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WestJet Airlines Ltd.'s (TSX:WJA) first-quarter profit more than doubled as it attracted more passengersto fill its expanding capacity and sold more non-fare items likevacation packages, Canada's No. 2 carrier said on Tuesday.

WestJet also said it plans to build a $90-million (US$81-million) office complex at the airport in its hometown of Calgary, Alberta, rather than pay sky rocketing rents downtown in the booming city.

The airline, which has been adding U.S. and Caribbean destinations to its network, earned $30-million, or 23 cents a share, more than double the $13-million, or 10 cents a share, it earned a year earlier.

That beat the average estimate of analysts polled by Reuters by 4 cents a share.

Revenue increased 24% to $479-million.

WestJet has steadily boosted capacity to compete with bigger rival Air Canada (TSX:AC.B). The firm, which operated 65 Boeing 737 aircraft at the end of March, plans to raise its available space by 13 percent this year, adding another five aircraft.

«The pricing environment was still reasonably strong, especially when you consider they grew their capacity pretty substantially in the firstquarter,» said analyst Cameron Doerksen of Versant Partners in Montreal.

«Normally you'd expect that to have a negative impact on pricing and onload factors, but in fact both pricing and load factor were up.»

Capacity, measured by available seat miles, increased by 19.1%in the quarter and 81.1% of WestJet's seats were filled, up from 79.4% a year earlier.

Fuel prices were down, helping costs to fall slightly to 12.3 cents per available seat mile.

WestJet President Sean Durfy said he expects capacity to increase16% in the second quarter, an amount the market should absorb, even as the airline shifts aircraft from the popular winter sun destinations.

«Quarter after quarter we're putting 10, 12, 14, 16 percent more capacity in the marketplace. Our yield stays high and our load factor stays high,» he said after the annual meeting.

Ahefty portion of rising revenue came from sales of products and services apart from airfares, including headsets, liquor and packages from WestJet Vacations.

Such sales surged 66% from the first quarter of 2006 to nearly $23-million.

«Furthermore, these offerings have brought incremental guests onto our aircraft,» Durfy told analysts and reporters.

Meanwhile, business travelers made up 45% of the total at WestJet, which started up 11 years ago as purely a no-frills airline. That's up from 40% in the first quarter of 2006.

The airline plans to build an office campus beside its hangar at Calgary International Airport, where it has a long-term lease of land. It wants to avoid high rents downtown, where the energy boom has sparked a tower-building frenzy.

WestJet staff work in a total of seven buildings, and the rent at the main office has more than doubled over the past 2-1/2 years, Durfy said.

The complex is slated to be complete by the end of 2008.

(Canada.com)

Other related stories:

1. Westjet First Quarter Results (AirFive)
2. Tip Sheet [WestJet] - (Report on Business)