WestJet Boeing 737-700. Photo: By Rob Finlayson.

WestJet reported third-quarter net income of C$54 million ($53.4 million), up 72% over a C$31.4 million profit in the year-ago period, marking its 22nd straight reporting period in the black.

Separately, WestJet said it will issue an initial quarterly dividend of C$0.05 per common voting share and variable voting share, becoming one of the few carriers in the world to reward shareholders in this way. Quarterly revenue rose 14% to C$684.6 million while expenses climbed 13.5% to C$594.4 million, producing operating income of C$90.2 million, up 17.1% over a C$77 million operating profit last year. CFO Vito Culmone told analysts and reporters that the Calgary-based LCC has "increasing confidence that pricing is starting to improve" and that the climate is right for capacity expansion.

Its capacity is projected to grow 13%-14% year-over-year in the fourth quarter and 10%-11% for the full year 2010. The focus is on increased transborder and international flying, with domestic ASMs expected to be "down slightly" in the current quarter compared with last year, Culmone commented.

President and CEO Gregg Saretsky said there will be a continued focus on "ways to reduce costs" and making operations more efficient. New self-service options will be rolled out for passengers, he noted, pointing to newly introduced self-bag tagging at Vancouver and Calgary and the planned implementation of self-bag tagging at Toronto Pearson and Edmonton by year end.

Ancillary revenue will continue to be a priority, the carrier said, announcing Wednesday that passengers will be charged C$20 for a second checked bag on all flights for travel on or after Jan. 11 for bookings starting immediately. At the same time, it is reducing its fee for third and fourth checked bags from C$75 to C$50. The carrier, which previously didn't charge for the first two checked bags, still won't charge for a first checked bag. It said the new fee structure could raise as much as C$10 million annually. "We believe this new checked baggage approach more closely aligns us with standard industry practices," Saretsky said.

Third-quarter traffic increased 11.7% to 4.01 billion RPMs on an 11.7% lift in capacity to 5.03 billion ASMs, producing a flat load factor of 79.6%. Yield heightened 2.1% to C$0.171 as RASM improved 2% to C$0.136 and CASM increased 1.5% to C$0.118. CASM excluding fuel grew 1.1% to C$0.083.

WestJet's first quarterly dividend will be paid on Jan. 21 to shareholders of record on Dec. 15. It also said it will buy back around 5% of its outstanding stock over the next year. "We are pleased to announce our dividend and share buy-back program and provide our shareholders who continue to believe in our low-cost, high-value airline with an even greater return on their investment," Saretsky stated.