WestJet (TSX: WJA) has provided 2018 to 2020 targets at its Investor Day being held in Calgary from 8:30 a.m. MT (10:30 a.m. ET) to 12:00 noon MT (2:00 p.m. ET), the company said.
WestJet is targeting an annual operating margin of between 10 per cent and 12 per cent in 2018 to 2020 and an improving annual return on invested capital (ROIC(1)) that is expected to exceed 13 per cent in 2020. From 2018 to 2020, WestJet expects to deliver cumulative free cash flow(1) of USD 775 to USD 875 million, with capital expenditures of approximately USD 780 million in 2018, peaking in 2019 at approximately USD 1 billion and dropping to approximately USD 870 million in 2020.
In terms of its key credit metric, WestJet estimates by the end of 2020 to be at 1.2 as measured by adjusted net debt over EBITDAR(1), and it expects to grow its number of unencumbered aircraft from 51 at the end of the third quarter of 2017 to 96 aircraft in 2020.
WestJet believes its strategy to attract and retain premium travellers, combined with an enhanced revenue management system, with broadened fare products and growth in ancillary represent an annual revenue opportunity of between USD 300 million to USD 500 million through to 2022. In addition, WestJet has identified annual cost savings opportunities of USD 140 million to USD 200 million through 2022. These cost savings opportunities are spread over several initiatives that include fleet reconfigurations, airport operations cost savings, optimized maintenance plans, digital self service, and sales & distribution channel efficiencies.
In-person attendance at WestJet´s Investor Day is by invitation only and the media and other interested persons are welcome to listen in via the webcast in the Media and Investor Relations section of westjet.com