taxes, depreciation, aircraft 

rent and other items, such as asset impairments, gains and 

losses on derivatives, and foreign exchange gains or losses. 

EBITDAR is a non-GAAP measure commonly used in the airline 

industry to evaluate results by excluding differences in the

method by which an airline finances its aircraft.

Net earnings and diluted earnings per share, excluding special 

items: We believe excluding special items is useful for investors 

to evaluate our recurring operational performance.

CASM, excluding fuel and employee profit share: We exclude 

the effects of aircraft fuel expense and employee profit share 

expense to assess the operating performance of our business. 

Fuel expense is excluded from our operating results because 

fuel prices are affected by a host of factors outside our control, 

such as significant weather events, geopolitical tensions, 

refinery capacity, and global demand and supply. Excluding 

this expense allows us to analyze our operating results on a 

comparable basis. Employee profit share expense is excluded 

from our operating results because of its variable nature and 

excluding this expense allows for greater comparability. 

Aircraft fuel expense, excluding hedging: As presented in the 

non-GAAP measures to GAAP reconciliation on 20 of this MD&A 

under the heading Results of operations – Aircraft fuel, we believe 

it is useful to reflect aircraft fuel expense excluding hedging, 

which excludes the effective portion of realized losses on fuel 

derivatives and ineffectiveness. Since fuel expense is highly 

volatile, we believe presenting the cost of fuel, both including 

and excluding the effects of hedging, is useful to a reader. This 

reconciliation table has not been repeated in this section.

Return on invested capital: ROIC is a measure commonly used 

to assess the efficiency with which a company allocates its 

capital to generate returns. Return is calculated based on our 

earnings before tax, excluding special items, interest expense, 

and implied interest on our off-balance-sheet aircraft operating 

leases. Invested capital includes average long-term debt, average 

capital lease obligations, average shareholders’ equity and 

off-balance-sheet aircraft operating leases. 

Free cash flow: Operating cash flow less capital expenditures. 

This measure is used to calculate the amount of cash available 

that can be used to pursue other opportunities after maintaining 

and expanding the asset base. 

Free cash flow per share: Free cash flow divided by the diluted 

weighted average number of shares outstanding. 

Operating cash flow per share: Cash flow from operations divided 

by the diluted weighted average number of shares outstanding.
54 WestJet 2010 Annual Report

Reconciliation of non-GAAP measures to GAAP

($ in thousands, except ratio amounts) 2010 2009 Change

Adjusted debt-to-equity

 Long-term debt(i) $ 1,047,177 $ 1,219,777 $ (172,600)

 Obligations under capital leases(ii) 3,357 4,102 (745)

 Off-balance-sheet aircraft leases(iii) 1,066,815 779,655 287,160 

Adjusted debt $ 2,117,349 $ 2,003,534 $ 113,815 

 Total shareholders’ equity 1,507,679 1,388,928 118,751 

 Add: AOCL 10,470 14,852 (4,382)

Adjusted equity $ 1,518,149 $ 1,403,780 $ 114,369 

Adjusted debt-to-equity 1.39 1.43 (2.8%)

Adjusted net debt to EBITDAR(iv)

Net earnings $ 136,720 $ 98,178 $ 38,542 

Add:

 Net interest(v) 50,254 62,105 (11,851)

 Taxes 59,947 38,618 21,329 

 Depreciation and amortization 132,894 141,303 (8,409)

 Aircraft leasing 142,242 103,954 38,288 

 Other(vi) 814 10,478 (9,664)

EBITDAR $ 522,871 $ 454,636 $ 68,235 

Adjusted debt (as above) 2,117,349 2,003,534 113,815 

Less: Cash and cash equivalents (1,187,899) (1,005,181) (182,718)

Adjusted net debt $ 929,450 $ 998,353 $ (68,903)

Adjusted net debt to EBITDAR 1.78 2.20 (19.1%)

(i) As at December 31, 2010, long-term debt includes the current portion of long-term debt of $183,681 (2009 – $171,223) and long-term debt of $863,496 (2009 – $1,048,554).

(ii) As at December 31, 2010, obligations under capital leases includes the current portion of obligations under capital leases of $108 (2009 – $744) and obligations under 

capital leases of $3,249 (2009 – $3,358).

(iii) Off-balance-sheet aircraft leases is calculated by multiplying the trailing twelve months of aircraft leasing expense by 7.5. As at December 31, 2010, the trailing twelve 

months of aircraft leasing costs totalled $142,242 (2009 – $103,954).

(iv) The trailing twelve months are used in the calculation of EBITDAR.

(v) As at December 31, 2010, net interest includes the trailing twelve months of interest income of $9,910 (2009 – $5,601) and the trailing twelve months of interest expense of 

$60,164 (2009 – $67,706).

(vi) As at December 31, 2010, other includes the trailing twelve months foreign exchange loss of $780 (2009 – loss of $12,306) and the trailing twelve months non-operating 

loss on derivatives of $34 (2009 – gain of $1,828).
WestJet 2010 Annual Report 55

($ in thousands, except per share data) Three months ended December 31 Twelve months ended December 31

2010 2009 2010 2009

Net earnings, excluding special items

Net earnings – GAAP $ 47,908 $ 20,175 $ 136,720 $ 98,178 

Adjusted for:

 CEO departure (net of tax) — — 3,700 — 

 Income tax rate reductions and estimate change — (5,051) 2,372 (5,051)

Net earnings, excluding special items $ 47,908 $ 15,124 $ 142,792 $ 93,127 

Diluted earnings per share, excluding special items $ 0.33 $ 0.11 $ 0.98 $ 0.71 

($ in thousands, except per share data) 2010 2009 Change

Operating cash fl ow per share

Cash fl ow from operating activities $ 443,283 $ 318,661 $ 124,622 

Diluted operating cash fl ow per share $ 3.05 $ 2.41 26.6%

($ in thousands, except per unit data) Three months ended December 31 Twelve months ended December 31

2010 2009 2010 2009

CASM, excluding fuel and employee profi t share

Operating expenses – GAAP $ 614,011 $ 533,938 $ 2,361,716 $ 2,070,564 

Adjusted for:

 Aircraft fuel expense (179,276) (148,853) (674,608) (570,569)

 Employee profi t share expense (7,442) (2,297) (22,222) (14,675)

Operating expenses, excluding above items – Non-GAAP $ 427,293 $ 382,788 $ 1,664,886 $ 1,485,320 

ASMs (in thousands) 5,021,010 4,412,574 19,535,291 17,587,641 

CASM, excluding above items – Non-GAAP (cents) 8.51 8.67 8.52 8.45 
56 WestJet 2010 Annual Report

($ in thousands, except percentage amounts) 2010 2009 Change

Return on invested capital

Earnings before income taxes $ 196,667 $ 136,796 $ 59,871 

Add:

 Special items before tax(i) 5,368 — 5,368 

 Interest expense 60,164 67,706 (7,542)

 Implicit interest in operating leases(ii) 74,677 54,576 20,101 

$ 336,876 $ 259,078 $ 77,798 

Invested capital:

 Average long-term debt(iii) $ 1,133,477 $ 1,285,840 $ (152,363)

 Average obligations under capital leases(iv) 3,730 2,605 1,125

 Average shareholders' equity 1,448,304 1,232,459 215,845

 Off balance-sheet operating leases(v) 1,066,815 779,655 287,160

$ 3,652,326 $ 3,300,559 $ 351,767 

Return on invested capital 9.2% 7.8% 1.4 pts.

(i) For the year ended December 31, 2010 special items before tax includes $4,136 for CEO departure and $1,232 for revisions to the calculation of capital taxes.

(ii) Interest implicit in operating leases is equal to 7.0 per cent of 7.5 times the trailing 12 months of aircraft lease expense. 7.5 is a proxy and does not necessarily 

represent actual for any given period.

(iii) Average long-term debt includes the current portion and long-term portion.

(iv) Average capital lease obligations includes the current portion and long-term portion.

(v) Off-balance-sheet aircraft leases is calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. As at December 31, 2010, the trailing 12 months of 

aircraft leasing costs totalled $142,242 (2009 – $103,954).

($ in thousands, except per share data) 2010 2009 Change

Free cash fl ow

Cash fl ow from operating activities $ 443,283 $ 318,661 $ 124,622 

Adjusted for capital expenditures:

 Aircraft additions (29,884) (118,659) 88,775 

 Other property and equipment and intangible additions (18,675) (48,021) 29,346 

Free cash fl ow $ 394,724 $ 151,981 $ 242,743 

Diluted free cash fl ow per share $ 2.72 $ 1.15 136.5%
WestJet 2010 Annual Report 57

CONSOLIDATED FINANCIAL

STATEMENTS AND NOTES

FOR THE YEARS ENDED

DECEMBER 31, 2010 AND 2009
58 WestJet 2010 Annual Report
WestJet 2010 Annual Report 59

MANAGEMENT’S REPORT

TO THE SHAREHOLDERS

The consolidated financial statements have been prepared by 

management in accordance with Canadian generally accepted 

accounting principles. When a choice between accounting methods 

exists, management has chosen those they deem conservative 

and appropriate in the circumstances. Financial statements 

will, by necessity, include certain amounts based on estimates 

and judgments. Management has determined such amounts 

on a reasonable basis to ensure that the consolidated financial 

statements are presented fairly in all material respects. 

Financial information contained in this report is consistent, 

where appropriate, with the information and data contained in 

the consolidated financial statements. All information in this 

report is the responsibility of management.

Management has established systems of internal control, 

including disclosure controls and procedures and internal controls 

over financial reporting, which are designed and operated to 

provide reasonable assurance that financial and non-financial 

information that is disclosed is timely, complete, relevant and 

accurate. These systems of internal control also serve to safeguard

the Corporation’s assets. The systems of internal control are 

monitored by management, and further supported by an internal 

audit department whose functions include reviewing internal 

controls and their applications.

The Board of Directors is responsible for the overall stewardship and 

governance of the Corporation, including ensuring management 

fulfills its responsibility for financial reporting and internal 

control, and reviewing and approving the consolidated financial 

statements. The Board carries out this responsibility principally 

through its Audit Committee.

The Audit Committee of the Board of Directors, composed of 

independent Directors, meets regularly with management, the 

internal auditors and the external auditors to satisfy itself that 

each is properly discharging its responsibilities, and to review the

consolidated financial statements and management’s discussion 

and analysis. The Audit Committee reports its findings to the 

Board of Directors prior to the approval of such statements 

for issuance to the shareholders. The Audit Committee also 

recommends, for review by the Board of Directors and approval 

of shareholders, the reappointment of the external auditors. The 

internal and external auditors have full and free access to the 

Audit Committee.

The consolidated financial statements have been audited by 

KPMG LLP, the independent external auditors, in accordance 

with generally accepted auditing standards on behalf of the 

shareholders. The auditors’ report outlines the scope of their 

examination and sets forth their opinion.

Gregg Saretsky

President and Chief Executive Officer

Vito Culmone

Executive Vice-President, Finance and

Chief Financial Officer

Calgary, Canada

February 8, 2011
60 WestJet 2010 Annual Report

INDEPENDENT 

AUDITOR’S REPORT

To the Shareholders

We have audited the accompanying consolidated financial 

statements of WestJet Airlines Ltd. (the Company), which 

comprise the balance sheets as at December 31, 2010 and 2009, 

and the consolidated statements of earnings, shareholders’ 

equity, comprehensive income and cash flows for the years then 

ended, and a summary of significant accounting policies and 

other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair 

presentation of these consolidated financial statements in 

accordance with Canadian generally accepted accounting 

principles, and for such internal control as management 

determines is necessary to enable the preparation of financial 

statements that are free from material misstatement, whether 

due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated 

financial statements based on our audit. We conducted our 

audit in accordance with Canadian generally accepted auditing 

standards. Those standards require that we comply with ethical 

requirements and plan and perform an audit to obtain reasonable 

assurance about whether the consolidated financial statements 

are free from material misstatement.

An audit involves performing procedures to obtain audit evidence 

about the amounts and disclosures in the financial statements. 

The procedures selected depend on the auditor’s judgment, 

including the assessment of the risks of material misstatement 

of the financial statements, whether due to fraud or error. In making 

those risk assessments, the auditor considers internal control 

relevant to the Company’s preparation and fair presentation of 

the financial statements in order to design audit procedures that 

are appropriate in the circumstances, but not for the purpose of 

expressing an opinion on the effectiveness of the entity’s internal 

control. An audit also includes evaluating the appropriateness 

of accounting policies used and the reasonableness of accounting 

estimates made by management, as well as evaluating the 

overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient 

and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present 

fairly, in all material respects, the financial position of 

WestJet Airlines Ltd. as at December 31, 2010 and 2009, and 

the results of its operations and its cash flows for the years 

then ended in accordance with Canadian generally accepted 

accounting principles.

Chartered Accountants

Calgary, Canada

February 8, 2011
WestJet 2010 Annual Report 61

CONSOLIDATED STATEMENT

OF EARNINGS

For the years ended December 31

(Stated in thousands of Canadian dollars, 

except per share amounts)

2010 2009

Revenues:

 Guest $ 2,405,281 $ 2,067,860

 Other 203,980 213,260

2,609,261 2,281,120

Expenses:

 Aircraft fuel 674,608 570,569

 Airport operations 388,392 352,333

 Flight operations and navigational charges 325,754 298,762

 Sales and distribution 255,777 172,326

 Marketing, general and administration 195,185 208,316

 Aircraft leasing 142,242 103,954

 Depreciation and amortization 132,894 141,303

 Infl ight 124,303 112,054

 Maintenance 100,339 96,272

 Employee profi t share 22,222 14,675

2,361,716 2,070,564

Earnings from operations 247,545 210,556

Non-operating income (expense):

 Interest income 9,910 5,601

 Interest expense (60,164) (67,706)

 Loss on foreign exchange (780) (12,306)

 Gain (loss) on disposal of property and equipment 190 (1,177)

 Gain (loss) on derivatives (note 13) (34) 1,828

(50,878) (73,760)

Earnings before income taxes 196,667 136,796

Income tax expense (note 9): 

 Current 1,573 2,690

 Future 58,374 35,928

59,947 38,618

Net earnings $ 136,720 $ 98,178

Earnings per share (note 10):

 Basic $ 0.94 $ 0.74

 Diluted $ 0.94 $ 0.74

The accompanying notes are an integral part of the consolidated fi nancial statements.
62 WestJet 2010 Annual Report

CONSOLIDATED

BALANCE SHEET

As at December 31

(Stated in thousands of Canadian dollars)

2010 2009

Assets

Current assets:

 Cash and cash equivalents (note 4) $ 1,187,899 $ 1,005,181

 Accounts receivable 17,518 27,654

 Prepaid expenses, deposits and other (note 14) 41,716 56,239

 Inventory 20,181 26,048

 Future income tax (note 9) 1,396 2,560

1,268,710 1,117,682

Property and equipment (note 5) 2,226,685 2,307,566

Intangible assets (note 6) 13,018 14,087

Other assets (note 14) 54,431 54,367

$ 3,562,844 $ 3,493,702

Liabilities and shareholders’ equity

Current liabilities:

 Accounts payable and accrued liabilities $ 303,583 $ 231,401

 Advance ticket sales 308,022 286,361

 Non-refundable guest credits 36,778 64,506

 Current portion of long-term debt (note 7) 183,681 171,223

 Current portion of obligations under capital leases (note 8) 108 744

832,172 754,235

Long-term debt (note 7) 863,496 1,048,554

Obligations under capital leases (note 8) 3,249 3,358

Other liabilities (note 14) 18,838 19,628

Future income tax (note 9) 337,410 278,999

2,055,165 2,104,774

Shareholders’ equity:

 Share capital (note 10) 647,637 633,075

 Contributed surplus 62,534 71,503

 Accumulated other comprehensive loss (note 14) (10,470) (14,852)

 Retained earnings 807,978 699,202

1,507,679 1,388,928

Commitments and contingencies (note 12)

$ 3,562,844 $ 3,493,702

The accompanying notes are an integral part of the consolidated fi nancial statements.

On behalf of the Board:

Gregg Saretsky, Director Hugh Bolton, Director

On behalf of the Board:

Gregg Saretsky Director
WestJet 2010 Annual Report 63

CONSOLIDATED STATEMENT

OF CASH FLOWS

For the years ended December 31

(Stated in thousands of Canadian dollars)

2010 2009

Operating activities:

Net earnings $ 136,720 $ 98,178

Items not involving cash:

 Depreciation and amortization 132,894 141,303

 Amortization of other liabilities (1,891) (7,595)

 Amortization of hedge settlements 1,400 1,400

 Issuance of shares pursuant to employee share purchase plan — 11,071

 (Gain) loss on derivatives 34 (2,406)

 (Gain) loss on disposal of property and equipment (167) 1,504

 Stock-based compensation expense 15,668 13,440

 Income tax credit (1,667) (1,952)

 Future income tax expense 58,374 35,928

 Unrealized foreign exchange loss 3,696 8,440

 Change in non-cash working capital 98,222 19,350

443,283 318,661

Financing activities:

Increase in long-term debt — 33,855

Repayment of long-term debt (171,115) (165,757)

Decrease in obligations under capital leases (744) (406)

Issuance of common shares 520 172,463

Share issue costs — (7,468)

Shares repurchased (31,391) —

Change in other assets (2,947) 3,427

Change in non-cash working capital (4,526) (1,463)

(210,203) 34,651

Investing activities:

Aircraft additions (29,884) (118,659)

Other property and equipment and intangible additions (18,675) (48,021)

(48,559) (166,680)

Cash fl ow from operating, fi nancing and investing activities 184,521 186,632

Effect of foreign exchange on cash and cash equivalents (1,803) (1,665)

Net change in cash and cash equivalents 182,718 184,967

Cash and cash equivalents, beginning of year 1,005,181 820,214

Cash and cash equivalents, end of year $ 1,187,899 $ 1,005,181

Cash interest paid $ 61,280 $ 67,973

Cash taxes paid $ 2,958 $ 3,369

The accompanying notes are an integral part of the consolidated fi nancial statements.
64 WestJet 2010 Annual Report

CONSOLIDATED STATEMENT

OF SHAREHOLDERS’ EQUITY

For the years ended December 31

(Stated in thousands of Canadian dollars)

2010 2009

Share capital (note 10):

 Balance, beginning of year $ 633,075 $ 452,885

 Transfer of stock-based compensation expense on issued shares 24,637 2,130

 Issuance of shares pursuant to stock option plans 520 —

 Shares repurchased (10,595) —

 Issued on public offering — 172,463

 Share issue costs — (7,468)

 Tax effect of share issue costs — 1,994

 Issuance of shares pursuant to employee share purchase plan — 11,071

647,637 633,075

Contributed surplus:

 Balance, beginning of year 71,503 60,193

 Stock-based compensation expense (note 10) 15,668 13,440

 Transfer of stock-based compensation expense on issued shares (24,637) (2,130)

62,534 71,503

Accumulated other comprehensive loss (note 14):

 Balance, beginning of year (14,852) (38,112)

 Other comprehensive income 4,382 23,260

(10,470) (14,852)

Retained earnings:

 Balance, beginning of year 699,202 611,171

 Change in accounting policy — (10,147)

 Net earnings 136,720 98,178

 Shares repurchased (note 10) (20,796) — 

 Dividends declared (7,148) —

807,978 699,202

Total accumulated other comprehensive loss and retained earnings 797,508 684,350

Total shareholders’ equity $ 1,507,679 $ 1,388,928

The accompanying notes are an integral part of the consolidated fi nancial statements.
WestJet 2010 Annual Report 65

CONSOLIDATED STATEMENT

OF COMPREHENSIVE INCOME

For the years ended December 31

(Stated in thousands of Canadian dollars)

2010 2009

Net earnings $ 136,720 $ 98,178

Other comprehensive income:

 Amortization of hedge settlements to aircraft leasing 1,400 1,400

 Net unrealized loss on foreign exchange derivatives under cash fl ow hedge accounting(i) (3,460) (911)

 Reclassifi cation of net realized (gain) loss on foreign exchange derivatives to net earnings(ii) 1,557 (3,977)

 Net unrealized gain (loss) on fuel derivatives under cash fl ow hedge accounting(iii) (1,778) 6,709

 Reclassifi cation of net realized loss on fuel derivatives to net earnings(iv) 6,663 20,039

4,382 23,260

Total comprehensive income $ 141,102 $ 121,438

(i) Net of income taxes of $1,224 (2009 – $447).

(ii) Net of income taxes of $(586) (2009 – $1,576).

(iii) Net of income taxes of $670 (2009 – $(2,878)).

(iv) Net of income taxes of $(2,509) (2009 – $(8,372)).

The accompanying notes are an integral part of the consolidated fi nancial statements.
66 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

1. Summary of signifi cant accounting policies

(a) Basis of presentation

 The accompanying consolidated fi nancial statements of WestJet Airlines Ltd. (the Corporation) have been prepared in accordance with Canadian 

generally accepted accounting principles (GAAP). Amounts presented in the Corporation’s consolidated fi nancial statements and the notes 

thereto are in Canadian dollars unless otherwise stated.

(b) Principles of consolidation

 The accompanying consolidated fi nancial statements include the accounts of the Corporation and its wholly owned subsidiaries, as well as the 

accounts of fi ve special-purpose entities, which are utilized to facilitate the fi nancing of aircraft. The Corporation has no equity ownership in 

the special-purpose entities; however, the Corporation is the primary benefi ciary of the special-purpose entities’ operations. All intercompany 

balances and transactions have been eliminated. 

(c) Use of estimates

 The preparation of fi nancial statements in conformity with Canadian GAAP requires management to make estimates and assumptions regarding 

signifi cant items such as amounts relating to depreciation and amortization, residual values, non-refundable guest credits, the frequent guest 

program, asset retirement obligations, allowance for doubtful accounts, future income taxes, stock-based compensation expense, impairment 

assessments of property and equipment and intangible assets, and the valuation of derivative fi nancial instruments that affect the amounts 

reported in the consolidated fi nancial statements and the notes thereto. Changes in facts and circumstances may result in revised estimates, 

and actual results may differ from these estimates. 

(d) Revenue recognition

 (i) Guest

 Guest revenues, including the air component of vacation packages, are recognized when air transportation is provided. Tickets sold but not 

yet used are reported in the consolidated balance sheet as advance ticket sales.

(ii) Other

 Other revenues include charter revenue, cargo revenue, net revenues from the sale of the land component of vacation packages, ancillary 

revenues and other.

 Charter and cargo revenue is recognized when air transportation is provided. 

 Revenue from the land component of vacation packages is generated from providing agency services equal to the amount paid by the 

guest for products and services less, payment to the travel supplier, and are reported at the net amounts received. Revenue from the land 

component is deferred as advance ticket sales and recognized in earnings on completion of the vacation.

 Ancillary revenues are recognized when the services and products are provided to the guests. Included in ancillary revenues are fees 

associated with guest itinerary changes or cancellations, excess baggage fees, buy-on-board sales, pre-reserved seating fees, and ancillary 

revenue from the frequent guest program.

 Included in other revenue is revenue from expired non-refundable guest credits recognized at the time of expiry. 

(e) Non-refundable guest credits

 The Corporation issues future travel credits to guests for fl ight changes and cancellations, as well as for gift certifi cates. Where appropriate, 

future travel credits are also issued for fl ight delays, missing baggage and other inconveniences. All credits are non-refundable and have expiry 

dates dependent upon the nature of the credit, except for gift certifi cates which do not contain an expiry date. The Corporation records a liability, 

depending on the nature of the credit, at either the face value or by applying an incremental cost percentage to the value of the credit in the period 

the credit is issued. The utilization of guest credits is recorded as revenue when the guest has fl own or upon expiry. 
WestJet 2010 Annual Report 67

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

1. Summary of signifi cant accounting policies (continued)

(f) Frequent guest program (FGP)

 The Corporation has a frequent guest program that allows guests to accumulate credits that entitle them to a choice of various rewards, primarily 

discounted travel. Revenue received in relation to credits issued is deferred as a liability at fair value until a reward is ultimately utilized, at which 

time it is recognized in guest revenue. Fair value is management’s estimate of the expected awards for which the credit will be redeemed and is 

reduced by the proportion of credits that have been redeemed relative to the total number expected to be redeemed.

 The Corporation also has a co-branded MasterCard with the Royal Bank of Canada (RBC). RBC issues FGP credits to cardholders as a percentage 

of their total retail spend. The fair value of these credits is deferred and recognized on redemption as described above. Ancillary revenue from 

the issuance of FGP credits on the credit card is measured as the difference between the cash received and the fair value of the credit and is 

recognized in other revenue on their issuance. Revenue related to new cards issued is recognized in other revenue immediately upon activation.

(g) Financial instruments

A fi nancial instrument is any contract that gives rise to a fi nancial asset of one entity and a fi nancial liability or equity instrument to another entity. 

Financial assets and fi nancial liabilities, including derivatives, are recognized on the consolidated balance sheet at the time the Corporation 

becomes a party to the contractual provisions. Upon initial recognition, fi nancial instruments are measured at fair value and, for the purpose of 

subsequent measurement, fi nancial instruments are allocated to one of the following fi ve categories: held-for-trading, held-to-maturity, loans 

and receivables, available-for-sale or other fi nancial liabilities. 

 The Corporation’s fi nancial assets and fi nancial liabilities consist primarily of cash and cash equivalents, deposits, accounts receivable, accounts 

payable and accrued liabilities, long-term debt, capital lease obligations and derivative instruments. The Corporation has designated its fi nancial 

instruments as follows:

Financial instrument Category Measurement method

Cash and cash equivalents Held-for-trading Fair value

Deposits Held-for-trading Fair value

Accounts receivable Loans and receivables Amortized cost

Accounts payable and accrued liabilities Other fi nancial liabilities Amortized cost

Long-term debt Other fi nancial liabilities Amortized cost

Obligations under capital leases Other fi nancial liabilities Amortized cost

Derivative instruments Held-for-trading Fair value

 Held-for-trading instruments are fi nancial assets and fi nancial liabilities typically acquired with the intention of generating revenues in the short 

term. However, an entity is allowed to designate any fi nancial instrument as held-for-trading on initial recognition even if it would otherwise not 

satisfy the defi nition. As at December 31, 2010, the Corporation does not hold any fi nancial instruments that do not satisfy the defi nition. Financial 

assets and fi nancial liabilities required to be classifi ed or designated as held-for-trading are measured at fair value, with gains and losses recorded 

in net earnings for the period in which the change occurs. The Corporation uses trade-date accounting for its held-for-trading fi nancial assets. 

 Financial assets classifi ed as loans and receivables are measured at amortized cost using the effective interest method.

 Other fi nancial liabilities are measured at amortized cost using the effective interest method and include all liabilities other than derivatives or 

liabilities that have been identifi ed as held-for-trading.
68 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

1. Summary of signifi cant accounting policies (continued)

(g) Financial instruments (continued)

 The Corporation will, from time to time, use various fi nancial derivatives to reduce market risk exposure from changes in foreign exchange rates 

and jet fuel prices. Derivatives are recorded at fair value on the balance sheet with changes in fair value recorded in the statement of earnings 

unless designated as effective hedging instruments. Similarly, embedded derivatives are recorded at fair value on the balance sheet with the 

changes in fair value recorded in the statement of earnings, unless exempted from derivative treatment as a normal purchase and sale, or the 

host contract and derivative are deemed to be clearly and closely related. The Corporation selected January 1, 2003, as its transition date for 

embedded derivatives; as such, only contracts entered into or substantively modifi ed after the transition date have been examined for embedded 

derivatives. When fi nancial assets and liabilities are designated as part of a hedging relationship and qualify for hedge accounting, they are 

subject to measurement and classifi cation requirements outlined under cash fl ow hedges. The Corporation’s policy is not to utilize derivative 

fi nancial instruments for trading or speculative purposes.

 At each reporting period, the Corporation will assess whether there is any objective evidence that a fi nancial asset, other than those classifi ed as 

held-for-trading, is impaired.

 The Corporation immediately expenses any transaction costs incurred in relation to the acquisition of fi nancial assets and liabilities.

(h) Cash fl ow hedges 

 The Corporation uses various fi nancial derivative instruments, such as forwards, swaps, collars and call options, to manage fl uctuations in 

foreign exchange rates and jet fuel prices. 

 The Corporation’s derivatives that have been designated and qualify for hedge accounting are classifi ed as cash fl ow hedges. The Corporation 

formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy 

for undertaking the hedge transaction. This process includes linking all derivatives that are designated in a cash fl ow hedging relationship to 

a specifi c fi rm commitment or forecasted transaction. The Corporation also formally assesses, both at inception and at every reporting date, 

whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in cash fl ows of hedged items and 

whether those derivatives may be expected to remain highly effective in future periods.

 Under cash fl ow hedge accounting, the effective portion of the change in the fair value of the hedging instrument is recognized in other 

comprehensive income (OCI), while the ineffective portion is recognized in non-operating income (expense). Upon maturity of the fi nancial derivative 

instrument, the effective gains and losses previously recognized in accumulated other comprehensive income (AOCI) are recorded in net earnings 

under the same caption as the hedged item.

 If the hedging relationship ceases to qualify for cash fl ow hedge accounting, any change in fair value of the instrument from the point it ceases to 

qualify is recorded in non-operating income (expense). Amounts previously recorded in AOCI will remain in AOCI until the anticipated transaction 

occurs, at which time, the amount is recorded in net earnings under the same caption as the hedged item. If the transaction is no longer expected 

to occur, amounts previously recorded in AOCI will be reclassifi ed to non-operating income (expense).

(i) Foreign currency

 Monetary assets and liabilities, denominated in foreign currencies, are translated into Canadian dollars at the rate of exchange in effect at the 

balance sheet date, with any resulting gain or loss being included in the consolidated statement of earnings. Non-monetary assets, non-monetary 

liabilities, and revenues and expenses arising from transactions denominated in foreign currencies are translated into Canadian dollars at the 

rates prevailing at the time of the transaction. 

(j) Cash and cash equivalents

 Cash and cash equivalents consist of cash and short-term investments that are highly liquid in nature and have a maturity date of one year or 

less, with the majority having a term of less than 91 days. 
WestJet 2010 Annual Report 69

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

1. Summary of signifi cant accounting policies (continued) 

(k) Inventory

 Inventories are valued at the lower of cost and net realizable value, with cost being determined on a fi rst-in, fi rst-out basis. The Corporation’s 

inventory balance consists of aircraft fuel, de-icing fl uid and retail merchandise. Aircraft expendables and consumables are expensed as acquired.

(l) Property and equipment

 Property and equipment is stated at cost and depreciated to its estimated residual value. Assets under capital leases are initially recorded at the 

present value of minimum lease payments at the inception of the lease. 

Asset class Basis Rate

Aircraft, net of estimated residual value Cycles Cycles fl own

Live satellite television included in aircraft Straight-line 10 years/Term of lease

Ground property and equipment Straight-line 3 to 25 years

Spare engines and parts, net of estimated residual value Straight-line 20 years

Buildings Straight-line 40 years

Leasehold improvements Straight-line Term of lease

Assets under capital leases Straight-line Term of lease

 Aircraft are depreciated over a range of 30,000 to 50,000 cycles. One cycle is defi ned as one fl ight, counted by the aircraft leaving the ground and 

landing. Estimated residual values of the Corporation’s aircraft range between $4,000 and $6,000.

 Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be 

recoverable. When events or circumstances indicate that the carrying amount of property and equipment may not be recoverable, the long-lived 

assets are tested for recoverability by comparing the undiscounted future cash fl ows to the carrying amount of the asset or group of assets. If 

the total of the undiscounted future cash fl ows is less than the carrying amount of the property and equipment, the amount of any impairment 

loss is determined as the amount by which the carrying amount of the asset exceeds the fair value of the asset. The impairment loss is then 

recognized in net earnings. Fair value is defi ned as the amount of the consideration that would be agreed upon in an arm’s-length transaction 

between knowledgeable, willing parties who are under no compulsion to act.

(m) Intangible assets

 Included in intangible assets are costs related to software. Software is carried at cost less accumulated amortization and is amortized on a 

straight-line basis over its useful life of fi ve years. Intangible assets are reviewed for impairment when events or changes in circumstances 

indicate that the carrying value may not be recoverable. Should the carrying amount of the asset exceed the fair value, the Corporation would 

recognize an impairment loss and reduce the carrying amount to fair value.

(n) Maintenance costs

 Maintenance and repairs, including major overhauls, are charged to maintenance expense as they are incurred. 

 Aircraft parts that are deemed to be beyond economic repair are disposed of, and the remaining net book values of these parts are included in 

maintenance expense. 

 Recovery of costs associated with parts and labour covered under warranty are recognized as an offset to maintenance expense. 

(o) Leases

 The Corporation classifi es leases as either a capital lease or an operating lease. Leases that transfer substantially all of the benefi ts and risks 

of ownership to the Corporation are accounted for as capital leases. Assets under capital leases are depreciated on a straight-line basis over the 

term of the lease. Rental payments under operating leases are expensed as incurred. 
70 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

1. Summary of signifi cant accounting policies (continued) 

(o) Leases (continued)

 The Corporation provides for asset retirement obligations to return leased aircraft to certain standard conditions as specifi ed within the 

Corporation’s lease agreements. The lease return costs are accounted for in accordance with the asset retirement obligation requirements; 

they are initially measured at fair value and capitalized to property and equipment as an asset retirement cost and depreciated over the term of 

the lease.

(p) Capitalized costs

 Costs associated with assets under development, which have probable future economic benefi t, can be clearly defi ned and measured, and are 

incurred for the construction or development of new assets or technologies, are capitalized. These costs are not amortized until the asset is 

substantially complete and ready for its intended use, at which time, they are amortized over the life of the underlying asset. 

 Interest attributable to funds used to fi nance property and equipment is capitalized to the related asset until the point of commercial use.

(q) Future income tax 

 The Corporation uses the asset and liability method of accounting for future income taxes. Under this method, current income taxes are 

recognized for the estimated income taxes payable for the current year. Future income tax assets and liabilities are recognized for temporary 

differences between the tax and accounting bases of assets and liabilities, calculated using the currently enacted or substantively enacted tax 

rates anticipated to apply in the period that the temporary differences are expected to reverse. Future income tax infl ows and outfl ows are subject 

to estimation in terms of both timing and amount of future taxable earnings. Should these estimates change, the carrying value of income tax 

assets or liabilities may change.

(r) Stock-based compensation plans

 Grants under the Corporation’s stock-based compensation plans are accounted for in accordance with the fair-value-based method of 

accounting. For stock-based compensation plans that will settle through the issuance of equity, the fair value of the option or unit is determined 

on the grant date using a valuation model and recorded as compensation expense over the period that the stock option or unit vests, with a 

corresponding increase to contributed surplus. The fair value of stock options is estimated on the date of grant using the Black-Scholes option 

pricing model, and the fair value of the Corporation’s equity-based share units is determined based on the market value of the Corporation’s 

voting shares on the date of the grant. Upon the exercise or settlement of stock options and units, consideration received, together with amounts 

previously recorded in contributed surplus, are recorded as an increase in share capital.

 Stock-based compensation plans that will be settled in cash are accounted for as liabilities based on the intrinsic value of the awards. Compensation 

expense is accrued over the vesting period of the award, based on the difference between the market value of the Corporation’s voting shares and 

the exercise price of the award, if any. Fluctuations in the market value of the Corporation’s voting shares, determined based on the closing voting 

share price on the last trading day of each reporting period, will result in a change to the accrued compensation expense, which is recognized 

in the period in which the fl uctuation occurs.

 The Corporation does not incorporate an estimated forfeiture rate for stock options or share units that will not vest, but rather accounts for actual 

forfeitures as they occur.

For employees eligible to retire during the vesting period, compensation expense is recognized over the period from the grant date to the retirement 

eligibility date. In instances where an employee is eligible to retire on the grant date, compensation expense is recognized immediately.

(s) Per share amounts

 Basic per share amounts are calculated using the weighted average number of shares outstanding during the year. Diluted per share amounts 

are calculated based on the treasury stock method, which assumes that the total proceeds obtained on the exercise of options and share units 

and the unamortized portion of stock-based compensation on stock options and share units would be used to purchase shares at the average 

price during the period. The weighted average number of shares outstanding is then adjusted by the net change.
WestJet 2010 Annual Report 71

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

1. Summary of signifi cant accounting policies (continued) 

(t) Comparative amounts

 Certain prior-period balances have been reclassifi ed to conform to the current period’s presentation.

2. Recent accounting pronouncements and changes

International fi nancial reporting standards (IFRS) 

 On February 13, 2008, the Accounting Standards Board (AcSB) confi rmed that the changeover to IFRS from Canadian GAAP will be required for 

publicly accountable enterprises for interim and annual fi nancial statements, effective for fi scal years beginning on or after January 1, 2011, 

including comparatives for 2010. The objective is to improve fi nancial reporting by having a single set of accounting standards that are comparable 

with other entities on an international basis. The transition from current Canadian GAAP to IFRS is a signifi cant undertaking that will materially 

affect the Corporation’s reported fi nancial position and results of operations. The Corporation continues to monitor standards developments 

issued by the International Accounting Standards Board and the AcSB, as well as regulatory developments issued by the Canadian Securities 

Administrators, which may affect the timing, nature or disclosure of its adoption of IFRS.

3. Capital management

 The Corporation’s policy is to maintain a strong capital base in order to maintain investor, creditor and market confi dence and to sustain the 

future development of the airline. The Corporation manages its capital structure and makes adjustments to it in light of changes in economic 

conditions and the risk characteristics of the underlying assets. 

 In order to maintain or adjust the capital structure, the Corporation may, from time to time, purchase shares for cancellation pursuant to normal 

course issuer bids, issue new shares, pay dividends and adjust current and projected debt levels. 

 In the management of capital, the Corporation includes shareholders’ equity (excluding accumulated other comprehensive loss (AOCL)), long-term 

debt, capital leases, cash and cash equivalents and the Corporation’s off-balance-sheet obligations related to its aircraft operating leases, all of 

which are presented in detail below.

 The Corporation monitors its capital structure on a number of bases, including adjusted debt-to-equity and adjusted net debt to earnings before 

interest, taxes, depreciation and aircraft rent (EBITDAR). EBITDAR is a non-GAAP fi nancial measure commonly used in the airline industry to 

evaluate results by excluding differences in the method by which an airline fi nances its aircraft. In addition, the Corporation will adjust EBITDAR 

for one-time special items, for non-operating gains and losses on derivatives and for gains and losses on foreign exchange. The calculation of 

EBITDAR is a measure that does not have a standardized meaning prescribed under GAAP and is therefore not likely to be comparable to similar 

measures presented by other issuers. The Corporation adjusts debt to include its off-balance-sheet aircraft operating leases. Common industry 

practice is to multiply the trailing 12 months of aircraft leasing expense by 7.5 to derive a present-value debt equivalent. The Corporation defi nes 

adjusted net debt as adjusted debt less cash and cash equivalents. The Corporation defi nes equity as the sum of share capital, contributed 

surplus and retained earnings, and excludes AOCL.
72 WestJet 2010 Annual Report

3. Capital management (continued)

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

2010 2009 Change

Adjusted debt-to-equity

 Long-term debt(i) $ 1,047,177 $ 1,219,777 $ (172,600)

 Obligations under capital leases(ii) 3,357 4,102 (745)

 Off-balance-sheet aircraft leases(iii) 1,066,815 779,655 287,160 

Adjusted debt $ 2,117,349 $ 2,003,534 $ 113,815 

 Total shareholders’ equity 1,507,679 1,388,928 118,751 

 Add: AOCL 10,470 14,852 (4,382)

Adjusted equity $ 1,518,149 $ 1,403,780 $ 114,369 

Adjusted debt-to-equity 1.39 1.43 (2.8%)

Adjusted net debt to EBITDAR(iv)

Net earnings $ 136,720 $ 98,178 $ 38,542 

Add:

 Net interest(v) 50,254 62,105 (11,851)

 Taxes 59,947 38,618 21,329 

 Depreciation and amortization 132,894 141,303 (8,409)

 Aircraft leasing 142,242 103,954 38,288 

 Other(vi) 814 10,478 (9,664)

EBITDAR $ 522,871 $ 454,636 $ 68,235 

Adjusted debt (as above) 2,117,349 2,003,534 113,815 

Less: Cash and cash equivalents (1,187,899) (1,005,181) (182,718)

Adjusted net debt $ 929,450 $ 998,353 $ (68,903)

Adjusted net debt to EBITDAR 1.78 2.20 (19.1%)

(i) As at December 31, 2010, long-term debt includes the current portion of long-term debt of $183,681 (2009 – $171,223) and long-term debt of $863,496 

(2009 – $1,048,554).

(ii) As at December 31, 2010, obligations under capital leases includes the current portion of obligations under capital leases of $108 (2009 – $744) and obligations 

under capital leases of $3,249 (2009 – $3,358).

(iii) Off-balance-sheet aircraft leases is calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. As at December 31, 2010, the trailing 

12 months of aircraft leasing costs totalled $142,242 (2009 – $103,954).

(iv) The trailing 12 months are used in the calculation of EBITDAR.

(v) As at December 31, 2010, net interest includes the trailing 12 months of interest income of $9,910 (2009 – $5,601) and the trailing 12 months of interest expense of 

$60,164 (2009 – $67,706).

(vi) As at December 31, 2010, other includes the trailing 12 months foreign exchange loss of $780 (2009 – loss of $12,306) and the trailing 12 months of non-operating 

loss on derivatives of $34 (2009 – gain of $1,828).

 As at December 31, 2010 and 2009, the Corporation’s internal targets were an adjusted debt-to-equity measure of no more than 3.00 and an 

adjusted net debt to EBITDAR of no more than 3.00. As at December 31, 2010, the Corporation’s adjusted debt-to-equity ratio improved by 2.8% 

when compared to 2009, mainly due to the increase in shareholders’ equity as a result of net earnings more than offsetting the net increase in the 

Corporation’s aircraft fi nancing. As at December 31, 2010, the Corporation’s adjusted net debt to EBITDAR improved by 19.1% when compared to 

2009, mainly attributable to the increase in cash and cash equivalents and EBITDAR.

 As part of the long-term debt agreements for the Calgary hangar facility and one fl ight simulator, the Corporation monitors certain fi nancial 

covenants to ensure compliance with these debt agreements. As at December 31, 2010, the Corporation was in compliance with these fi nancial 

covenants. There are no fi nancial covenant compliance requirements for the facilities guaranteed by the Export-Import Bank of the United States 

(Ex-Im Bank).
WestJet 2010 Annual Report 73

3. Capital management (continued)

 During the year ended December 31, 2010, the Corporation announced a dividend program and declared an initial quarterly dividend of $0.05 per 

common voting share and variable voting share to be paid on January 21, 2011, to shareholders of record on December 15, 2010. 

 Furthermore, during the year ended December 31, 2010, the Corporation initiated a normal course issuer bid to purchase outstanding shares in 

the open market. See note 10, Share capital for further disclosure.

 There were no other changes in the Corporation’s approach to capital management during the year ended December 31, 2010.

4. Cash and cash equivalents

 As at December 31, 2010, cash and cash equivalents includes bank balances of $229,817 (2009 – $191,966) and short-term investments of 

$958,082 (2009 – $813,215). Included in these balances, as at December 31, 2010, the Corporation has US-dollar cash and cash equivalents 

totalling US $66,194 (2009 – US $32,858) and short-term investments of US $45,157 (2009 – US $nil).

 As at December 31, 2010, cash and cash equivalents includes total restricted cash of $28,583 (2009 – $10,192). Included in this amount is $21,578 

(2009 – $4,564), representing cash held in trust by WestJet Vacations Inc., a wholly owned subsidiary of the Corporation, in accordance with 

regulatory requirements governing advance ticket sales for certain travel-related activities; $6,691 (2009 – $4,491) for security on the Corporation’s 

facilities for letters of guarantee; and, in accordance with U.S. regulatory requirements, US $315 (2009 – US $1,082) in restricted cash, representing 

cash not yet remitted for passenger facility charges.

5. Property and equipment

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

2010 Cost

Accumulated 

depreciation Net book value

Aircraft $ 2,471,806 $ 622,997 $ 1,848,809

Ground property and equipment 121,814 61,895 59,919

Spare engines and parts 106,198 28,251 77,947

Buildings 135,817 13,154 122,663

Leasehold improvements 9,965 3,348 6,617

Assets under capital leases 4,413 1,170 3,243

2,850,013 730,815 2,119,198

Deposits on aircraft 98,344 — 98,344

Assets under development 9,143 — 9,143

$ 2,957,500 $ 730,815 $ 2,226,685

2009 Cost

Accumulated 

depreciation Net book value

Aircraft $ 2,456,988 $ 513,521 $ 1,943,467

Ground property and equipment 120,031 52,804 67,227

Spare engines and parts 100,567 24,360 76,207

Buildings 136,228 9,843 126,385

Leasehold improvements 9,910 2,877 7,033

Assets under capital leases 5,882 2,210 3,672

2,829,606 605,615 2,223,991

Deposits on aircraft 83,489 — 83,489

Assets under development 86 — 86

$ 2,913,181 $ 605,615 $ 2,307,566
74 WestJet 2010 Annual Report

5. Property and equipment (continued)

 For the year ended December 31, 2010, the Corporation recognized $128,284 (2009 − $135,702) of depreciation expense in relation to property 

and equipment. Included in aircraft costs are asset retirement costs for aircraft under operating leases totalling $5,411 (2009 – $4,710) and 

associated accumulated depreciation of $1,912 (2009 – $1,314). These amounts are being depreciated on a straight-line basis over the term of 

each lease. During the year ended December 31, 2010, the Corporation recognized depreciation expense of $598 (2009 – $468) in relation to the 

asset retirement costs.

6. Intangible assets

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

Cost

Accumulated 

amortization Net book value

2010

 Software $ 43,549 $ 30,531 $ 13,018

2009

 Software $ 40,392 $ 26,305 $ 14,087

2010 2009

Term loans – purchased aircraft (i) $ 1,005,678 $ 1,168,381

Term loan – purchased aircraft (ii) 25,997 33,631

Term loan – fl ight simulator (iii) 5,575 6,392

Term loan – live satellite television equipment (iv) 41 493

Term loan – Calgary hangar facility (v) 8,707 9,202

Term loan – Calgary hangar facility (vi) 1,179 1,678

1,047,177 1,219,777

Current portion 183,681 171,223

$ 863,496 $ 1,048,554

 All of the Corporation’s intangible assets relate to purchased software. Included in the balance of software is $2,151 (2009 − $4,085) for 

acquired software that is being developed and is not yet being amortized. For the year ended December 31, 2010, the Corporation recognized 

$4,610 (2009 – $5,601) of amortization expense in relation to intangible assets.

7. Long-term debt

(i) 52 individual term loans, amortized over a 12-year term, each repayable in quarterly principal instalments ranging from $668 to $955, plus 

fi xed interest at a weighted average rate of 5.30%, maturing between 2014 and 2020. These facilities are guaranteed by Ex-Im Bank and 

secured by one 800-series aircraft, 38 700-series aircraft and 13 600-series aircraft.

(ii) Term loan of US $26,137 repayable in quarterly instalments of US $1,788, including fi xed interest at a rate of 4.315%, maturing in 2014. This 

facility is secured by one 800-series aircraft.

(iii) Term loan repayable in monthly instalments of $93, including fl oating interest at the bank’s prime rate plus 0.88%, with an effective interest 

rate of 3.88% as at December 31, 2010, maturing in July 2011 with a fi nal payment of $5,123, secured by one fl ight simulator.

(iv) Term loan amortized over a fi ve-year term, repayable in quarterly principal instalments of $41, plus fl oating interest at the Canadian LIBOR 

rate plus 0.08%, with an effective interest rate of 1.30% as at December 31, 2010, maturing in January 2011. This facility is for the purchase 

of live satellite television equipment, is guaranteed by the Ex-Im Bank and is secured by one 700-series aircraft.

(v) Term loan repayable in monthly instalments of $108, including fi xed interest at 9.03%, maturing in April 2011 with a fi nal payment of $8,575, 

secured by the Calgary hangar facility.
WestJet 2010 Annual Report 75

7. Long-term debt (continued)

(vi) Term loan repayable in monthly instalments of $50, including fl oating interest at the bank’s prime rate plus 0.50%, with an effective interest 

rate of 3.50% as at December 31, 2010, maturing in 2013, secured by the Calgary hangar facility.

 The net book value of the property and equipment pledged as collateral for the Corporation’s secured borrowings was $1,819,095 as at 

December 31, 2010 (2009 – $1,925,672).

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

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

2011 $ 183,681

2012 169,642

2013 169,358

2014 169,626

2015 132,170

2016 and thereafter 222,700

$ 1,047,177

2011 $ 282

2012 245

2013 245

2014 245

2015 245

2016 and thereafter 4,616

Total minimum lease payments $ 5,878

Less: Weighted average imputed interest at 5.28% (2,521)

Net minimum lease payments 3,357

Less: Current portion of obligations under capital leases (108)

Obligations under capital leases $ 3,249

 Held within the special-purpose entities, as identifi ed in note 1, Summary of signifi cant accounting policies, are liabilities of $1,005,719 

(2009 – $1,168,907) related to the acquisition of the 52 purchased aircraft and live satellite television equipment, which are included above in the 

long-term debt balances.

8. Obligations under capital leases 

 The Corporation has entered into capital leases relating to a fuel storage facility and ground handling equipment. The obligations are as follows:
76 WestJet 2010 Annual Report

9. Income taxes

 The provision for income taxes differs from that which would be expected by applying the combined federal and provincial statutory rates. 

A reconciliation of the difference is as follows:

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

2010 2009

Earnings before income taxes $ 196,667 $ 136,796

Income tax rate 29.39% 30.62%

Expected income tax provision 57,800 41,887

Add (deduct):

 Non-deductible expenses 2,380 5,545

 Non-deductible stock-based compensation 4,584 4,112

 Effect of tax rate changes (5,609) (18,206)

 Other 792 5,280

Actual income tax provision $ 59,947 $ 38,618

2010 2009

Future income tax liability:

 Property and equipment $ (350,506) $ (327,783)

 Deferred partnership income (43,437) (11,913)

Future income tax asset:

 Share issue costs 1,143 1,561

 Net unrealized loss on effective portion of derivatives designated in a hedging relationship 919 2,120

 Non-capital losses 45,010 50,200

 Credit carryforwards 10,857 9,376

$ (336,014) $ (276,439)

The net future tax liability is presented on the consolidated 

balance sheet as follows:

 Future income tax Current assets 1,396 2,560

 Future income tax Long-term liabilities (337,410) (278,999)

$ (336,014) $ (276,439)

 The Corporation has included in its reconciliation an amount of $5,609 (2009 – $18,206) for the effect of tax rate changes. This amount refl ects the 

impact of changes to the timing around when the Corporation expects certain temporary differences to reverse, and differences between current 

statutory rates used in the reconciliation and future rates at which the future income tax liability is recorded.

 The components of the net future tax liability are as follows:

 The Corporation has recognized a benefi t on $168,663 (2009 – $188,474) of non-capital losses that are available for carryforward to reduce 

taxable income in future years. These losses will begin to expire in 2014. The Corporation has also recognized a benefi t of $10,857 (2009 – $9,376) 

for unused corporate minimum tax credits, which are available for carryforward to reduce taxes payable in future years. These credits begin to 

expire in 2013.
WestJet 2010 Annual Report 77

10. Share capital

(a) Authorized

Unlimited number of common voting shares

 The common voting shares may be owned and controlled only by Canadians and shall confer the right to one vote per common voting share at all 

meetings of shareholders of the Corporation.

 If a common voting share becomes benefi cially owned or controlled by a person who is not a Canadian, such common voting share shall be 

converted into one variable voting share automatically and without any further act of the Corporation or the holder.

Unlimited number of variable voting shares

 The variable voting shares may be benefi cially owned and controlled only by a person who is not Canadian; they are entitled to one vote per variable 

voting share unless (i) the number of issued and outstanding variable voting shares exceeds 25% of the total number of all issued and outstanding 

variable voting shares and common voting shares collectively, including securities currently convertible into such a share and currently exercisable 

options and rights to acquire such shares (or any higher percentage the Governor in Council may specify pursuant to the Canada Transportation Act); 

or (ii) the total number of votes cast by or on behalf of the holders of variable voting shares at any meeting exceeds 25% (or any higher percentage 

the Governor in Council may specify pursuant to the Canada Transportation Act) of the total number of votes cast that may be cast at such meeting.

 If either of the thresholds described in the paragraph above is surpassed at any time, the vote attached to each variable voting share will decrease 

automatically and without further act or formality to equal the maximum permitted vote per variable voting share. In the circumstance described 

in (i) in the paragraph above, the variable voting shares as a class cannot carry more than 25% (or any higher percentage the Governor in Council 

may specify pursuant to the Canada Transportation Act) of the aggregate votes attached to all variable voting shares and common voting shares 

collectively, including securities currently convertible into such a share and currently exercisable options and rights to acquire such shares. In 

the circumstance described in (ii) in the paragraph above, the variable voting shares as a class cannot, for a given shareholders’ meeting, carry 

more than 25% (or any higher percentage the Governor in Council may specify pursuant to the Canada Transportation Act) of the total number of 

votes that can be exercised at the meeting.

 Each issued and outstanding variable voting share shall be automatically converted into one common voting share without any further intervention 

on the part of the Corporation or of the holder if (i) the variable voting share is or becomes owned and controlled by a Canadian, or (ii) the 

provisions contained in the Canada Transportation Act relating to foreign ownership restrictions are repealed and not replaced with other similar 

provisions in applicable legislation.

Unlimited number of non-voting shares and unlimited number of non-voting fi rst, second and third preferred shares

 The non-voting shares and non-voting preferred shares may be issued, from time to time, in one or more series, with each series consisting of 

such number of non-voting shares and non-voting preferred shares as determined by the Corporation’s Board of Directors, who may also fi x the 

designations, rights, privileges, restrictions and conditions attached to the shares of each series of non-voting shares and non-voting preferred 

shares. There are no non-voting shares or non-voting preferred shares issued and outstanding.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)
78 WestJet 2010 Annual Report

10. Share capital (continued)

(b) Issued and outstanding

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

2010 2009

Number Amount Number Amount

Common and variable voting shares:

Balance, beginning of year 144,359,383 $ 633,075 127,913,580 $ 452,885

Issuance of shares pursuant to stock option plans 741,014 520 29,685 —

Stock-based compensation expense on stock 

options exercised — 21,860 — 1,561

Issuance of shares pursuant to key employee 

and pilot plan 2,298 — — —

Stock-based compensation for settled key employee 

and pilot units — 29 — —

Issuance of shares pursuant to executive share 

unit plan 194,449 — 40,159 —

Stock-based compensation expense on executive 

share units exercised — 2,748 — 569

Issued on public offering — — 15,398,500 172,463

Issuance of shares pursuant to employee share 

purchase plan — — 977,459 11,071

Share issue costs — — — (7,468)

Tax effect of share issue costs — — — 1,994

Shares repurchased (2,338,730) (10,595) — —

Balance, end of year 142,958,414 $ 647,637 144,359,383 $ 633,075

 As at December 31, 2010, the number of common voting shares outstanding was 137,489,456 (2009 – 138,763,891) and the number of variable 

voting shares outstanding was 5,468,958 (2009 – 5,595,492).

 On November 2, 2010, the Corporation fi led a notice with the Toronto Stock Exchange (TSX) to make a normal course issuer bid to purchase 

outstanding shares on the open market. As approved by the TSX, the Corporation is authorized to purchase up to 7,264,820 shares (representing 

5% of its issued and outstanding shares at the time of the bid) during the period of November 5, 2010, to November 4, 2011, or until such earlier 

time as the bid is completed or terminated at the option of the Corporation. Any shares the Corporation purchases under the bid will be 

purchased on the open market through the facilities of the TSX at the prevailing market price at the time of the transaction. Shares acquired 

under the bid will be cancelled.

 During the year ended December 31, 2010, the Corporation purchased 2,338,730 shares under the bid for total consideration of $31,391. The 

average book value of the shares repurchased of $4.53 per share was charged to share capital with the $20,796 excess of the market price over 

the average book value, including transaction costs, charged to retained earnings.

(c) Per share amounts

 The following table summarizes the shares used in calculating earnings per share:

2010 2009

Weighted average number of shares outstanding – basic 144,852,548 132,130,009

Effect of dilutive employee stock options and share unit plans 267,348 131,761

Weighted average number of shares outstanding – diluted 145,119,896 132,261,770
WestJet 2010 Annual Report 79

10. Share capital (continued)

(c) Per share amounts (continued)

 For the year ended December 31, 2010, 6,580,005 (2009 – 10,455,457) employee stock options were not included in the calculation of dilutive 

potential shares as the result would be anti-dilutive.

(d) Stock option plan

 The Corporation has a stock option plan, whereby at December 31, 2010, 11,693,868 (2009 – 12,228,611) voting shares were reserved for issuance 

to offi cers and employees of the Corporation, subject to the following limitations:

(i) the number of common voting shares reserved for issuance to any one optionee will not exceed 5% of the issued and outstanding voting 

shares at any time;

(ii) the number of common voting shares reserved for issuance to insiders shall not exceed 10% of the issued and outstanding voting shares; and

(iii) the number of common voting shares issuable under the stock option plans, which may be issued within a one-year period, shall not exceed 

10% of the issued and outstanding voting shares at any time.

 Stock options are granted at a price that equals the market value of the Corporation’s voting shares, have a term of up to fi ve years and vest on 

either the fi rst, second or third anniversary from the date of grant.

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

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

Outstanding options Exercisable options

Range of 

exercise prices Number outstanding

Weighted average 

remaining life (years)

Weighted average 

exercise price

Number 

exercisable

Weighted average 

exercise price

$11.00–$12.50 2,813,635 2.38 $ 12.47 56,818 $ 12.49

$12.51–$15.50 2,017,658 3.33 12.81 39,208 14.51

$15.51–$19.99 3,252,138 0.90 16.58 3,252,138 16.58

8,083,431 2.03 $ 14.21 3,348,164 $ 16.49

2010 2009

Number of options

Weighted average 

exercise price Number of options

Weighted average 

exercise price

Stock options outstanding, beginning of year 11,521,844 $ 13.42 11,918,168 $ 13.90

 Granted 2,024,143 12.78 3,011,148 12.47

 Exercised (5,100,279) 11.83 (376,596) 11.83

 Forfeited (32,607) 12.58 (34,487) 13.25

 Expired (329,670) 14.77 (2,996,389) 14.61

Stock options outstanding, end of year 8,083,431 $ 14.21 11,521,844 $ 13.42

Exercisable, end of year 3,348,164 $ 16.49 6,647,525 $ 12.90

 Under the terms of the Corporation’s stock option plan, with the approval of the Corporation, option holders can either (i) elect to receive shares 

by delivering cash to the Corporation in the amount of the options, or (ii) choose a cashless settlement alternative, whereby they can elect to 

receive a number of shares equivalent to the market value of the options over the exercise price. For the year ended December 31, 2010, option 

holders exercised 5,056,288 (2009 – 376,596) options on a cashless settlement basis and received 697,023 (2009 – 29,685) shares. For the year 

ended December 31, 2010, 43,991 options (2009 – nil) were exercised on a cash basis.

 The following table summarizes the options outstanding and exercisable as at December 31, 2010:
80 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

10. Share capital (continued)

(d) Stock option plan (continued)

 As new options are granted, the fair value of the options is 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 to share capital.

 The fair value of options granted during the years ended December 31, 2010 and 2009, and the assumptions used in their determination are 

as follows:

2010 2009

Weighted average fair value per option $ 4.02 $ 3.82

Weighted average risk-free interest rate 2.5% 1.7%

Weighted average volatility 38% 39%

Expected life (years) 3.6 3.6

Weighted average dividend yield 0.02% —

2010

Number of RSUs

Weighted 

average grant 

date fair value

RSUs outstanding, beginning of period — $ —

 Granted 177,440 12.77

 Settled (2,298) 12.77

 Forfeited (4,013) 12.77

RSUs outstanding, end of period 171,129 $ 12.77

Vested, end of period — $ —

(e) Key employee and pilot plan

 During 2010, shareholders of the Corporation approved a new stock-based compensation plan, the key employee and pilot (KEP) plan, whereby 

restricted share units (RSU) are issued to key employees and pilots of the Corporation. The fair market value of the RSUs at the time of grant is 

equal to the weighted average trading price of the Corporation’s voting shares for the fi ve trading days immediately preceding the grant date. 

Each RSU entitles the employee to receive payment upon vesting in the form of voting shares of the Corporation. The Corporation intends to 

settle all RSUs with shares either through the purchase of voting shares on the open market or the issuance of new shares from treasury; 

however, wholly at its own discretion, the Corporation may settle the units in cash. The RSUs time vest at the end of a two- or three-year period, 

with compensation expense being recognized in net earnings on a straight-line basis over the vesting period. As at December 31, 2010, 997,702 

voting shares of the Corporation were reserved for issuance under the KEP plan. For the year ended December 31, 2010, the Corporation settled 

all RSUs with shares issued from treasury.

(f) Executive share unit plan

 The Corporation has an equity-based executive share unit (ESU) plan, whereby RSUs and performance share units (PSU) may be issued to senior 

executive offi cers. As at December 31, 2010, 805,551 (2009 – 509,841) voting shares of the Corporation were reserved for issuance under the 

ESU plan. 

 The fair market value of the RSUs and PSUs at the time of grant is equal to the weighted average trading price of the Corporation’s voting shares 

for the fi ve trading days immediately preceding the grant date. 
WestJet 2010 Annual Report 81

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

10. Share capital (continued) 

(f) Executive share unit plan (continued)

 Each RSU entitles the senior executive offi cers to receive payment upon exercise in the form of voting shares of the Corporation. RSUs time vest 

at the end of a three-year term, with compensation expense being recognized in net earnings over the vesting period. 

 Each PSU entitles the senior executive offi cers to receive payment upon exercise in the form of voting shares of the Corporation. PSUs time vest 

at the end of a three-year term and incorporate performance criteria based on achieving compounded average diluted earnings per share growth 

rate targets established at the time of grant. Compensation expense is recognized in net earnings over the vesting period based on the number 

of units expected to vest.

2010

RSUs PSUs

Number of units

Weighted average 

grant date fair value Number of units

Weighted average 

grant date fair value

Units outstanding, beginning of year 143,461 $ 14.10 191,276 $ 14.10

 Granted 127,750 13.57 119,323 13.78

 Exercised (83,336) 14.13 (111,113) 14.13

Units outstanding, end of year 187,875 $ 13.73 199,486 $ 13.90

Vested, end of year 17,211 $ 14.16 22,948 $ 14.16

2009

RSUs PSUs

Number of units

Weighted average 

grant date fair value Number of units

Weighted average 

grant date fair value

Units outstanding, beginning of year 55,181 $ 19.37 73,574 $ 19.37

 Granted 105,491 11.36 140,650 11.36

 Exercised (17,211) 14.16 (22,948) 14.16

Units outstanding, end of year 143,461 $ 14.10 191,276 $ 14.10

Vested, end of year — $ — — $ —

(g) Stock-based compensation expense

 The following table summarizes stock-based compensation expense for the Corporation’s equity-based plans:

2010 2009

Stock option plan $ 11,103 $ 12,045

Key employee and pilot plan 977 —

Executive share unit plan 3,588 1,395

Total stock-based compensation expense $ 15,668 $ 13,440

Presented on the consolidated statement of earnings as follows:

Flight operations and navigational charges $ 8,956 $ 8,248

Marketing, general and administration 6,712 5,192

Total stock-based compensation expense $ 15,668 $ 13,440
82 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

10. Share capital (continued) 

(h) 2007 restricted share units

 The Corporation has a cash-settled RSU plan, whereby RSUs may be issued to executive offi cers of the Corporation. Each RSU entitles a participant 

to receive cash equal to the market value of the equivalent number of shares of the Corporation. Compensation expense is accrued over the 

vesting period of the RSU. Fluctuations in the market value are recognized in the period in which the fl uctuations occur. For the year ended 

December 31, 2010, $296 (2009 – $181) of expense was included in marketing, general and administration expense. For the year ended 

December 31, 2010, the Corporation granted 21,282 (2009 – nil) RSUs and settled 82,964 (2009 − 6,376) RSUs for total cash payment of $1,060 

(2009 − $78). As at December 31, 2010, nil (2009 – 61,682) RSUs were outstanding.

(i) Deferred share units

 The Corporation has a cash-settled deferred share unit (DSU) plan as an alternative form of compensation for independent members of the 

Corporation’s Board of Directors. Each DSU entitles a participant to receive cash equal to the market value of the equivalent number of shares 

of the Corporation. The number of DSUs granted is determined based on the closing price of the Corporation’s common shares on the trading 

day immediately prior to the date of grant. Total compensation expense is recognized at the time of grant. Fluctuations in the market value are 

recognized in the period in which the fl uctuations occur. For the year ended December 31, 2010, 20,565 (2009 – 24,324) DSUs were granted, 

with $344 (2009 – $288) of expense included in marketing, general and administration expense. During the year ended December 31, 2010, the 

Corporation settled nil (2009 – 1,392) DSUs for a total cash payment of $nil (2009 – $16). As at December 31, 2010, 60,988 (2009 – 40,423) DSUs 

are vested and outstanding. DSUs are redeemable upon the Director’s retirement from the Board.

(j) Employee share purchase plan

 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, employees may contribute up to a maximum of 20% of their gross pay and acquire voting shares of the Corporation 

at the current fair market value of such shares. Shares acquired for the ESPP are restricted for one year. Employees may offer to sell shares, 

which have not been held for at least one year to the Corporation, four times per year. The purchase price of the voting shares shall be equal 

to 50% of the weighted average trading price of the Corporation’s voting shares for the fi ve trading days immediately preceding the employee’s 

notice to the Corporation. 

 The Corporation has the option to acquire voting shares on behalf of employees through open market purchases or to issue new shares from 

treasury at the current market price, which is determined based on the volume weighted average trading price of the Corporation’s voting shares 

for the fi ve trading days preceding the issuance.

 For the year ended December 31, 2010, all shares were acquired through open market purchases. For the year ended December 31, 2009, the 

Corporation elected to issue a portion of the shares from treasury. During 2009, a total of 977,459 shares were issued at a total market value of 

$11,071 for which no cash was exchanged. The remaining shares for 2009 were acquired through the open market. 

 The Corporation’s share of the contributions in 2010 amounted to $52,643 (2009 – $47,030) and is recorded as compensation expense within the 

related business unit.

11. Related-party transactions

 The Corporation has debt fi nancing and investments in short-term deposits with a fi nancial institution that is related through two common directors, 

one of whom is also the president of the fi nancial institution. As at December 31, 2010, total long-term debt includes an amount of $5,575 

(2009 – $6,392) due to the fi nancial institution. See note 7, Long-term debt, for further disclosure. Included in cash and cash equivalents, as 

at December 31, 2010, are short-term investments of $164,710 (2009 – $143,332) owing from the fi nancial institution. In 2008, the Corporation 

signed a three-year revolving operating line of credit agreement with a banking syndicate, of which one of the members is the related-party 

fi nancial institution. See note 12, Commitments and contingencies, for further information. These transactions occurred in the normal course of 

operations on terms consistent with those offered to arm’s-length parties and are measured at the exchange amount.
WestJet 2010 Annual Report 83

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

11. Related-party transactions (continued)

 The Corporation engaged a relocation fi rm to purchase a single family residence from the President and Chief Executive Offi cer (CEO) for a 

guaranteed price of US $1,525 in accordance with the Corporation’s relocation policy. The relocation fi rm will actively market the residence to 

locate an outside buyer. If the proceeds on the sale of the home to a third party are less than or greater than the guaranteed price, the difference 

between the guaranteed price and the proceeds will accrue to WestJet. The Corporation paid the relocation fi rm’s fees and expenses in 

connection with this transaction, and also agreed to reimburse the offi cer for certain related tax and relocation expenses. The residence is 

located in the United States and the transaction was a result of the offi cer’s move to Canada in conjunction with his appointment to President and 

CEO, effective April 1, 2010. In connection with the relocation, the Corporation granted 38,256 RSUs pursuant to the ESU plan with a total value 

of US $500, which are scheduled to wholly vest on April 1, 2011, the anniversary of the offi cer’s appointment to President and CEO. Upon exercise 

of the RSUs, the Corporation will remit, on his behalf, an amount suffi cient to satisfy any withholding or other tax requirements of such RSUs, 

limited to the withholding tax on the original award amount of US $500. Transactions have been measured at the exchange amount.

12. Commitments and contingencies

(a) Purchased aircraft and live satellite television systems 

 As at December 31, 2010, the Corporation is committed to purchase 38 737-700 aircraft for delivery between 2011 and 2017. The remaining 

estimated amounts to be paid in deposits and purchase prices for the 38 aircraft, as well as amounts to be paid for live satellite television systems 

on purchased and leased aircraft in US dollars and the Canadian-dollar equivalents, are as follows:

USD CAD

2011 $ 72,607 $ 72,217

2012 183,949 182,961

2013 271,896 270,436

2014 289,150 287,597

2015 403,574 401,406

2016 and thereafter 434,764 432,429

$ 1,655,940 $ 1,647,046

USD CAD

2011 $ 186,454 $ 206,983

2012 188,807 202,085

2013 185,535 195,222

2014 184,359 190,423

2015 161,149 166,189

2016 and thereafter 361,979 405,113

$ 1,268,283 $ 1,366,015

 Subsequent to year end, the Corporation took delivery of one 737-700 aircraft. The Corporation did not incur any debt or equity fi nancing for this 

aircraft and funded the entire purchase with cash.

 In addition, subsequent to year end, the Corporation has deferred the deliveries of six 737-700 aircraft from the years 2012 to 2015 into 2017 and 

2018. The total number of the Corporation’s aircraft purchase commitments remains unchanged at 38 737-700 aircraft. These deferrals have not 

been refl ected in the table above.

(b) Operating leases and commitments 

 The Corporation has entered into operating leases and commitments for aircraft, land, buildings, equipment, computer hardware, software 

licences and satellite programming. As at December 31, 2010, the future payments in Canadian dollars, and when applicable the US-dollar 

equivalents, under operating leases and commitments are as follows:
84 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

12. Commitments and contingencies (continued)

(b) Operating leases and commitments (continued)

 As at December 31, 2010, the Corporation is committed to lease an additional three 737-700 aircraft and three 737-800 aircraft for terms ranging 

between eight and 10 years in US dollars. These aircraft have been included in the above totals.

 The Corporation signed a six-year agreement with Bell ExpressVu to provide satellite programming. The agreement commenced in 2004, expires 

in July 2011, and can be renewed for an additional four years. During 2009, the Corporation amended its agreement with LiveTV to install, maintain 

and operate live satellite television on all of the Corporation’s aircraft for a term of 10 years. The minimum commitment amounts associated with 

these agreements have been included in the totals in the table above.

 In 2008, the Corporation signed an agreement with Sabre Airline Solutions (Sabre) to provide the Corporation with a licence to access and use 

Sabre’s reservation system, SabreSonic, for a term of eight years. The minimum contract amounts associated with the reservation system have 

been included in the totals in the table above.

(c) Letters of guarantee

 The Corporation has available two revolving loan credit facilities with a Canadian chartered bank totalling $38,000 (2009 – $38,000). One loan 

facility is unsecured for $8,000, and the other is a facility for $30,000 that requires funds to be assigned and held in cash security for the full value 

of letters of guarantee issued by the Corporation. As at December 31, 2010, $6,691 (2009 – $12,491) of letters of guarantee were issued under 

these facilities. These facilities are secured by a general security agreement and $6,691 (2009 – $4,491) of restricted cash. 

(d) Operating line of credit

 Commencing in the third quarter of 2009, the Corporation has available a three-year revolving operating line of credit with a syndicate of three 

Canadian banks. The line of credit is available to a maximum of $80,750 (2009 − $85,000) and is secured by the Corporation’s Campus facility. 

The line of credit bears interest at prime plus 0.50% per annum, or a bankers’ acceptance rate at 2.0% annual stamping fee or equivalent, and is 

available for general corporate expenditures and working capital purposes. The Corporation is required to pay an annual standby fee of 15 basis 

points, based on the average unused portion of the line of credit for the previous quarter, payable quarterly. As at December 31, 2010, no amounts 

were drawn (2009 – $nil). 

(e) Fuel facility corporations

 The Corporation has entered into nine arrangements whereby it participates under contract in fuel facility corporations, along with other airlines, to 

procure fuel services at major Canadian airports. The fuel facility corporations operate on a cost-recovery basis. The purpose of these corporations 

is to own and fi nance the system that distributes fuel to the contracting airlines, including the leasing of land rights, while providing the contracting 

airlines with preferential service and pricing over non-participating entities. The operating costs, including debt service requirements, of the 

fuel facility corporations are shared pro rata among the contracting airlines. The nine fuel facility corporations are considered variable interest 

entities and have not been consolidated within the Corporation’s accounts. In the remote event that all other contracting airlines withdraw from 

the arrangements and the Corporation remained as sole member, it would be responsible for the costs of the fuel facility corporations, including 

debt service requirements. As at November 30, 2010, the nine fuel facility corporations had combined total assets of approximately $345,523 

(2009 − $341,487) and debt of approximately $312,625 (2009 − $307,825).

(f) Contingencies

 The Corporation is party to legal proceedings and claims that arise during the ordinary course of business. It is the opinion of management that 

the ultimate outcome of these and any outstanding matters will not have a material effect upon the Corporation’s fi nancial position, results of 

operations or cash fl ows.
WestJet 2010 Annual Report 85

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management 

(a) Fair value of fi nancial assets and fi nancial liabilities 

 The Corporation’s fi nancial assets and liabilities consist primarily of cash and cash equivalents, accounts receivable, derivatives both designated 

and not designated in an effective hedging relationship, deposits, accounts payable and accrued liabilities, long-term debt and capital lease 

obligations. The following tables set out the Corporation’s classifi cation and the carrying amount, together with the fair value, for each type of its 

fi nancial assets and liabilities as at December 31, 2010 and 2009:

Fair value Amortized cost Totals

2010

Held-fortrading DerivativesLoans and 

receivables

Other fi nancial

liabilities

Carrying 

amount Fair value

Asset (liability):

Cash and cash equivalents $ 1,187,899 $ — $ — $ — $ 1,187,899 $ 1,187,899

Accounts receivable — — 17,518 — 17,518 17,518

Foreign exchange derivatives(i) — (3,579) — — (3,579) (3,579)

Fuel derivatives(ii) — 4,889 — — 4,889 4,889

Deposits(iii) 28,258 — — — 28,258 28,258

Accounts payable and accrued liabilities(iv) — — — (299,204) (299,204) (299,204)

Long-term debt(v) — — — (1,047,177) (1,047,177) (1,141,961)

Obligations under capital leases(vi) — — — (3,357) (3,357) (3,357)

$ 1,216,157 $ 1,310 $ 17,518 $(1,349,738) $ (114,753) $ (209,537)

Fair value Amortized cost Totals

2009

Held-fortrading DerivativesLoans and 

receivables

Other fi nancial

liabilities

Carrying 

amount Fair value

Asset (liability):

Cash and cash equivalents $ 1,005,181 $ — $ — $ — $ 1,005,181 $ 1,005,181

Accounts receivable — — 27,654 — 27,654 27,654

Foreign exchange derivatives(i) — (1,249) — — (1,249) (1,249)

Fuel derivatives(ii) — (8,667) — — (8,667) (8,667)

Deposits(iii) 27,264 — — — 27,264 27,264

Accounts payable and accrued liabilities(iv) — — — (221,208) (221,208) (221,208)

Long-term debt(v) — — — (1,219,777) (1,219,777) (1,323,120)

Obligations under capital leases(vi) — — — (4,102) (4,102) (4,102)

$ 1,032,445 $ (9,916) $ 27,654 $(1,445,087) $ (394,904) $ (498,247)

(i) Includes $nil (2009 – $181) classifi ed in prepaid expenses, deposits and other, and $3,579 (2009 – $1,430) classifi ed in accounts payable and accrued liabilities. 

(ii) Includes $5,689 (2009 – $96) classifi ed in prepaid expenses, deposits and other, and $800 (2009 – $8,763) classifi ed in accounts payable and accrued liabilities. 

(iii) Includes $14,752 (2009 – $11,249) classifi ed in prepaid expenses, deposits and other, and $13,506 (2009 – $16,015) classifi ed in other assets.

(iv) Excludes fuel derivative liabilities of $800 (2009 – $8,763) and foreign exchange derivative liabilities of $3,579 (2009 – $1,430).

(v) Includes current portion of long-term debt of $183,681 (2009 – $171,223) and long-term portion of $863,496 (2009 – $1,048,554).

(vi) Includes current portion of obligations under capital leases of $108 (2009 – $744) and long-term portion of $3,249 (2009 – $3,358).
86 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued) 

(a) Fair value of fi nancial assets and fi nancial liabilities (continued)

 Section 3862, Financial Instruments – Disclosures, requires an explanation about how fair value is determined for assets and liabilities measured 

in the fi nancial statements at fair value and establishes a hierarchy for which these assets and liabilities must be grouped, based on signifi cant 

levels of input, as follows:

 Level 1: observable inputs, such as quoted prices in active markets;

 Level 2: inputs, other than the quoted market prices in active markets, which are observable, either directly and/or indirectly; and

 Level 3: unobservable inputs for the asset or liability in which little or no market data exists, therefore, requiring an entity to develop its 

own assumptions.

 The following items, shown in the consolidated balance sheet as at December 31, 2010 and 2009, are measured at fair value on a recurring basis 

using level 1 or level 2 inputs. The fair value of the fi nancial assets and liabilities at December 31, 2010, using level 3 inputs, was $nil (2009 − $nil).

2010 Level 1 Level 2 Total

Asset (liability):

 Cash and cash equivalents $ 1,187,899 $ — $ 1,187,899

 Foreign exchange derivatives — (3,579) (3,579)

 Fuel derivatives — 4,889 4,889

 Deposits 28,258 — 28,258

$ 1,216,157 $ 1,310 $ 1,217,467

2009 Level 1 Level 2 Total

Asset (liability):

 Cash and cash equivalents $ 1,005,181 $ — $ 1,005,181

 Foreign exchange derivatives — (1,249) (1,249)

 Fuel derivatives — (8,667) (8,667)

 Deposits 27,264 — 27,264

$ 1,032,445 $ (9,916) $ 1,022,529

 During the years ended December 31, 2010 and 2009, there were no transfers between level 1, level 2 and level 3 classifi ed assets and liabilities.

Cash and cash equivalents: Cash and cash equivalents, classifi ed as level 1 instruments, consist of bank balances and short-term investments, 

primarily highly liquid debt instruments, with terms of up to one year with the majority having terms of less than 91 days. The fair value of cash 

and cash equivalents approximates their carrying values because of their short-term nature.

Accounts receivable and accounts payable and accrued liabilities: The carrying amount of accounts receivable and accounts payable and 

accrued liabilities approximates their fair values because of the short-term nature of the instruments. 

Foreign exchange derivatives: Foreign exchange derivatives consist of forward and option contracts. The fair value of the foreign exchange 

forward contracts is measured based on the difference between the contracted rate and the current forward price obtained from the counterparty, 

which can be observed and corroborated in the marketplace. These instruments are classifi ed as level 2. As at December 31, 2010, the average 

contracted rate on the forward contracts was 1.0264 (2009 – 1.0671) Canadian dollars to US dollars, and the average forward rate used in 

determining the fair value was 0.9995 (2009 – 1.0512) Canadian dollars to US dollars. The fair value of the foreign exchange option contracts is 

determined through a standard option valuation technique used by the counterparty based on market inputs, including foreign exchange rates, 

interest rates and volatilities. These instruments are classifi ed as level 2. There were no foreign exchange option contracts outstanding as 

at December 31, 2010.
WestJet 2010 Annual Report 87

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued)

(a) Fair value of fi nancial assets and fi nancial liabilities (continued)

Fuel derivatives: Fuel derivatives consist of swaps, collars and call option contracts. The fair value of the fuel derivatives is determined using 

inputs, including quoted forward prices for commodities, foreign exchange rates and interest rates, which can be observed or corroborated in the 

marketplace. The fair value of the swap contracts is estimated by discounting the difference between the contractual strike price and the current 

forward price. These instruments are classifi ed as level 2.

 The fair value of the collar and call option contracts are estimated by the use of a standard option valuation technique. These instruments are 

classifi ed as level 2. As at December 31, 2010, for the period that the Corporation is hedged, the closing forward curve for crude oil ranged from 

approximately US $91 to US $94 (2009 – US $79 to US $84), with the average forward foreign exchange rate used in determining the fair value 

being 1.0032 (2009 – 1.0536) Canadian dollars to US dollars. 

Deposits: The fair value of the deposits that relate to purchased aircraft and airport operations approximates their carrying amounts as they are 

at a fl oating market rate of interest. These instruments are classifi ed as level 1.

Long-term debt: The fair value of the Corporation’s fi xed-rate long-term debt is determined by discounting the future contractual cash fl ows 

under current fi nancing arrangements at discount rates obtained from the lender, which represent borrowing rates presently available to the 

Corporation for loans with similar terms and remaining maturities. As at December 31, 2010, rates used in determining the fair value ranged 

from 2.00% to 2.74% (2009 – 2.28% to 3.27%). The fair value of the Corporation’s variable-rate long-term debt approximates its carrying value, 

as it is at a fl oating market rate of interest.

Obligations under capital leases: The fair value of the Corporation’s capital lease obligations approximates their carrying value due to their 

short-term remaining maturities and total value due. 

(b) Gain (loss) on derivatives recorded at fair value

 The following table presents the components of gain (loss) on derivatives included on the consolidated statement of earnings for the years ended 

December 31, 2010 and 2009: 

2010 2009

Gain on designated fuel derivatives $ 44 $ 5,617

Loss on foreign exchange options (78) (3,789)

$ (34) $ 1,828

(c) Risk management 

 The Corporation is exposed to market, credit and liquidity risks associated with its fi nancial assets and liabilities. From time to time, the 

Corporation will use various fi nancial derivatives to reduce market risk exposures from changes in foreign exchange rates, interest rates and jet 

fuel prices. The Corporation does not hold or use any derivative instruments for trading or speculative purposes. 

 Overall, the Corporation’s Board of Directors has responsibility for the establishment and approval of the Corporation’s risk management 

policies. Management continually perform risk assessments to ensure that all signifi cant risks related to the Corporation and its operations have 

been reviewed and assessed to refl ect changes in market conditions and the Corporation’s operating activities.

Fuel risk 

 The airline industry is inherently dependent upon jet fuel to operate and, therefore, the Corporation is exposed to the risk of volatile fuel prices. 

Fuel prices are impacted by a host of factors outside the Corporation’s control, such as signifi cant weather events, geopolitical tensions, 

refi nery capacity, and global demand and supply. For the year ended December 31, 2010, aircraft fuel expense represented approximately 29% 

(2009 – 28%) of the Corporation’s total operating expenses.
88 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued)

(c) Risk management (continued)

Fuel risk (continued)

 Under the Corporation’s fuel price risk management policy, the Corporation is permitted to hedge a portion of its future anticipated jet fuel 

purchases for up to 36 months, as approved by the Board of Directors. The policy establishes hedging limits based on time horizon. The hedging 

program is designed to mitigate the risk of sudden and substantial movements in fuel prices causing volatility in earnings and cash fl ows. 

Management continuously reviews and adjusts its strategy based on market conditions and competitors’ positions. Financial derivatives in 

crude-oil-based commodities (including a variety of crude oil, heating oil and jet benchmarks) that are traded directly on organized exchanges 

or are available over the counter can be useful in mitigating the risk of volatile fuel prices. 

 As at December 31, 2010, the Corporation had a mixture of Canadian-dollar West Texas Intermediate (WTI) and jet fuel call options and collars to 

hedge approximately 20% (2009 – 14%) of its anticipated jet fuel requirements for the next 12 months. The following table outlines, per type, as 

at December 31, 2010, the notional volumes per barrel (bbl.) or per gallon (gal.) along with the weighted average contract prices.

Type Year Instrument Notional volumes (bbl.) WTI average call price (CAD/bbl.)

WTI 2011 Call options 1,230,000 $ 97

Type Year Instrument Notional volumes (gal.)

Jet average call 

price (CAD/gal.)

Jet average put 

price (CAD/gal.)

Jet 2011 Collars 1,260,000 $ 2.50 $ 2.00

 Upon proper qualifi cation, the Corporation accounts for its fuel derivatives as cash fl ow hedges. Under cash fl ow hedge accounting, the effective 

portion of the change in the fair value of the hedging instrument is recognized in AOCL, while the ineffective portion is recognized in non-operating 

income (expense). Upon maturity of the derivative instrument, the effective gains and losses previously recognized in AOCL are recorded in net 

earnings as a component of aircraft fuel expense. 

 The Corporation’s policy for its fuel derivatives is to measure effectiveness based on the change in the intrinsic value of the fuel derivatives 

versus the change in the intrinsic value of the anticipated jet fuel purchase. The Corporation elects to exclude time value from the measurement 

of effectiveness; accordingly, changes in time value are recognized in non-operating income (expense) during the period the change occurs. As a 

result, a signifi cant portion of the change in fair value of the Corporation’s options may be recorded as ineffective.

 Ineffectiveness is inherent in hedging jet fuel with derivative instruments in other commodities, such as crude oil, particularly given the signifi cant 

volatility observed in the market on crude oil and related products. Due to this volatility, the Corporation is unable to predict the amount of 

ineffectiveness for each period. This may result in increased volatility in the Corporation’s results. 

 If the hedging relationship ceases to qualify for cash fl ow hedge accounting, any change in fair value of the instrument from the point it ceases 

to qualify is recorded in non-operating income (expense). Amounts previously recorded in AOCL will remain in AOCL until the anticipated jet fuel 

purchase occurs, at which time, the amount is recorded in net earnings under aircraft fuel expense. If the transaction is no longer expected to 

occur, amounts previously recorded in AOCL will be reclassifi ed to non-operating income (expense). For the years ended December 31, 2010 and 

2009, there were no amounts reclassifi ed as a result of transactions no longer expected to occur.

 The periodic changes in fair value and realized settlements on fuel derivatives that do not qualify or that are not designated under cash fl ow hedge 

accounting are recorded in non-operating income (expense). For the years ended December 31, 2010 and 2009, there were no fuel derivatives 

not designated under cash fl ow hedge accounting.
WestJet 2010 Annual Report 89

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued)

(c) Risk management (continued)

Fuel risk (continued)

 The following table presents the fi nancial impact and statement presentation of the Corporation’s fuel derivatives on the consolidated balance 

sheet as at December 31, 2010 and 2009:

Statement presentation 2010 2009

Receivable from counterparties for fuel derivatives Prepaid expenses, deposits and other $ 445 $ 96

Fair value of fuel derivatives Prepaid expenses, deposits and other 5,244 —

Fair value of fuel derivatives Accounts payable and accrued liabilities — (7,521)

Payable to counterparties for fuel derivatives Accounts payable and accrued liabilities (800) (1,242)

Unrealized (gain) loss from fuel derivatives AOCL – before tax impact (11) 6,713

Statement presentation 2010 2009

Realized loss on designated fuel derivatives – 

effective portion Aircraft fuel $ (9,172) $ (28,411)

Gain on designated fuel derivatives Gain (loss) on derivatives 44 5,617

 The following table presents the fi nancial impact and statement presentation of the Corporation’s fuel derivatives on the consolidated statement 

of earnings for the years ended December 31, 2010 and 2009:

 During the year ended December 31, 2010, the Corporation net settled fuel derivatives in favour of the counterparties of $8,980 (2009 – $29,574) 

and paid cash premiums for option-style contracts of $6,189 (2009 – $nil).

 The estimated amount reported in AOCL that is expected to be reclassifi ed to net earnings as a component of aircraft fuel expense, when the 

underlying jet fuel is consumed during the next 12 months, is a gain before tax of $11 (2009 – loss before tax of $6,713).

 A 10% increase in the forward curve for WTI, the underlying commodity of the Corporation’s fuel derivatives, as at December 31, 2010, would have 

decreased AOCL by approximately $4,896, net of taxes (2009 – $3,583). A 10% decrease in the forward curve for WTI, as at December 31, 2010, 

would have increased AOCL by approximately $2,455, net of taxes (2009 – $3,814). This is assuming that 100% of the change in price is considered 

effective under cash fl ow hedge accounting. Should some or all of the change in price be considered ineffective under hedge accounting, the 

ineffective portion would be recorded in non-operating income (expense). It also assumes that all other variables remain constant, particularly 

foreign exchange and interest rates. These assumptions may not be representative of actual movements.
90 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued)

(c) Risk management (continued)

Foreign exchange risk

 Foreign exchange risk is the risk that the fair value of recognized assets and liabilities or future cash fl ows would fl uctuate as a result of 

changes in foreign exchange rates. The Corporation is exposed to foreign exchange risks arising from fl uctuations in exchange rates on its 

US-dollar-denominated net monetary assets and its operating expenditures, mainly aircraft fuel, aircraft leasing expense, certain maintenance 

costs and a portion of airport operations costs. During the year ended December 31, 2010, the average US-dollar exchange rate was 1.0302 

(2009 – 1.1425), with the year-end exchange rate at 0.9946 (2009 – 1.0510).

 The gain or loss on foreign exchange included in the Corporation’s consolidated statement of earnings is mainly attributable to the effect of the 

changes in the value of the Corporation’s US-dollar-denominated net monetary assets. As at December 31, 2010, US-dollar-denominated net 

monetary assets totalled approximately US $53,037 (2009 – US $19,858). The Corporation estimates that a one-cent change in the value of the 

US dollar versus the Canadian dollar as at December 31, 2010, would have increased or decreased net earnings for the year ended December 

31, 2010, by $369 (2009 – $143), as a result of the Corporation’s US-dollar-denominated net monetary asset balance.

 As at December 31, 2010, the Corporation was entered into foreign exchange forward contracts for an average of US $11,535 (2009 – US $7,270) 

per month for the period of January to December 2011 for a total of US $138,420 (2009 – US $65,430) at a weighted average contract price of 1.0264 

(2009 – 1.0671) per US dollar to offset a portion of its US-dollar-denominated aircraft lease payments. Upon proper qualifi cation, the Corporation 

designated the forward contracts as effective cash fl ow hedges for accounting purposes. Under cash fl ow hedge accounting, the effective portion 

of the change in the fair value of the hedging instrument is recognized in AOCL, while the ineffective portion is recognized in non-operating 

income (expense). Upon maturity of the derivative instrument, the effective gains and losses previously recognized in AOCL are recorded in net 

earnings as a component of aircraft leasing expense. As at December 31, 2010, no portion of the forward contracts was considered ineffective. 

 As at December 31, 2010, the fair value of the foreign exchange forward contracts was $3,579 (2009 – $1,219) included in accounts payable and 

accrued liabilities, and $nil (2009 − $181), recorded in prepaid expenses, deposits and other. For the year ended December 31, 2010, the Corporation 

realized a loss before tax on forward contracts of $2,143 (2009 – gain of $5,553), included in net earnings as an increase (2009 – decrease) to 

aircraft leasing expense. The estimated amount reported in AOCL that is expected to be reclassifi ed to net earnings as a component of aircraft 

leasing expense in the next 12 months is a loss before tax of $3,579 (2009 – loss before tax of $1,038).

 The Corporation’s foreign exchange option contracts were not designated as hedges for accounting purposes and were recorded at fair 

value on the consolidated balance sheet, with changes in fair value recorded in non-operating income (expense). As at December 31, 2010, the 

Corporation had no foreign exchange option contracts outstanding. For the year ended December 31, 2010, the Corporation recorded a loss of $78 

(2009 – loss of $3,789), included in non-operating income (expense) on foreign exchange option contracts. 

 A one-cent change in the US-dollar exchange rate for the year ended December 31, 2010, would impact AOCL, net of taxes, by $1,028 

(2009 – $475) as a result of the foreign exchange derivatives.

Interest rate risk

 Interest rate risk is the risk that the value of fi nancial assets and liabilities or future cash fl ows will fl uctuate as a result of changes in market 

interest rates.

(i) Cash and cash equivalents

 The Corporation is exposed to interest rate fl uctuations on its short-term investments, included in cash and cash equivalents. A change of 

50 basis points in the market interest rate would have had for the year ended December 31, 2010, an approximate impact on net earnings 

of $3,762 (2009 – $2,555) as a result of the Corporation’s short-term investment activities. 
WestJet 2010 Annual Report 91

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued)

(c) Risk management (continued)

Interest rate risk (continued)

(ii) Deposits

 The Corporation is exposed to interest rate fl uctuations on its deposits that relate to purchased aircraft and airport operations, which, as 

at December 31, 2010, totalled $28,258 (2009 – $27,264). A reasonable change in market interest rates as at December 31, 2010, would not 

have signifi cantly impacted the Corporation’s net earnings as a result of the deposits.

(iii) Long-term debt

 The fi xed-rate nature of the majority of the Corporation’s long-term debt mitigates the impact of interest rate fl uctuations over the term 

of the outstanding debt. The Corporation accounts for its long-term fi xed-rate debt at amortized cost, and, therefore, a change in interest 

rates as at December 31, 2010, would not impact net earnings. 

 The Corporation is exposed to interest rate fl uctuations on its variable-rate long-term debt, which, as at December 31, 2010, totalled $6,795 

(2009 – $8,563) or 0.6% (2009 – 0.7%) of the Corporation’s total long-term debt. Because of the immaterial balance of the variable-rate 

long-term debt, a change in market interest rates as at December 31, 2010, would not have signifi cantly impacted the Corporation’s 

net earnings.

Credit risk

 Credit risk is the risk that one party to a fi nancial instrument will cause a fi nancial loss for the other party by failing to discharge an obligation. 

As at December 31, 2010, the Corporation’s credit exposure consisted primarily of the carrying amounts of cash and cash equivalents, accounts 

receivable, deposits, as well as the fair value of derivative fi nancial assets. 

(i) Cash and cash equivalents

 Cash and cash equivalents consist of bank balances and short-term investments with terms of up to one year, with the majority having terms 

of less than 91 days. Credit risk associated with cash and cash equivalents is minimized substantially by ensuring that these fi nancial assets 

are invested primarily in debt instruments with highly rated fi nancial institutions. The Corporation manages its exposure risk by assessing 

the fi nancial strength of its counterparties and by limiting the total exposure to any one individual counterparty. As at December 31, 2010, 

the Corporation had a total principal amount invested of $913,167 (2009 – $813,215) in Canadian-dollar short-term investments and a total 

of US $45,157 (2009 – US $nil) invested in US-dollar short-term investments, all with terms ranging between fi ve and 365 days. 

 The Corporation performs an ongoing review to evaluate its risk associated with its cash and cash equivalent counterparties. As at 

December 31, 2010, the Corporation does not expect any counterparties to fail to meet their obligations.

(ii) Accounts receivable

 As at December 31, 2010, the Corporation’s accounts receivable were predominantly trade receivables of $12,446 (2009 – $8,673). The 

remainder related to receivables from travel agents, interline agreements with other airlines and partnerships. All signifi cant services and 

counterparties are reviewed and approved for credit on a regular basis. Receivables are short term in nature, generally being settled within 

30 to 60 days.

 As at December 31, 2010, the Corporation continues to dispute with a counterparty, an accounts receivable balance relating to its cargo 

operations of $2,368 (2009 − $2,368). The Corporation recorded a bad debt provision for the amount in 2009. There were no new provisions 

recorded for bad debts in 2010.
92 WestJet 2010 Annual Report

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

13. Financial instruments and risk management (continued)

(c) Risk management (continued)

Credit risk (continued)

(iii) Derivative fi nancial instruments

 The Corporation recognizes that it is subject to credit risk arising from derivative transactions that are in an asset position at the balance 

sheet date. The Corporation carefully monitors this risk by closely considering the size, credit rating and diversifi cation of the counterparty. 

As at December 31, 2010, fuel derivatives of $5,689 (2009 − $96) and foreign exchange derivatives of $nil (2009 − $181) outstanding with the 

Corporation’s counterparties were in an asset position. The Corporation does not expect these counterparties to fail to meet their obligations.

(iv) Deposits 

 The Corporation is not exposed to counterparty credit risk on its deposits that relate to purchased aircraft, as the funds are held in a security 

trust separate from the assets of the fi nancial institution. While the Corporation is exposed to counterparty credit risk on its deposit relating 

to airport operations, it considers this risk to be remote because of the nature of the deposit and the credit rating of the counterparty.

 Liquidity risk

 Liquidity risk is the risk that the Corporation will encounter diffi culty in meeting obligations associated with fi nancial liabilities. The Corporation 

maintains a strong liquidity position and suffi cient fi nancial resources to meet its obligations as they fall due.

 The table below presents a maturity analysis of the Corporation’s undiscounted contractual cash fl ows for its non-derivative and derivative fi nancial 

liabilities as at December 31, 2010. The analysis is based on foreign exchange and interest rates in effect at the balance sheet date, and includes 

both principal and interest cash fl ows for long-term debt and obligations under capital leases.

Total Within 1 year 1–3 years 4–5 years Over 5 years

Accounts payable and accrued liabilities (i) $ 299,204 $ 299,204 $ — $ — $ — 

Foreign exchange derivatives 3,579 3,579 — — — 

Fuel derivatives 800 800 — — — 

Long-term debt 1,232,319 235,215 414,455 341,920 240,729 

Obligations under capital leases 5,878 282 490 490 4,616 

Total $ 1,541,780 $ 539,080 $ 414,945 $ 342,410 $ 245,345 

(i) Excludes foreign exchange derivatives of $3,579 and fuel derivatives of $800.

 A portion of the Corporation’s cash and cash equivalents balance relates to cash collected with respect to advance ticket sales, for which the 

balance at December 31, 2010, was $308,022 (2009 – $286,361). Typically, the Corporation has cash and cash equivalents on hand to have suffi cient 

liquidity to meet its liabilities, when due, under both normal and stressed conditions. As at December 31, 2010, the Corporation had cash and 

cash equivalents on hand of 3.86 (2009 – 3.51) times the advance ticket sales balance. The Corporation aims to maintain a current ratio, defi ned 

as current assets over current liabilities, of at least 1.00. As at December 31, 2010, the Corporation’s current ratio was 1.52 (2009 – 1.48). As at 

December 31, 2010, the Corporation was not required to post collateral with respect to any of its outstanding derivative contracts.
WestJet 2010 Annual Report 93

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

(i) Short-term deposits include deposits relating to aircraft fuel, airport operations and other operating costs.

(ii) Aircraft-related deposits include long-term deposits with lessors for the lease of aircraft and long-term US-dollar deposits, which relate to 

purchased aircraft.

(iii) Deferred gains from the sale and leaseback of aircraft, net of amortization, which are being deferred and amortized over the lease terms 

with the amortization included in aircraft leasing expense.

(iv) Included in other liabilities is an estimate pertaining to asset retirement obligations on its aircraft under operating leases. During the year 

ended December 31, 2010, the Corporation increased the liability by $701 (2009 – $1,217) due to the addition of further leased aircraft with 

$nil (2009 – $nil) incurred on the settlement of these obligations.

(v) Incentives received by the Corporation for entering into various leasing and maintenance contracts. Amounts are deferred and recognized 

in net earnings on a straight-line basis over the term of the contract.

(b) Supplementary cash fl ow information

2010 2009

Net change in non-cash working capital from operations:

 (Increase) decrease in accounts receivable $ 10,378 $ (11,365)

 (Increase) decrease in prepaid expenses, deposits and other 8,531 (2,691)

 (Increase) decrease in inventory 5,788 (9,014)

 Increase in accounts payable and accrued liabilities 79,474 15,926

 Increase in advance ticket sales 21,779 35,008

 Decrease in non-refundable guest credits (27,728) (8,514)

$ 98,222 $ 19,350

2010 2009

Prepaid expenses, deposits and other:

 Prepaid expenses $ 9,082 $ 29,797

 Short-term deposits (i) 26,854 23,439

 Derivatives (note 13) 5,689 277

 Other 91 2,726

$ 41,716 $ 56,239

Other assets:

 Aircraft-related deposits (ii) $ 45,268 $ 50,975

 Other 9,163 3,392

$ 54,431 $ 54,367

Other liabilities:

 Deferred gain on sale and leaseback (iii) $ 4,143 $ 5,281

 Asset retirement obligations (iv) 5,901 4,926

 Deferred contract incentives (v) 8,794 9,421

$ 18,838 $ 19,628

14. Additional fi nancial information

(a) Balance sheet
94 WestJet 2010 Annual Report

14. Additional fi nancial information (continued)

(c) Accumulated other comprehensive loss

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

For the years ended December 31, 2010 and 2009

(Stated in thousands of Canadian dollars, 

except share and per share amounts)

Amortization of 

hedge settlements

Cash fl ow hedges – 

foreign exchange 

derivatives

Cash fl ow hedges – 

fuel derivatives Total

Balance as at January 1, 2009 $ (10,620) $ 4,133 $ (31,625) $ (38,112)

 Amortization of hedge settlements 1,400 — — 1,400

 Unrealized gain (loss) on derivatives — (1,358) 9,587 8,229

 Tax on unrealized portion — 447 (2,878) (2,431)

 Realized (gain) loss on derivatives — (5,553) 28,411 22,858

 Tax on realized portion — 1,576 (8,372) (6,796)

Balance as at December 31, 2009 (9,220) (755) (4,877) (14,852)

 Amortization of hedge settlements 1,400 — — 1,400

 Unrealized loss on derivatives — (4,684) (2,448) (7,132)

 Tax on unrealized portion — 1,224 670 1,894

 Realized loss on derivatives — 2,143 9,172 11,315

 Tax on realized portion — (586) (2,509) (3,095)

Balance as at December 31, 2010 $ (7,820) $ (2,658) $ 8 $ (10,470)
BOARD OF DIRECTORS

Clive Beddoe

Chair

WestJet Airlines Ltd.

Hugh Bolton

Non-Executive Chair

EPCOR Utilities Inc.

Ron Brenneman

Former President and CEO

Petro-Canada

Brett Godfrey

Former CEO

Virgin Blue Airlines

Don Hougan

Captain, PACT Chair

WestJet Airlines Ltd.

Allan Jackson

President and CEO 

Arci Ltd.

S. Barry Jackson

Chair

TransCanada Corporation and TransCanada PipeLines Ltd.

Wilmot Matthews

President 

Marjad Inc.

Larry Pollock

President and CEO

Canadian Western Bank and Canadian Western Trust

Gregg Saretsky

President and CEO

WestJet Airlines Ltd.

Arthur Scace

Former Chair

Bank of Nova Scotia

EXECUTIVE TEAM

Gregg Saretsky

President and CEO

Vito Culmone

Executive Vice-President, Finance and CFO

Bob Cummings

Executive Vice-President, Sales, Marketing and Guest Experience

Hugh Dunleavy

Executive Vice-President, Strategy and Planning

Cam Kenyon

Executive Vice-President, Operations

Ferio Pugliese

Executive Vice-President, People and Culture

STOCK EXCHANGE LISTING

Shares in WestJet stock are publicly traded on the 

Toronto Stock Exchange under the symbols WJA and WJA.A.

INVESTOR RELATIONS CONTACT INFORMATION

Phone: 1-877-493-7853

Email: investor_relations@westjet.com

WESTJET HEADQUARTERS

22 Aerial Place NE

Calgary, Alta. T2E 3J1

Phone: 1-403-444-2600

Toll-free: 1-888-293-7853

ANNUAL GENERAL MEETING (AGM)

WestJet Airlines Ltd.’s AGM will be held at 2 p.m. (MDT) on 

Tuesday, May 3, 2011, at WestJet’s Campus, 22 Aerial Place NE, 

Calgary, Alta. T2E 3J1

TRANSFER AGENT AND REGISTRAR

CIBC Mellon Trust Company

Toll-free in North America: 1-800-387-0825

cibcmellon.com

Auditors

KPMG LLP, Calgary, Alta.

CORPORATE

INFORMATION
WESTJET.COM
WESTJET 

______________________________________________________________________________ 

EXHIBIT 6 

INSURANCE CERTIFICATE
Office of the Secretary 

of Transportation 

AGENCY DISPLAY OF ESTIMATED BURDEN 

The public reporting burden for this collection of information is estimated to average 30 minutes per response. If you wish 

to comment on the accuracy of the estimate or make suggestions for reducing this burden, please direct your comments to: 

U.S. Department of Transportation, Office of Aviation Analysis, X-56, 400 7th St., SW,., Washington, D.C. 20590. According 

to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays 

a valid OMB control number. 

NOTE: For information on where to file completed copies of this form, see FILING INSTRUCTIONS below. 

OMB No. 2106-0030 Expires 9-30-2007 

FOREIGN AIR CARRIERS - CERTIFICATE OF INSURANCE

POLICIES OF INSURANCE FOR AIRCRAFT ACCIDENT BODILY INJURY 

AND PROPERTY DAMAGE LIABILITY 

FILING INSTRUCTIONS: File a signed original of this form with the Federal Aviation Administration, Air Transportation Div., AFS-260, 800 

Independence Ave., SW., Washington, DC 20591. (See EXCEPTION below.) 

 EXCEPTION: If Section 2.A. is filled in because the insured is a Canadian Charter Air Taxi Operator, file an original of this form with the U.S. 

Department 

 of Transportation, Special Authorities Division (X-46), 400 7th Street, SW, Washington, D.C. 20590 

(Please type information, except signatures.)

THIS CERTIFIES THAT: ___Underwriters at Lloyd’s of London and Licensed London and Canadian Companies through Marsh Canada Limited as 

brokers___________ 

 (Name of Insurer) 

has issued a policy or policies of Aircraft Liability Insurance to __WestJet Airlines Ltd., 22 Aerial Place NE, Calgary, AB, T2E 3J1__________ 

__________________________________________________________________FAA Certificate Number________________ 

(Name, address and FAA Certificate number of Insured Foreign Air Carrier) 

effective from ___December 1, 2011____ until ten (10) days after written notice from the insurer or carrier of the intent 

to terminate coverage is received by the Department of Transportation. 

NOTE: Part 205 of the Department’s Regulations does not allow for a predetermined termination date, and a certificate showing such a date is 

unacceptable. 

_______________________________________________________________________________________________________________1. The 

Insurer (Check One): 

 _ is licensed to issue aircraft insurance policies in the United States; 

 X is licensed or approved by the government of __Canada________ to issue aircraft insurance policies; or 

 _ is an approved surplus line insurer in the State(s) of _________________________ 

_______________________________________________________________________________________________________________2. The 

insurer assumes, under the policy or policies listed below, aircraft accident liability insured to minimums at least equal to the following during 

operation, maintenance, or use of aircraft in “foreign air transportation” as that term is defined in 49 U.S.C. 40102. 

(Complete applicable section A, B, or C below): 

A. CANADIAN CHARTER AIR TAXI OPERATORS WITH PART 294 AUTHORITY ONLY 

The aircraft covered by this policy have: (1) 30 or fewer passenger seats and a maximum payload capacity of 7,500 pounds or less; and/or 

(2) a maximum authorized takeoff weight on wheels of no more than 35,000 pounds. (Complete separate or combined coverage as 

appropriate): 

 Separate Coverages: Minimum Limit 

 Policy No. Type of Liability Each person Each Occurrence 

 __________________ Combined Bodily Injury (Excluding Passengers other 

 than cargo attendants) and Property Damage Liability $75,000 $2,000,000*(See note) 

 __________________ Passenger Bodily Injury $75,000 $75,000 x 75% of 

 total number of 

 passenger seats 

 installed in aircraft 

 Combined Coverage: This combined coverage is a single limit of liability for each occurrence at least equal to the required minimums 

stated above for bodily injury (excluding passengers), property damage, and passenger bodily injury. 

Policy No.__________________________________ Amount of Coverage_____________________U.S. Dollars 

 This policy covers CARGO operations only and excludes passenger liability insurance. 

___________________________________________________________________________________________________________ 

NOTE: If the aircraft covered by this policy have more than 30 passenger seats or more than a maximum payload capacity of 7,500 

pounds, the minimum limit per occurrence shall be $20,000,000. 
OST Form 6411 

B. FOREIGN AIR CARRIERS OPERATING SMALL AIRCRAFT 

The aircraft covered by this policy are SMALL AIRCRAFT (i.e., with 60 or fewer passenger seats or with a maximum payload 

capacity of 18,000 pounds or less). (Complete separate or combined coverage as appropriate): 

 Separate Coverages: Minimum Limit 

 Policy No. Type of Liability Each person Each Occurrence 

 __________________ Combined Bodily Injury (Excluding Passengers other 

 than cargo attendants) and Property Damage Liability $300,000 $2,000,000 

 __________________ Passenger Bodily Injury $300,000 $300,000 x 75% of 

 total number of 

 passenger seats 

 installed in aircraft 

 Combined Coverage: This combined coverage is a single limit of liability for each occurrence at least equal to the required minimums 

stated above for bodily injury (excluding passengers), property damaged, and passenger bodily injury. 

Policy No.__________________________________ Amount of Coverage_____________________U.S. Dollars 

 This policy covers CARGO operations only and excludes passenger liability insurance. 

________________________________________________________________________________________________________________________

C. FOREIGN AIR CARRIERS OPERATING LARGE AIRCRAFT 

The aircraft covered by this policy are LARGE AIRCRAFT (i.e., with more than 60 passenger seats or with a maximum payload capacity of 

more than 18,000 pounds). (Complete separate or combined coverage as appropriate): 

 Separate Coverages: Minimum Limit 

 Policy No. Type of Liability Each person Each Occurrence 

 ___AU104011______ Combined Bodily Injury (Excluding Passengers other 

 than cargo attendants) and Property Damage Liability $300,000 $20,000,000 

 ___AU104011_______ Passenger Bodily Injury $300,000 $300,000 x 75% of 

 total number of 

 passenger seats 

 installed in aircraft 

 Combined Coverage: This combined coverage is a single limit of liability for each occurrence at least equal to the required minimums 

stated above for bodily injury (excluding passengers), property damaged, and passenger bodily injury. 

Policy No.__________________________________ Amount of Coverage_____________________U.S. Dollars 

 This policy covers CARGO operations only and excludes passenger liability insurance. 

________________________________________________________________________________________________________________________

3. The policy or policies listed in this certificate insure(s) (Check One): Make and Model FAA or Foreign Flag 

 Boeing 737 All Aircraft 

X Operations conducted with all aircraft operated by the insured 

_ Operations conducted with the following types of aircraft: 

_ Operations with the following aircraft: (Use additional page if necessary) 

________________________________________________________________________________________________________________________

4. Each policy listed in this certificate meets or exceeds the requirements in 14 CFR Part 205. 

 _________________Marsh Canada Limited____________________ 

 (Name of Insurer) (Name of Broker, if applicable) 

 ________________Suite 1100, 222 – 3 Avenue SW_____________ 

 (Address) (Address) 

 ________________________Calgary, AB, T2P 0B4_________________

 (City, State, Zip Code) 

_______________________________________________________________ _________________Sigmund Berlie_______ 

Contact (person who can verify the effectiveness of the coverage) (Officer or authorized representative) 

______________403-476-3463______/____403-266-9881_________ 

 (Area Code, Phone Number) (Area Code, Fax Number) (Area Code, Phone Number) (Area Code, Fax Number) 

________________________________________________________________ 

__________________________________________________________ (Signature, if applicable) 

 ___________________1 Dec 2011______________(Date)