WestJet CEO apologizes over charges of corporate spying
Last Updated: Tuesday, August 3, 2004 | 4:58 PM ET
CBC News
Clive Beddoe offered the apology to WestJet's employees and shareholders during a conference call with analysts.
WestJet vice-president Mark Hill quit the company last month after Air Canada sued WestJet over allegations Hill and another worker used an Air Canada employee website to get access to flight scheduling information.
"Clearly I have to take responsibility for this event as I should have known what [Mark Hill] was doing, and no individual, including myself, should have the latitude to act irresponsibly," Beddoe said.
WestJet expects "no material liability" as a result of the Air Canada suit, Beddoe said. Air Canada is seeking $220 million in damages.
WestJet has filed a countersuit, claiming that Air Canada used private investigators to go through the garbage of WestJet executives.
None of the allegations have been proven in court.
WestJet earnings down
Earlier in the day, WestJet (TSX:WJA)saw its earnings almost cut in half during what it called a "disappointing" second quarter.
WestJet said it made $7.5 million (6 cents a share), down from $14.7 million (13 cents a share) a year earlier.
The company's operating revenue increased during the quarter by 25 per cent to $257.3 million from $205.9 million in the quarter ended June 2003.
"Despite our 29 per cent increase in capacity and our 25 per cent increase in revenue during this period, the increasing cost of fuel and airport landing and terminal fees has had a significant impact on our earnings," Beddoe said.
Beddoe said the company's fuel costs grew by 32 per cent from the previous year, cutting its earnings before income taxes and profit sharing by $10.5 million. He said each $1 US increase in the price of crude oil reduces the company's net earnings before profit sharing and income taxes by an estimated $5 million on an annual basis.
"Had the price of fuel remained the same as last year, we estimate our diluted [earnings per share] this quarter would have been $0.11 instead of $0.06," added Beddoe.
The company also said the landing and terminal fees it pays at Toronto's Pearson Airport are over 200 per cent more than those same fees it paid at Hamilton airport. The company shifted its eastern Canadian hub of operations to Toronto from Hamilton in mid-April.
In the first six months of 2004, the airline's net earnings were $8.0 million, compared to $15.5 million during the first six months of 2003.
Year to date, operating revenue grew 25.2 per cent to $474.0 million from $378.6 million during the same period in 2003.
Shares of WestJet rose 25 cents to $13.55 on the TSX.
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