Home based investors - WJA

[mykalberta]

Well here goes, I am what you would call an airline nerd.

Had my guidance councellor nor been drunk for year and told me what a sweet gig an ATC was I wouldnt have spent 4 years in school. Anyways, now that I am set in a job that I couldnt really leave due to financual commitments I decided to then live via the stock market.

To that end I own WestJet stock (2350 shares currently at average 9.74). Lately the sotck has been climbing but I dont think its maxed its value even by a long shot. If you havent noticed yet, Westjet stock is today is taking a beating, mostly by investors who want WJA to turn into the next incarnation of Canadian.

Its down almost 75 cents today to 15$/share, and not on any buisness fundamental problems. Just thought people would like to know. As I think by the end of next quarter it could easily be over 16$ and I am forecasting over 20$ by Q3 2009 for a variety of reasons.

Cheers.

MYK

[Cowboy89]

Originally Posted by mykalberta

Well here goes, I am what you would call an airline nerd.

Had my guidance councellor nor been drunk for year and told me what a sweet gig an ATC was I wouldnt have spent 4 years in school. Anyways, now that I am set in a job that I couldnt really leave due to financual commitments I decided to then live via the stock market.

To that end I own WestJet stock (2350 shares currently at average 9.74). Lately the sotck has been climbing but I dont think its maxed its value even by a long shot. If you havent noticed yet, Westjet stock is today is taking a beating, mostly by investors who want WJA to turn into the next incarnation of Canadian.

Its down almost 75 cents today to 15$/share, and not on any buisness fundamental problems. Just thought people would like to know. As I think by the end of next quarter it could easily be over 16$ and I am forecasting over 20$ by Q3 2009 for a variety of reasons.

Cheers.

MYK

Let's see your reasons.

[Mccree]

Westjet profits down 49%

That explains the drop today.

[mykalberta]

Originally Posted by Mccree

Westjet profits down 49%

That explains the drop today.

Correct but its not profit per say but they are taking a one time hit from the AirRes system.

MYK

[arsenal]

Looks like they scrubbed the aiRes system, that was about a year over due, and decided to declare the entire loss in the Q3 statement. So they take the hit that quarter, but they should recover for next one. Based on what they have been doing for the last 10 years or so.

[Bobblehead]

Yeah, I'm not sure the drop in value can be attributed to "investors who want WJA to turn into the next incarnation of Canadian".

I'm pretty sure that sort of thought wouldn't enter into the process. The drop in profits Mccree listed is a bit more resonable explanation.

[mykalberta]

Originally Posted by Cowboy89

Let's see your reasons.

(1) Q2 2009, they will cancel the money losing Airmiles contract and start their own FFQ plan - lilely the only stumbling block still left to attract long time AC employees - that should result in 1-1.75 conservatively in stock price jumps.

(2) After investors get past the one time charges and look at the buisness fundamentals (all revenue/profit is made by them and them alone, they arent currently reliant on any code shares). they should easily hit their high before today and get back up to 16$.

(3) With the new carribean routes, WJ Vacations will liekly show a sharp rise in profits from year from now, that will likely result in a $1 - $1.25 increase (investors love products that could be spun off in the future as individual vehicles for growth)

(4) The code sharing is coming - already they exclusively use BA to Europe, Asia, SA, Africa and Quantas to Australia. Eventually investors will take that as a sign of a limited OW partnership as soon as they can get the reservation issue worked out. OW alliance is the natural progression for a carrier in Canada. They are based at all the important markets from Canada, Star is simply second fiddle for carriers based in Canada.

That takes you to about 19$ not counting the normal increases in buisnes growth forecasted at a conservative 10%.

Arilines at the best of times are risky, but in Canada with only one competitor that has its own problems its as safe as you get.

I think if they were a little more ballsy they could get that to 22.50 if they were to properly exploit the new travel 4th Freedom arrangements in the US and attack some of the wounded Elephants in the US but they havent been ballsy in the past so I doubt it would happen now. Although it would give them a great platform to grow 2nd teir buisness markets which is another reason I believe the stock price is depressed.

MYK

[Mccree]

Originally Posted by Bobblehead

Yeah, I'm not sure the drop in value can be attributed to "investors who want WJA to turn into the next incarnation of Canadian".

I'm pretty sure that sort of thought wouldn't enter into the process. The drop in profits Mccree listed is a bit more resonable explanation.

That was my point.

[mykalberta]

Originally Posted by Mccree

That was my point.

Have you ever listend to any of the previous 12+ conference calls. Half of the questions are when are you buying the 787, the 350, when are you joining OW, blah blah blah.

The recent drop isnt because of it, but the depression in the price comapred to AC, SW, JBLU, FRT, Continental, AirTran definately is. As an investor listenting to the Q1 conference call, you could tell they werent happy with AirRes and that this was likely to happen.

I am not suggesting go into this stock and get out in 6 months. But its a great vehicle for investment, instead of buying a Jetta a year ago i bought this stock and it has now grown at a 50% clip in less than a year.

That is a damn good investment vehicle.

MYK

[photon]

Longest pump and dump ever!

[corporatejay]

(1) Q2 2009, they will cancel the money losing Airmiles contract and start their own FFQ plan.

do you have evidence of this?

[Bend it like Bourgeois]

Originally Posted by corporatejay

do you have evidence of this?

Ugh. I hope not. That's my vacation provider.

[Cowboy89]

Originally Posted by mykalberta

(1) Q2 2009, they will cancel the money losing Airmiles contract and start their own FFQ plan - lilely the only stumbling block still left to attract long time AC employees - that should result in 1-1.75 conservatively in stock price jumps.

(2) After investors get past the one time charges and look at the buisness fundamentals (all revenue/profit is made by them and them alone, they arent currently reliant on any code shares). they should easily hit their high before today and get back up to 16$.

(3) With the new carribean routes, WJ Vacations will liekly show a sharp rise in profits from year from now, that will likely result in a $1 - $1.25 increase (investors love products that could be spun off in the future as individual vehicles for growth)

(4) The code sharing is coming - already they exclusively use BA to Europe, Asia, SA, Africa and Quantas to Australia. Eventually investors will take that as a sign of a limited OW partnership as soon as they can get the reservation issue worked out. OW alliance is the natural progression for a carrier in Canada. They are based at all the important markets from Canada, Star is simply second fiddle for carriers based in Canada.

That takes you to about 19$ not counting the normal increases in buisnes growth forecasted at a conservative 10%.

Arilines at the best of times are risky, but in Canada with only one competitor that has its own problems its as safe as you get.

I think if they were a little more ballsy they could get that to 22.50 if they were to properly exploit the new travel 4th Freedom arrangements in the US and attack some of the wounded Elephants in the US but they havent been ballsy in the past so I doubt it would happen now. Although it would give them a great platform to grow 2nd teir buisness markets which is another reason I believe the stock price is depressed.

MYK

All fairly good points. I'm not much of an airline investor, largely because higher fuel prices can take a huge dent out of profits at any time, especially when your investment time horizon is longer than most. I agree with the sentiment that one-time issues are difficult for investors to figure out (although they shouldn't be), however when a company has a reputation for always having 'one time' charges every quarter it really takes one's faith out of normalized earnings (not speaking about West Jet in particular but rather the airline business in general).

[mykalberta]

Sorry, 6th freedoms, I always mistake them and 4th.

MYK

[mykalberta]

Originally Posted by corporatejay

do you have evidence of this?

Was indicated in the Q1 2007 Conference call. They arent allowed to start their own until then - that is when the current contract runs out.

As per SD (might bw Q3, but I am pretty sure its Q2), the reason they went into it was because they needed something and now that they have a more established network its becoming a real drain.

MYK