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WestJet Announces Third Quarter Results: Thirty-First Consecutive Quarter of Profitability

08:30 EDT Wednesday, October 27, 2004

CALGARY, ALBERTA--(CCNMatthews - Oct. 27, 2004) - WestJet today announced its 2004 third quarter results with net earnings of $21.1 million compared to $32.3 million achieved during the same period last year. In the first nine months of 2004, the airline achieved net earnings of $29.1 million compared to $47.8 million during the first nine months of 2003.

Operating revenue increased this quarter to $310.3 million from $254.8 million attained in the third quarter last year. Year to date, operating revenue grew to $784.3 million, an increase from $633.4 million during the same period in 2003.

WestJet reported diluted earnings per share of $0.17 during the third quarter of 2004, compared with $0.28 during the third quarter of 2003. Year to date, the airline reported diluted earnings per share of $0.23 compared to $0.42 during the same nine-month period in 2003. The number of common shares outstanding increased to 125,447,836 at the quarter's end compared to 114,180,078 on September 30, 2003, largely due to a $150.0 million equity issue in October 2003.

WestJet's capacity, measured in available seat miles (ASMs), grew this quarter by 26.9% to 2.41 billion from last year's 1.90 billion ASMs. Year to date, ASMs increased 30.0% to 6.47 billion from 4.98 billion ASMs during the first nine months of 2003. Revenue passenger miles (RPMs) increased 27.3% to 1.85 billion RPMs this quarter, up from 1.45 billion RPMs in the same quarter last year. For the first nine months of 2004, RPMs increased 30.5% to 4.60 billion RPMs from 3.52 billion RPMs during the first three quarters of 2003.

WestJet's load factor for the quarter was 76.6% compared with 76.4% in the third quarter of 2003, while the airline's year-to-date load factor was 71.0% compared with 70.7% during the first nine months of 2003.

Yield (revenue per revenue passenger mile) decreased 4.0% this quarter to 16.8 cents from 17.5 cents during third quarter 2003. Year to date, yield is down 5.0% to 17.1 cents from 18.0 cents during the first nine months of 2003. WestJet's average stage length increased 16.0% from 679.4 miles in the third quarter of 2003 to 788.0 miles this quarter.

Clive Beddoe, WestJet's President and CEO, commented, "Although we are pleased to report our 31st consecutive quarter of profitability, this quarter was nevertheless a disappointing one for WestJet. Two main factors contributed to our less than satisfactory level of profitability, the first being the record high price of fuel and the second being the diminishing yield environment in which all airlines are operating throughout North America.

"Historically, airlines have attempted to manage increases in fuel prices by adding fuel surcharges to base fares. In a price sensitive market, any increase in price has an impact on demand. Therefore, we pursued a strategy of maintaining our regular low fares while limiting the number of deep discount seat sales in hopes of leading the market to improved yields with higher average fares more aligned with the increased cost environment. This strategy fell short of our expectations.

"While we have little control over the high fuel prices and extremely low fares that create pressures on our margins, we have introduced initiatives to reduce our exposure to them. We continue to retire our 737-200 aircraft as we add new Next-Generation aircraft to our fleet. With blended winglet technology, these aircraft are approximately 33% more fuel efficient on a per-ASM basis.

"This quarter we added three new 737-700 aircraft and by this time next year, we will have acquired an additional 14 new Next-Generation aircraft including a combination of three versions of the 737 to provide us with the ability to adjust the size of aircraft deployed to meet the demands of the market being served. As these aircraft are all 737s that share virtually all major components, we will continue to benefit from the cost savings that come from operating a common fleet type.

"In this quarter we expanded our Check N' Go electronic check-in program at six major airports across Canada, launched a successful baggage drop program, and introduced new technology that will better support the sale of our seats to corporate Canada through a dedicated business-traveller website. We have also worked hard to strengthen our relationship with Canada's top travel agencies and continue to provide enhanced systems for these and all other travel agencies to utilize.

"Throughout this quarter we also focused on further strengthening our domestic flight network with more non-stop frequencies and better connectivity, flying 1,774 flights per week at quarter's end this year compared with 1,552 flights per week at September 30th last year. We are also pleased to report that load factors on most routes operating out of Toronto, Ottawa and Montreal have been strong, which reaffirms our belief that WestJet will continue to be very successful in eastern Canada.

"We achieved a major milestone this quarter with the launch of scheduled transborder service with flights to New York and Los Angeles and we will be launching five of our remaining six transborder destinations in the fourth quarter. Bookings to date indicate that our transborder flights are showing significant promise.

"The strong culture at WestJet continues and our people remain committed, working extremely hard as we grow our operations and further expand our customer base. We are on track to have 20 LiveTV-equipped aircraft in operation by the December holiday season. Feedback from the guests who have flown on our operational LiveTV aircraft has been extremely positive, and we remain confident this feature will lead to an increase in load factor as we continue to put these aircraft into service.

"The fundamentals of our business remain sound and despite the challenging cost environment that exists in a time of unprecedented fuel prices, I am confident that the new aircraft, new initiatives and exceptional culture of our organization will lead us to even further financial success."

WestJet serves the 24 Canadian cities of Victoria, Comox, Vancouver, Abbotsford/Fraser Valley, Prince George, Kelowna, Grande Prairie, Calgary, Edmonton, Fort McMurray, Saskatoon, Regina, Winnipeg, Thunder Bay, Windsor, London, Hamilton, Toronto, Ottawa, Montreal, Moncton, Halifax, Gander and St. John's, and the eight U.S. cities of Los Angeles, New York, Orlando, San Francisco, Phoenix, Fort Lauderdale, Tampa (beginning October 31, 2004) and Palm Springs (beginning January 7, 2005). The airline operates a growing fleet of 53 aircraft featuring 35 new Next-Generation Boeing 737-700 aircraft. WestJet is publicly traded on the Toronto Stock Exchange under the symbol WJA.

Third Quarter 2004 Management's Discussion and Analysis

Forward-looking Information

This Management's Discussion and Analysis contains forward-looking statements that are based on management's current expectations, estimates, projections and assumptions. In light of the current state of affairs in the domestic and international airline industry, forward-looking statements must be understood to involve a number of risks and uncertainties.

As a result of many factors, including competition, governmental regulations, fuel pricing, the airline pricing environment, industry capacity fluctuations, new entrants, foreign exchange rates, interest rates, labour matters, terrorism, actions by third parties, and external events, expected results could differ from actual results and differences could be material. The foregoing list of factors should not be considered exhaustive.

To supplement our consolidated financial statements presented in accordance with Canadian generally accepted accounting principles ("GAAP"), the Company uses various non-GAAP performance measures, including cost per available seat mile ("CASM"), revenue per available seat mile ("RASM") and yield ("revenue per revenue passenger mile"). These measures are provided to enhance the user's overall understanding of our current financial performance and are included to provide investors and management with an alternative method for assessing the Company's operating results in a manner that is focused on the performance of the Company's ongoing operations and to provide a more consistent basis for comparison between quarters. These measures are not in accordance with or an alternative for, GAAP and may be different from measures used by other companies.

We profitably completed our 31st quarter of operations amid many challenges in our industry. The summer period is typically our strongest time of the year and although our gross revenues during the quarter grew by 21.8%, the high fuel prices and diminished yields have reduced our profits during this period from that which we would have normally expected. Our net earnings for the third quarter of 2004 declined 34.5% over the same quarter in 2003, and year to date were 39.1% less than the first nine months of last year.

The table below sets forth selected data derived from our consolidated financial statements prepared in accordance with Canadian generally accepted accounting principles for the eight previous quarters ended September 30, 2004. This information should be read in conjunction with the consolidated financial statements and related notes thereto.

Quarterly unaudited financial information
(In millions except per share data)

                           ---------------------------------------------
                            12/31/2003  3/31/2004  6/30/2004  9/30/2004
                           ---------------------------------------------

Total revenues                   $ 229      $ 217      $ 257      $ 310
Net earnings                     $  13      $   1      $   7      $  21
Basic earnings per share         $0.11      $0.01      $0.06      $0.17
Diluted earnings per share       $0.10      $0.01      $0.06      $0.17

                           ---------------------------------------------
                            12/31/2002  3/31/2003  6/30/2003  9/30/2003
                           ---------------------------------------------

Total revenues                   $ 176      $ 173      $ 206      $ 255
Net earnings                     $   9      $   1      $  15      $  32
Basic earnings per share         $0.08      $0.01      $0.13      $0.28
Diluted earnings per share       $0.08      $0.01      $0.13      $0.28

Highlights

For the first time in our operating history, we added scheduled service to two destinations in the United States during the quarter, Los Angeles and New York. In October we also added scheduled service to the four additional transborder destinations of Orlando, San Francisco, Phoenix and Fort Lauderdale, and we will start service to Palm Springs in January 2005.

There is currently very little low-cost transborder capacity between Canada and the United States, and we believe there is an opportunity for us to stimulate the transborder market by offering our guests low-fares to and from US markets. The addition of these transborder routes also provides us with the opportunity to ease the seasonality on our business by maximizing the utilization of our capacity during the winter months by offering scheduled flights to warmer destinations across the border.

With the expansion of our network to the United States, and in consideration of our current routes, it was necessary for us to reassess the composition of our fleet. The profitability we realize on each route is dependent on several factors, including our ability to minimize our operating costs on specific routes. Until recently, our future fleet plan included only adding more 737-700 aircraft, which, because of its larger size compared to our 737-200 aircraft, can be less efficient to operate on short-haul routes to smaller cities. To ensure that we maintain ideal aircraft size on each route as we retire our 737-200 aircraft, we announced plans to introduce new Boeing Next-Generation 737 variants to our family of aircraft. In 2005, we will be adding seven new 737-700s, three 737-600s and five 737-800s, with the 600s being configured to seat 119 guests, the 700s to seat 136 guests and the 800s to seat 166 guests.

Larger aircraft incur higher operating costs such as increased landing fees and fuel consumption, and are therefore best suited for operating on longer-haul routes. The increase in length of a flight contributes to a decline in unit costs as these fixed charges are distributed over more available seat miles.

We want to optimize the cost economics of aircraft size operating a particular stage length in order to minimize the cost of operating our various routes. With the addition of smaller 119-seat 737-600 aircraft, we will better serve our short-haul routes by realizing the reduced costs of operating a smaller size aircraft for shorter-distance of travel. Similarly, the 737-800s, with their 166-seat configuration, will reduce unit cost per seat mile which maximizes the revenue potential of longer-haul flights between larger city pairs.

Cost per Available Seat Mile (Dollars)

                                        Three Months Ended
                          ----------------------------------------------
                                                           % (Increase)
                           Sept. 30, 2004  Sept. 30, 2003     Decrease
------------------------------------------------------------------------

Aircraft fuel                       0.027           0.022        (22.7%)
Airport operations                  0.019           0.017        (11.8%)
Flight operations and
 navigational charges               0.016           0.015         (6.7%)
Sales and marketing                 0.009           0.008        (12.5%)
Maintenance                         0.008           0.010         20.0%
Amortization                        0.008           0.009         11.1%
General and administration          0.007           0.005        (40.0%)
Aircraft leasing                    0.004           0.006         33.3%
Interest expense                    0.005           0.004        (25.0%)
Inflight                            0.005           0.005          0.0%
Customer service                    0.003           0.003          0.0%

------------------------------------------------------------------------
Total                               0.111           0.104         (6.7%)

                                         Nine Months Ended
                          ----------------------------------------------
                                                           % (Increase)
                           Sept. 30, 2004  Sept. 30, 2003     Decrease
------------------------------------------------------------------------

Aircraft fuel                       0.026           0.023        (13.0%)
Airport operations                  0.019           0.018         (5.6%)
Flight operations and
 navigational charges               0.017           0.015        (13.3%)
Sales and marketing                 0.010           0.008        (25.0%)
Maintenance                         0.009           0.012         25.0%
Amortization                        0.009           0.009          0.0%
General and administration          0.007           0.007          0.0%
Aircraft leasing                    0.005           0.007         28.6%
Interest expense                    0.004           0.003        (33.3%)
Inflight                            0.005           0.005          0.0%
Customer service                    0.002           0.003         33.3%

------------------------------------------------------------------------
Total                               0.113           0.110         (2.7%)

                                        Three Months Ended
                          ----------------------------------------------
                                                           % (Increase)
                           Sept. 30, 2004   June 30, 2004     Decrease
------------------------------------------------------------------------

Aircraft fuel                       0.027           0.025         (8.0%)
Airport operations                  0.019           0.020          5.0%
Flight operations and
 navigational charges               0.016           0.017          5.9%
Sales and marketing                 0.009           0.013         30.8%
Maintenance                         0.008           0.009         11.1%
Amortization                        0.008           0.009         11.1%
General and administration          0.007           0.008         12.5%
Aircraft leasing                    0.004           0.005         20.0%
Interest expense                    0.005           0.005          0.0%
Inflight                            0.005           0.005          0.0%
Customer service                    0.003           0.003          0.0%

------------------------------------------------------------------------
Total                               0.111           0.119          6.7%

Challenging The Environment

We strive to maximize the revenue obtained from the sale of seats on every flight, which is why we are disappointed with the lack of development in our yield performance this quarter. Our three-month yield declined by 4.0% compared to the third quarter of 2003 and deteriorated by 5.0% during the nine-months ended September 30, 2004 from the same period last year. The cause of the decline in our yield results can be attributed to an increase of capacity in the market along with our increasing average trip length.

Increasing average trip length reduces yield in the same manner as increasing average stage length reduces unit costs. Average trip length is defined as the average distance on a one-way trip that a guest flies from a point of origin to final destination, inclusive of stopovers and transfers onto at least one other flight.

In the third quarter, we estimate a significant portion of yield decline that occurred from last year to this year was related to this increasing trip length. Similar increases in trip length during the first nine months of 2004 led to approximately 3% of the 5% yield decline.

Our yield was also driven down by an increase in the number of seats that we sold at a discount compared to the previous year as we endeavoured to respond to increased capacity in the market. During this quarter, 43% of our seat inventory was sold at seat sale fares while only 39% were sold at discounted fares in the same period last year. Similarly, 47% of our seats were sold at reduced fares for the year-to-date period, an increase of six percentage points from the same nine-month period last year.

Our overall cost per available seat mile ("CASM") increased by 6.7% and 2.7% in the three and nine-month period ended September 30, 2004 respectively, compared to the same periods last year. Persistently high fuel prices represented the single largest impact in our variable costs and have negated the reduction we would have realized from our increased stage length and have contributed to the majority of our CASM increase. Our average stage length has increased by approximately 16% from 679 miles in the third quarter of 2003 to 788 miles in the same quarter of this year. Similarly, for the nine-month period ended September 30, 2004, our average stage length also increased 16% over the same period in the prior year. We estimate that our increased stage length caused an approximate decrease to our quarterly CASM by approximately 8% and approximately 8% to our year-to-date CASM, however, this benefit has been offset by higher fuel prices.

At $65.6 million, fuel cost accounts for 24% of our total operating costs. We incurred a 32% increase in fuel cost per litre in our operations during the third quarter of this year compared to the same quarter one year ago.

We estimate that for every US $1.00 change in the price of crude oil, our net earnings before employee profit share and taxes for the nine-months ended September 30, 2004 is impacted by $3.8 million. The average WTI US$ per barrel for the nine months ended September 30, 2004 was $39.41 which represents on average an increase of approximately $7 WTI US per barrel during the year-to-date period. This increase in fuel prices has caused an additional cost to our Company of approximately $27 million since the beginning of 2004.

In this high fuel cost environment, we believe it is not advantageous for us in the long-term to commit to fuel prices which we believe will eventually fall. We will continue to monitor the viability of entering into fuel hedges in the future and at this time we do not have any fuel hedges in place.

The cost pressure from fuel price increases not only impacts our Company but also other carriers within our industry. Although we have not hedged any fuel, we have to some extent been able to alleviate the impact of increasing fuel costs on our bottom line by managing our overall infrastructure costs. Since the second quarter of this year, our CASM has improved in all cost categories with the exception of fuel. Overall, our CASM improved by 6.7% since the second quarter of 2004, illustrating our ability to continually improve our fundamental cost structure exclusive of fuel.

We depend upon maximizing the efficiency of our aircraft to optimize our costs. With fuel being one of our largest and most unpredictable expenses, maximizing fuel efficiency is a necessity. We have further improved the new aircraft joining our fleet by adding fuel-saving blended winglet technology to these aircraft. By lowering drag and improving aerodynamic efficiency, winglets reduce required thrust and thereby extend engine life, a benefit that will be realized in a reduction to our future maintenance costs.

As at September 30, 2004 our fleet consisted of 35 fuel-efficient Boeing Next-Generation aircraft, with half of these aircraft retrofitted with winglets. We anticipate that all of our Next-Generation aircraft will be retrofitted with winglets by the middle of 2005. Future aircraft that we receive commencing November 2004 will already have factory-installed winglets when delivered. This will eliminate the need for us to remove aircraft from operating service, thereby maximizing revenue-generating opportunities by fully utilizing our capacity in our network at all times.

As our fleet is replenished with new aircraft and we retire our older 737-200 aircraft, the average age of our fleet decreases. Along with the fuel savings, we also realize an improvement in maintenance unit costs, as new aircraft require less maintenance than older aircraft. Clearly, our unit maintenance costs have benefited from our investment in a newer fleet, as we see a 20.0% decrease in maintenance CASM in the third quarter of 2004 compared to the third quarter of 2003. Correspondingly, our nine-month CASM for maintenance has improved by 25.0% compared to the same period last year.

In comparing the current third quarter and year-to-date results to the same periods last year, we must consider the impact of stock-based compensation expense we had to incur this year to comply with changes in Canadian generally accepted accounting principles. For the three and nine months ended September 30, 2004, we recognized $3.4 million and $8.9 million in stock-based compensation expense respectively, while for the same periods in the previous year, no stock-based compensation expense was required to be recognized. This caused our third quarter CASM to increase by approximately 1% over the same period one year ago.

Overall, fuel price increases had the largest impact on our CASM, accounting for 0.5 cents of our unit cost increase from this quarter compared to the same quarter in the prior year, and 0.3 cents of the increase in our year-to-date CASM compared to the nine-month period in 2003. Excluding the impact of these increases, CASM would have been 10.6 cents and 11.0 cents for the three-months ended and nine-months ended September 30, 2004, respectively, bringing our unit costs during these periods in line with that of the previous year's.

Building the future with a strong balance sheet

Cash flow management is imperative for the long-term success of our Company. The airline industry's financial health is highly sensitive to external factors, including volatility in fuel prices, weather conditions, health epidemics, such as SARS, and threats and acts of terrorism. Consequently, there is a high degree of uncertainty in our business due to unpredictable events in our environment. Consequently our ability to maintain a strong cash position is critical to our continued success by allowing us to weather the impact of unforeseen events on our operations.

Throughout the course of the past year we have been successful in stabilizing our cash flow. We have been able to maintain a strong liquidity position, ending each quarter with a cash balance in excess of $225 million. We ended this quarter with a healthy cash position by having $227.9 million in cash and cash equivalents on hand.

Our short-term liquidity position remains healthy as indicated by our current ratio. We ended the third quarter of this year with a working capital ratio of 0.9:1 compared to 1.2:1 at December 31, 2003 and 0.7:1 at September 30, 2003.

We place high importance on maintaining a strong balance sheet in order to endure negative economic elements. We measure the strength of our balance by targeting a debt-to-equity ratio of no more than 3:1, including off-balance sheet financing, which is a conservative standard within our industry.

As we evolve our fleet to new Next-Generation aircraft, we will continue to incur more debt to finance this growth. We added an additional $121.4 million in Canadian dollar debt to finance the acquisition of three aircraft deliveries during the third quarter of this year. For the nine months ended September 30, 2004 we incurred $388.9 million in additional Canadian dollar debt to support the purchase of 10 aircraft. We completed the quarter with $996.1 million of debt on our balance sheet, including obligations related to capital leases, and $278.7 million of off-balance sheet debt associated to operating leases on 11 aircraft.

We ended this quarter with a debt-to-equity ratio 2.0:1 compared to 1.7:1 at the commencement of this year, after incorporating off-balance sheet debt. This is well within our self-imposed limit of 3.0:1. As at October 20, 2004, we had 125,453,275 outstanding common shares.

For the remainder of this year, we will be incurring additional Canadian dollar debt for the acquisition of our last scheduled aircraft delivery during 2004. Through the use of a foreign exchange forward fixing agreement, we have fixed the foreign exchange rate on US$29 million of the US dollar purchase price of this aircraft at a rate of 1.36 for settlement in November 2004, with the remainder of the purchase price to be fixed at the foreign exchange rate prevalent at the time of delivery. Our ability to acquire Canadian dollar debt for US dollar aircraft purchases has significantly reduced our exposure to fluctuations in the foreign exchange rate.

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 table below:

(Millions)              2004  2005  2006  2007  2008 Thereafter    Total
------------------------------------------------------------------------
------------------------------------------------------------------------

Long-term debt          $ 23  $ 94  $ 89  $ 89  $ 89      $ 601    $ 985
Capital lease
 obligations (1)(2)        2     5     3     1     1          -       12
Operating leases (3)      15    55    52    51    50        354      577
Purchase obligations (4)  56   493   131     -     -          -      680

------------------------------------------------------------------------
Total contractual
 obligations            $ 96 $ 647 $ 275 $ 141 $ 140      $ 955  $ 2,254
------------------------------------------------------------------------
------------------------------------------------------------------------


(1) The Corporation's capital leases are denominated in US dollars. The
    obligations in US dollars are 2004 - $1,353,000, 2005 - $4,220,000,
    2006 - $2,743,000, 2007 - $900,000, 2008 - $375,000

(2) Includes imputed interest at 7.74% totalling $1,061,000

(3) Included in operating leases are US dollar operating leases
    primarily related to aircraft. The obligations of these operating
    leases in US dollars are 2004 - $7,741,000, 2005 - $30,822,000, 2006
    - $29,162,000, 2007 - $29,096,000, 2008 - $29,096,000, 2009 and
    thereafter - $209,320,000.

(4) Relates to purchases of aircraft, LiveTV systems and winglets

Although we signed an agreement in August 2003 with Ontario Teachers' Pension Plan for a $100 million equity line, we opted not to exercise this upon its expiry this year. At the time we entered into the agreement, our intention was to secure a back-up resource to finance our future growth. Since that time, we have successfully issued $150 million of new equity and have been able to generate sufficient cash from operations to meet the required pre-payments on our future aircraft deliveries, while maintaining a healthy balance sheet.

During the quarter we continued to move forward with investments in our infrastructure growth. We finished the quarter with 35 Next-Generation aircraft and 18 737-200 aircraft, increasing our total fleet by 20% since the start of this year. We spent an additional $23.4 million during the quarter to pre-pay a portion of our committed future aircraft purchases, bringing the total amount on deposit with Boeing to $132.4 million. We expended $121.4 million to support the purchase of the three aircraft we received during the quarter, and for payments related to LiveTV and winglets. Furthermore, we incurred cash outlays of $12.6 million on spare parts, facility equipment, and training equipment to support our growing fleet.

Our success to date has been rooted in our low-cost structure and unique corporate culture. We are now entering the winter months, a period when the December holiday season is the only strong time amid months of a lower demand for travel domestically. This will pose additional challenges to our Company, along with the necessity to deal with economic pressures brought about by high fuel prices and price competition. Offsetting these negative factors, however, we will be increasing our charter flying by 100% this winter which will improve our earnings potential, fleet utilization and load factors.

Despite these pressures, we will continue to focus on our long-term plans to continually improve our cost structure and the quality of service we provide our guests, and not allow current hindrances to distract us. By improving on our fundamental strengths, we will be better equipped to overcome future hurdles. And as we have proven in the past, challenges will only serve to renew the resolve of our motivated and loyal team of people to work harder at making WestJet even more successful.

October 20, 2004

WestJet Airlines Ltd.
Consolidated Financial Statements
September 30, 2004
(Unaudited)


WestJet Airlines Ltd.
Consolidated Balance Sheets
September 30, 2004, December 31, 2003 and September 30, 2003
(Stated in Thousands of Dollars)


-----------------------------------------------------------------------
-----------------------------------------------------------------------
                                  September      December     September
                                       2004          2003          2003
                                 (unaudited)                 (unaudited)
-----------------------------------------------------------------------
Assets
Current assets:
 Cash and cash equivalents      $   227,887   $   241,384   $   145,851
 Accounts receivable                 12,935        11,781         7,123
 Income taxes recoverable             3,423             -             -
 Prepaid expenses and deposits       24,612        19,928        10,563
 Inventory                            5,369         3,764         3,516
 ----------------------------------------------------------------------
                                    274,226       276,857       167,053

Property and equipment (note 3)   1,573,785     1,140,226     1,031,434

Other long-term assets
                                     79,398        59,775        50,095
-----------------------------------------------------------------------
                                $ 1,927,409   $ 1,476,858   $ 1,248,582
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable and accrued
   liabilities                  $    82,434   $    82,822   $    79,120
 Income taxes payable                     -         9,820         8,216
 Advance ticket sales                95,724        58,086        72,655
 Non-refundable guest credits        23,386        21,718        18,917
 Current portion of long-term
  debt (note 4)                      92,190        59,334        52,762
 Current portion of obligations
  under capital lease (note 8(b))     5,211         6,297         6,536
 ----------------------------------------------------------------------
                                    298,945       238,077       238,206

Long-term debt (note 4)             892,780       589,531       528,734

Obligations under capital lease
 (note 8(b))                          5,894         7,015         9,012

Long-term liabilities (note 5)       10,000             -             -

Future income tax                    87,068        61,423        54,457
-----------------------------------------------------------------------
                                  1,294,687       896,046       830,409
Shareholders' equity:
 Share capital (note 7)             390,465       376,081       226,205
 Contributed surplus (note 7(d))     18,542             -             -
 Retained earnings                  223,715       204,731       191,968
-----------------------------------------------------------------------
                                    632,722       580,812       418,173
-----------------------------------------------------------------------

Commitments and contingencies
 (note 8)                       $ 1,927,409   $ 1,476,858   $ 1,248,582
-----------------------------------------------------------------------
-----------------------------------------------------------------------

WestJet Airlines Ltd.
Consolidated Statements of Earnings and Retained Earnings
For the periods ended September 30, 2004 and 2003
(Unaudited)
(Stated in Thousands of Dollars, Except Per Share Data)


-----------------------------------------------------------------------
-----------------------------------------------------------------------
                       Three Months Ended             Nine Months Ended
                             September 30                  September 30
                      2004           2003           2004           2003
-----------------------------------------------------------------------
Revenues:
 Guest revenues  $ 283,949      $ 237,497      $ 693,054      $ 584,168
 Charter
  and other         25,059         16,355         87,074         46,850
 Interest Income     1,265            978          4,128          2,421
-----------------------------------------------------------------------
                   310,273        254,830        784,256        633,439


Expenses:
 Aircraft fuel      65,601         41,461        165,532        115,122
 Airport
  operations        45,362         31,519        123,512         87,281
 Flight
  operations
  and
  navigational
  charges           39,294         28,173        107,326         75,387
 Sales and
  marketing         20,508         16,006         62,332         41,713
 Maintenance        19,516         19,053         57,089         57,779
 Amortization       19,890         17,357         56,762         46,415
 General
  and
  administration    17,413         11,771         44,713         33,706
 Aircraft leasing   10,487         10,745         31,538         33,830
 Interest expense   11,682          7,036         31,036         16,611
 Inflight           11,534          8,590         31,517         23,098
 Customer service    6,581          6,047         17,020         15,880
 ----------------------------------------------------------------------
                   267,868        197,758        728,377        546,822

-----------------------------------------------------------------------
Earnings from
 operations         42,405         57,072         55,879         86,617

Non-operating
 income
 (expense):
  Gain (loss)
   on foreign
   exchange         (2,668)         2,001           (637)           (47)
  Gain (loss) on
   disposal of
   property and
   equipment            32            214            (23)           436
-----------------------------------------------------------------------
                    (2,636)         2,215           (660)           389

Employee profit
 share (note 9)      4,135          9,888          5,839         13,136

-----------------------------------------------------------------------

Earnings before
 income taxes       35,634         49,399         49,380         73,870

Income tax
 expense
 (reduction):
  Current            1,479         (1,692)        (5,366)         9,654
  Future            13,032         18,835         25,645         16,440
  ---------------------------------------------------------------------
                    14,511         17,143         20,279         26,094

-----------------------------------------------------------------------
Net earnings        21,123         32,256         29,101         47,776

Retained
 earnings,
 beginning
 of period         202,592        159,712        204,731        144,192

Change in
 accounting
 policy
 (note 7(d))             -              -        (10,117)             -
-----------------------------------------------------------------------

Retained
 earnings,
 end of period   $ 223,715      $ 191,968      $ 223,715      $ 191,968
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Earnings per share
 (note 7(c)):
  Basic          $    0.17      $    0.28      $    0.23      $    0.42
  Diluted        $    0.17      $    0.28      $    0.23      $    0.42

-----------------------------------------------------------------------
-----------------------------------------------------------------------

Operating highlights:

Available
 seat miles  2,411,184,937  1,900,486,662  6,474,433,930  4,981,041,679
Revenue
 passenger
 miles       1,847,831,718  1,452,035,835  4,597,575,973  3,523,708,733
Load factor           76.6%          76.4%          71.0%          70.7%
Revenue per
 passenger
  mile (cents)        16.8           17.5           17.1           18.0
Revenue per
 available
 seat mile
 (cents)              12.9           13.4           12.1           12.7
Cost per
 passenger
 mile (cents)         14.5           13.6           15.8           15.5
Cost per
 available seat
 mile (cents)         11.1           10.4           11.3           11.0
Fuel
 consumption
 (litres)       131,666,890   109,673,410    356,121,880    288,244,265
Fuel cost/litre
(cents)                49.8          37.8           46.5           39.9
Segment guests    2,174,582     1,991,486      5,742,767      5,122,749
Average stage
 length               788.0         679.4          749.8          644.9
Number of full
 time equivalent
 employees at
 quarter end          3,923         3,217          3,923          3,217
Fleet size at
 quarter end             53            43             53             43
-----------------------------------------------------------------------
-----------------------------------------------------------------------


WestJet Airlines Ltd.
Consolidated Statements of Cash Flows
For the periods ended September 30, 2004 and 2003
(Unaudited)
(Stated in Thousands of Dollars)

-----------------------------------------------------------------------
-----------------------------------------------------------------------
                             Three Months Ended       Nine Months Ended
                                   September 30            September 30
                               2004        2003        2004        2003
-----------------------------------------------------------------------
Cash flows from (used in):

Operations:
 Net earnings              $ 21,123    $ 32,256    $ 29,101    $ 47,776
 Items not involving cash:
  Amortization               19,890      17,357      56,762      46,415
 (Gain) loss on
   disposal of  property
   and equipment                (32)       (214)         23        (436)
  Stock-based compensation
   expense                    3,411           -       8,869           -
  Issued from treasury stock      -           -           -       3,062
  Future income tax expense  13,032      18,835      25,645      16,440
-----------------------------------------------------------------------
                             57,424      68,234     120,400     113,257

 (Increase) Decrease in
  non-cash working
  capital                   (30,441)     (9,281)     18,101      62,056
-----------------------------------------------------------------------
                             26,983      58,953     138,501     175,313

Financing:
 Repayment of long-term
  debt                      (20,395)    (14,622)    (52,830)    (35,847)
 Increase in long-term
  debt                      121,376     120,862     388,935     385,673
 Decrease in obligations
  under capital lease        (1,590)     (1,593)     (4,826)     (4,939)
 Increase in long-term
  liabilities                     -           -      10,000           -
 Share issuance costs             -           -         (10)        (55)
 Increase in other
  long-term assets           (5,122)     (5,117)    (21,562)    (14,955)
 Issuance of common
  shares                        142       7,405      13,950      11,614
-----------------------------------------------------------------------
                             94,411     106,935     333,657     341,491
-----------------------------------------------------------------------

Investing:
 Aircraft additions        (149,689)   (156,353)   (455,275)   (446,048)
 Other property and
  equipment additions        (7,956)    (11,889)    (33,224)    (26,801)
 Other property and
  equipment disposals           237         683       2,842       1,486
-----------------------------------------------------------------------
                           (157,408)   (167,559)   (485,657)   (471,363)
-----------------------------------------------------------------------

Net change in cash          (36,014)     (1,671)    (13,499)     45,441

Cash, beginning of period   263,899     147,522     241,384     100,410
-----------------------------------------------------------------------
Cash, end of period       $ 227,885   $ 145,851   $ 227,885   $ 145,851
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Cash interest and taxes paid during the nine months ended September 30,
2004 were $21,321,000 (2003 - $14,217,000) and $7,878,000 (2003 -
$9,420,000) respectively.

As at September 30, 2004 cash and cash equivalents include US $8,238,000
(2003 - $nil) of restricted cash.


WestJet Airlines Ltd.
Notes to Consolidated Financial Statements,
For the periods ended September 30, 2004 and 2003
(Unaudited)
(Tabular Dollar Amounts are Stated in Thousands, Except Per Share Data)

The interim consolidated financial statements of WestJet Airlines Ltd.
("WestJet" or "the Corporation") have been prepared by management in
accordance with accounting principles generally accepted in Canada. The
interim consolidated financial statements have been prepared following
the same accounting policies and methods of computation as the
consolidated financial statements for the fiscal year ended December 31,
2003, except as disclosed below. The disclosures provided below are
incremental to those included with the annual consolidated financial
statements. The interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and the
notes thereto in the Corporation's annual report for the year ended
December 31, 2003.

The Corporation's business is seasonal in nature, with the highest
activity in the summer (third quarter) and the lowest activity in the
winter (first quarter) due to the high number of leisure travelers and
their preference to travel during the summer months.


1. Comparative figures:

   Certain prior period balances have been reclassified to conform to
   current period's presentation.

2. Maintenance costs:

   Heavy maintenance ("D" check) costs incurred on the 200-series
   aircraft are capitalized and amortized over the remaining useful
   service life of the "D" check. Future "D" checks are not expected to
   occur on the 200-series aircraft based on the Corporation's aircraft
   retirement plan.

   As with the 200-series aircraft, the 700-series aircraft are
   maintained under a maintenance program approved by Transport Canada.
   This program entails portions of services required under "D" checks
   to be performed throughout the service period of the 700-series
   aircraft, and therefore the traditional "D" check will not be
   performed on the 700-series aircraft. All heavy maintenance costs
   related to 700-series aircraft are expensed as incurred.


3. Property and equipment:

-----------------------------------------------------------------------
-----------------------------------------------------------------------

September 30, 2004                          Accumulated
                                     Cost  Depreciation  Net book value
-----------------------------------------------------------------------

Aircraft - 700 series         $ 1,210,274     $  37,263     $ 1,173,011
Aircraft - 200 series             144,424        76,627          67,797
Ground property and equipment     105,766        32,419          73,347
Spare engines and parts - 700
 series                            52,556         4,167          48,389
Buildings                          39,401         2,593          36,808
Aircraft under capital lease       29,442        18,046          11,396
Spare engines and parts - 200
 series                            25,370        13,833          11,537
Leasehold improvements              5,422         2,949           2,473
-----------------------------------------------------------------------
                                1,612,655       187,897       1,424,758
Deposits on aircraft              140,882             -         140,882
Assets under construction           8,145             -           8,145
-----------------------------------------------------------------------
                              $ 1,761,682     $ 187,897     $ 1,573,785
-----------------------------------------------------------------------
-----------------------------------------------------------------------

-----------------------------------------------------------------------
-----------------------------------------------------------------------

December 31, 2003                           Accumulated
                                     Cost  Depreciation  Net book value
-----------------------------------------------------------------------

Aircraft - 700 series         $   758,135     $  17,265     $   740,870
Aircraft - 200 series             152,487        70,424          82,063
Ground property and equipment      93,636        22,524          71,112
Spare engines and parts - 700
 series                            36,754         2,518          34,236
Buildings                          39,474         1,852          37,622
Aircraft under capital lease       31,135        17,221          13,914
Spare engines and parts - 200
 series                            26,376        11,634          14,742
Leasehold improvements              5,055         2,377           2,678
-----------------------------------------------------------------------
                                1,143,052       145,815         997,237
Deposits on aircraft              141,640             -         141,640
Assets under construction           1,349             -           1,349
-----------------------------------------------------------------------
                              $ 1,286,041     $ 145,815     $ 1,140,226
-----------------------------------------------------------------------
-----------------------------------------------------------------------

-----------------------------------------------------------------------
-----------------------------------------------------------------------

September 30, 2003                          Accumulated
                                     Cost  Depreciation  Net book value
-----------------------------------------------------------------------

Aircraft - 700 series         $   659,236     $  12,022     $   647,214
Aircraft - 200 series             157,978        70,971          87,007
Ground property and equipment      87,744        19,861          67,883
Spare engines and parts - 700
 series                            35,367         1,946          33,421
Buildings                          39,772         1,603          38,169
Aircraft under capital lease       31,093        15,424          15,669
Spare engines and parts - 200
 series                            26,925        10,871          16,054
Leasehold improvements              4,901         2,105           2,796
-----------------------------------------------------------------------
                                1,043,016       134,803         908,213
Deposits on aircraft              122,756             -         122,756
Assets under construction             465             -             465
-----------------------------------------------------------------------
                              $ 1,166,237     $ 134,803     $ 1,031,434
-----------------------------------------------------------------------
-----------------------------------------------------------------------


4. Long-term debt:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
                                         September  December  September
                                                30        31         30
                                              2004      2003       2003
-----------------------------------------------------------------------

$1,013,159,000 in 25 individual term
loans, amortized on a straight-line
basis over a 12-year term, repayable in
quarterly principal instalments ranging
from $768,000 to $955,000, guaranteed
by the Ex-Im Bank and secured by 25
700-series aircraft, and maturing
between 2014 and 2016. 22 of these
facilities include fixed rate weighted
average interest at 5.43%. The remaining
three facilities, totalling
$119,502,000, include weighted average
floating interest at the Canadian LIBOR
rate plus 0.08% (effective weighted
interest rate of 2.37% as at September
30, 2004) until after the first
scheduled repayment dates in December
2004, after such time the interest rate
on the loans will be fixed at an average
rate of 5.72% for the remaining period
the loans are outstanding                $ 935,410  $ 600,047 $ 530,822

$26,000,000 in two individual term
loans, repayable in monthly instalments
of $105,000 and $155,000 including
floating interest at the bank's prime
plus 0.88% with an effective interest
rate of 4.88% as at September 30, 2004,
maturing in July 2008 and July 2013,
secured by two Next-Generation flight
simulators and cross-collateralized by
one 200-series aircraft                     22,188     23,751    24,258

$12,000,000 term loan repayable in
monthly instalments of $108,000
including interest at 9.03%, maturing
April 2011, secured by the Calgary
hangar facility                             11,147     11,360    11,425

$22,073,000 in six individual term
loans, repayable in monthly instalments
ranging from $25,000 to $87,000
including fixed rate weighted average
interest at 8.43% with maturities in
October 2005, secured by three
200-series aircraft                          6,188      9,390    10,586

$4,550,000 term loan repayable in
monthly instalments of $50,000,
including floating interest at the
bank's prime plus 0.50%, with an
effective interest rate of 4.50% as at
September 30, 2004, maturing April
2013, secured by the Calgary hangar
facility                                     4,000      4,317     4,405

$6,355,000 in 10 individual term loans,
amortized on a straight-line basis over
a five year term, repayable in
quarterly principal instalments ranging
from $30,000 to $33,000 including
floating interest at Canadian LIBOR
plus 0.08%, with a weighted average
effective interest rate of 2.26%,
maturing in 2009, guaranteed by the
Ex-Im Bank and secured by certain
700-series aircraft                          6,037          -         -
-----------------------------------------------------------------------
                                           984,970    648,865   581,496
Less current portion                        92,190     59,334    52,762
-----------------------------------------------------------------------
                                         $ 892,780  $ 589,531 $ 528,734
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Future scheduled repayments of long-term debt are as follows:

--------------------------------------------
--------------------------------------------
2004                                $ 23,000
2005                                  93,866
2006                                  88,716
2007                                  88,878
2008                                  89,048
2009 and thereafter                  601,462
--------------------------------------------
                                   $ 984,970
--------------------------------------------
--------------------------------------------

5. Long-term liabilities

   The Corporation recorded $10 million of unearned revenue relating to
   the tri-branded credit card. The unearned revenue will be drawn down
   commencing in May 2005 under this five-year agreement.


6. Financial instruments:

  (a) Foreign exchange risk management

      At September 30, 2004, the Corporation had U.S. dollar cash and
      cash equivalents totaling US $38,065,000 (2003 - $24,099,000).

      The Corporation has entered into a contract to fix the exchange
      rate on the future US dollar debt facility for the purchase of one
      aircraft in November 2004. As at September 30, 2004, the total
      amount of the debt facility fixed is US $29 million at a forward
      rate of 1.36 for settlement in November 2004. The total estimated
      fair value of the contract at September 30, 2004 is a loss of CDN
      $2.8 million.

      Gains and losses relating to derivatives that are hedges are
      deferred in other long-term assets and recognized in the same
      period and in the same financial category as the corresponding
      hedged transactions.

  (b) Interest rate risk management

      The Corporation has entered into a forward starting interest rate
      agreement at a rate of 5.93%, effective in February 2005, to fix
      the interest rate on one future aircraft delivery during 2004.

  (c) Financing agreement

      The Corporation had an agreement with Ontario Teachers' Pension 
      Plan Board ("Ontario Teachers") for the right to require Ontario
      Teachers to purchase up to $100,000,000 of common shares, which 
      expired on August 29,2004 and was extended to September 10, 2004. 
      The Corporation elected not to exercise the financing agreement 
      and has included the 1% annual standby fee in general and 
      administrative expenses for the period ended September 30, 2004.

7. Share capital:

(a) Issued:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
                              Three Months Ended      Nine Months Ended
                              September 30, 2004     September 30, 2004
-----------------------------------------------------------------------
                               Number     Amount        Number   Amount
-----------------------------------------------------------------------
Common shares:

Balance, beginning
 of period                125,409,291  $ 390,206  123,882,489 $ 376,081
  Exercise of options          38,545        142    1,562,151    13,950
  Stock-base
   compensation                              117                    444
  Issued on rounding
    of stock split                  -          -        3,196         -
  Share issuance costs                         -                    (10)

-----------------------------------------------------------------------
Balance, end of period    125,447,836  $ 390,465  125,447,836 $ 390,465
-----------------------------------------------------------------------
-----------------------------------------------------------------------


-----------------------------------------------------------------------
-----------------------------------------------------------------------
                             Three Months Ended       Nine Months Ended
                             September 30, 2003      September 30, 2003
-----------------------------------------------------------------------
                              Number     Amount       Number     Amount
-----------------------------------------------------------------------

Common shares:

Balance, beginning
 of period               113,366,367  $ 218,800  112,349,414  $ 211,564
  Exercise of options        813,711      7,405    1,248,595      8,552
  Common shares issued
   from treasury                   -          -      582,069      6,124
  Share issuance costs                        -                     (55)
  Tax benefit of
   issue costs                                -                      20

-----------------------------------------------------------------------
Balance, end of period   114,180,078  $ 226,205  114,180,078  $ 226,205
-----------------------------------------------------------------------
-----------------------------------------------------------------------

(b) Stock option plan:

Changes in the number of options, with their weighted average exercise
prices, are summarized below:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
                             Three Months Ended       Nine Months Ended
                             September 30, 2004      September 30, 2004
-----------------------------------------------------------------------
                                       Weighted                Weighted
                              Number    average       Number    average
                                  of   exercise           of   exercise
                             Options      price      Options      price
-----------------------------------------------------------------------

Stock options outstanding,
 beginning of period      11,053,974    $ 12.29     9,809,753   $ 10.78
Issued                        13,637      12.96     2,904,677     15.77
Exercised                   (114,378)     10.12    (1,707,320)     9.36
Cancelled                    (34,344)     13.78       (88,221)    12.53

-----------------------------------------------------------------------
Stock options outstanding,
 end of period            10,918,889    $ 12.32    10,918,889   $ 12.32
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Exercisable, end of
 period                    4,946,039    $ 10.84     4,946,039   $ 10.84
-----------------------------------------------------------------------
-----------------------------------------------------------------------

-----------------------------------------------------------------------
-----------------------------------------------------------------------
                             Three Months Ended       Nine Months Ended
                             September 30, 2003      September 30, 2003
-----------------------------------------------------------------------
                                       Weighted                Weighted
                              Number    average       Number    average
                                  of   exercise           of   exercise
                             Options      price      Options      price
-----------------------------------------------------------------------

Stock options outstanding,
 beginning of period      11,048,199    $ 10.60    8,713,782     $ 9.99
Issued                         8,174      10.68    2,904,420      11.21
Exercised                   (813,711)      9.10   (1,248,596)      6.85
Cancelled                     (4,307)     13.19     (131,252)     10.55

-----------------------------------------------------------------------
Stock options outstanding,
 end of period            10,238,355    $ 10.71   10,238,355    $ 10.71
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Exercisable, end of
 period                    1,768,364    $  9.10    1,768,364    $  9.10
-----------------------------------------------------------------------
-----------------------------------------------------------------------

At the Annual General Meeting held in April 2004, Shareholders approved
the new 2004 stock option plan and an amendment to the 2003 stock
option plan. The terms of the approved plans allow the holders of vested
options a cashless settlement alternative whereby the option holder can
either (a) elect to receive shares by delivering cash to the
Corporation in the amount of the options or (b) elect to receive a
number of shares equivalent to the market value of the options over the
exercise price. For the three months ended September 30, 2004, option
holders exercised 99,987 options on a cashless settlement basis and
received 24,154 shares. For the nine months ended September 30, 2004,
option holders exercised 197,953 options on a cashless settlement basis
and received 52,784 shares.

(c) Per share amounts:

The following table summarizes the common shares used in calculating net
earnings per common share:

------------------------------------------------------------------------
------------------------------------------------------------------------
                             Three Months Ended        Nine Months Ended
                                   September 30             September 30
                               2004        2003        2004         2003
------------------------------------------------------------------------
Weighted average number
 of common shares
 outstanding - basic    125,423,627 113,711,288  124,938,868 113,167,013
Effect of dilutive
 employee stock options   1,207,202   2,379,897    2,147,020   1,308,471

------------------------------------------------------------------------
Weighted average number
 of common shares
 outstanding - diluted  126,630,829 116,091,185  127,085,888 114,475,484
------------------------------------------------------------------------
------------------------------------------------------------------------

(d) Stock-based compensation

    On January 1, 2004 the Corporation changed its accounting policy
    related to stock options granted on or after January 1, 2002. Under
    the new policy, the Corporation determines the fair value of stock
    options on their grant date and records this amount as compensation
    expense over the period that the stock options vest, with a
    corresponding increase to contributed surplus. The Corporation has
    retroactively adopted the changes without restatement of prior
    periods on January 1, 2004 which resulted in retained earnings
    decreasing by $10.1 million and an offsetting entry to contributed
    surplus.

    As new options are granted, the fair value of these options will be
    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 in share capital.

    Employee compensation expense included in flight operations and
    general and administrative expenses totalled $3.4 million and $8.9
    million for the three and nine months ended September 30, 2004
    respectively related to the vesting of the outstanding stock options
    issued on or after January 1, 2002 to officers and certain employees
    of the Corporation.

    The fair market value of options granted during the three months
    ended September 30, 2004 and the weighted average assumptions used
    in their determination are as follows:

            Fair market value per option      $     4.41
            Risk free interest rate                 3.86%
            Expected stock price volatility           40%
            Expected life of options           3.5 years

8. Commitments and contingencies: 

(a) Aircraft: 

    The Corporation has committed to purchase nine 737-700s, five
    737-800s and seven 737-600s for delivery between 2004 and 2006. 

    The remaining estimated amounts to be paid in deposits and
    purchase prices in US dollars relating to the purchases of the
    remaining aircraft, LiveTV systems and winglets are as follows:

     ---------------------------
     ---------------------------
     2004              $  56,051
     2005                493,091
     2006                130,814
     ---------------------------
                       $ 679,956
     ---------------------------
     ---------------------------

(b) Leasehold commitments:

    The Corporation has entered into operating leases and agreements
    for aircraft, buildings, computer hardware and software licenses,
    satellite programming, and capital leases relating to aircraft. The
    obligations are as follows:

                                                    -------------------
                                                    -------------------
                                                     Capital  Operating
                                                      Leases     Leases
                                                    -------------------
    2004                                             $ 1,716  $  15,147
    2005                                               5,353     54,983
    2006                                               3,479     52,332
    2007                                               1,142     50,665
    2008                                                 476     50,264
    2009 and thereafter                                    -    353,305
                                                    -------------------
    Total lease payments                              12,166  $ 576,696
                                                              ---------
                                                              ---------
    Less imputed interest at 7.74%                    (1,061)
                                                    --------
    Net minimum lease payments                        11,105
                                                    --------
    Less current portion of obligation
    under capital lease                               (5,211)
                                                    --------
    Obligations under capital lease                  $ 5,894
                                                    --------
                                                    --------

    The Corporation's capital leases are denominated in US dollars. The
    obligations in US dollars are 2004 - $1,353,000, 2005 - $4,220,000,
    2006 - $2,743,000, 2007 - $900,000, 2008 - $375,000.

    Included in operating leases are US dollar operating leases
    primarily related to aircraft. The obligations of these operating
    leases in US dollars are 2004 - $7,741,000, 2005 - $30,822,000,
    2006 - $29,162,000, 2007 - $29,096,000, 2008 - $29,096,000, 2009
    and thereafter - $209,320,000.

(c) Contingencies: 

    An Amended Statement of Claim was filed by Air Canada and ZIP Air
    Inc. in the Ontario Superior Court on July 22, 2004 against the
    Corporation, an employee, and a former officer (the "Defendants").
    The principal allegations are that the Defendants unlawfully
    obtained confidential flight load and load factor information from
    Air Canada's employee travel website and, as a result, the
    Plaintiffs have suffered damages and the Defendants have benefited
    from having access to the alleged confidential information. The
    Plaintiffs are seeking damages, aggregating $220 million, but the
    Plaintiffs have provided no details or evidence to substantiate
    their damages claim.

    A Statement of Claim was also filed by Jetsgo Corporation in the
    Ontario Superior Court on October 15, 2004 against the Corporation,
    an officer, and a former officer (the "defendants"). The principal
    allegations are that the defendants conspired together to
    unlawfully obtain Jetsgo's proprietary information and to use this
    proprietary information to harm Jetsgo and benefit WestJet. The
    Plaintiff is seeking damages, in an amount to be determined plus
    $50 million, but the Plaintiff has provided no details or evidence
    to substantiate its claim.

    Based on the results to date of (i) an internal investigation, (ii)
    advice from independent industry experts, and (iii) cross-
    examinations of witnesses in the Air Canada proceedings, management
    believes the damages claimed are substantially without merit. The
    amount of loss, if any, to the Corporation as a result of these two
    claims cannot be reasonably estimated. The defense and
    investigation of these claims are continuing.

9. Employee profit share provision:

The provision for employee profit share is estimated based on actual
year-to-date earnings results. The actual employee profit share amount
is to be determined by the Board of Directors based on audited financial
results at the completion of the financial year.

FOR FURTHER INFORMATION PLEASE CONTACT:

WestJet
Siobhan Vinish (Pronounced Sha-von)
Director, Public Relations and Communications
(403) 444-2615
(403) 444-2261  (FAX)
Website: www.westjet.com




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