WestJet (TSX: WJA) today announced its 2006 second quarter results with net earnings of $22.4 million compared to net earnings of $2.3 million achieved in the same period in 2005, an increase of 872.8 per cent. In the first six months of 2006, the airline reported net earnings of $35.2 million as compared to a net loss of $7.3 million during the first six months of 2005.

Second Quarter Overview:

- Second quarter revenue increased by 30.3 per cent to $425.4 million from $326.4 million in second quarter 2005

- Year-to-date revenue grew by 30.9 per cent to $812.9 million from $621.0 million in the same period in 2005

- Second quarter diluted earnings per share of 17 cents compared to two cents in 2005

- Year-to-date diluted earnings per share of 27 cents compared to diluted loss per share of six cents in 2005

- Second quarter load factor of 77.5 per cent, compared with 71.0 per cent in the same period in 2005

- Year-to-date load factor of 78.4 per cent, compared with 72.3 per cent during the first half of last year

- Year-to-date aircraft utilization increased from 11.6 to 12.2 block hours per day for the first two quarters of 2006 versus the first two quarters of 2005, an increase of 5.2 per cent

- Second quarter ancillary revenues, including fees and non-fare items, increased by 104.0 per cent to $17.4 million in the second quarter 2006 from $8.5 million in the same period 2005

- Year-to-date ancillary revenues for 2006 increased 71.3 per cent to $31.5 million in the second quarter of 2006 from $18.4 million in the first six months of 2005

- Record breaking on-time performance (OTP) averaged 91.6 per cent for the second quarter 2006, a 4.3 percentage point increase over the same period in 2005

- Corporate tax rate reductions resulted in recovery of $11.2 million of future income tax expense previously recognized

- Elimination of the large corporation tax, effective January 1, 2006, created a reversal of approximately $1 million in taxes previously recorded in the year

- Total number of common and variable voting shares outstanding as at June 30, 2006 was 129,578,305, compared to 128,255,922 on June 30, 2005

This quarter, we grew our capacity, measured in available seat miles (ASMs), by 18.5 per cent to 3.002 billion ASMs from 2.534 billion ASMs in the same quarter last year. Year to date, ASMs increased 14.2 per cent to 5.899 billion from 5.164 billion ASMs in the same period last year. Revenue passenger miles (RPMs) increased 29.3 per cent to 2.326 billion RPMs this quarter, from 1.798 billion in the second quarter of 2005. For the first six months of 2006, RPMs increased to 4.626 billion RPMs from 3.733 billion, an increase of 23.9 per cent over the same period in 2005.

WestJet's costs per ASM increased during the second quarter to 12.9 cents from 12.6 cents in the same period of 2005. During the first half of the year, our cost per available seat mile increased from 12.1 cents in 2005 to 12.7 cents this year. Our cost per ASM, excluding fuel, during the three months ended June 30, 2006, remained consistent at 9.4 cents from the same period in 2005. During the first six months of the year, our cost per ASM, excluding fuel, increased to 9.3 cents from 9.0 cents during the first half of 2005.

Yield (revenue per revenue passenger mile) for the quarter was 18.3 cents compared to 18.2 cents in the second quarter of 2005. However, on a stage length adjusted basis yield increased by approximately four per cent this quarter compared to the same period in 2005. During the first six months of the year, yield was 17.6 cents compared to 16.6 cents for the six months ended June 30, 2005. On a stage length adjusted basis yield increased by seven per cent during the first half of this year compared to the same period last year.

Clive Beddoe, WestJet's President and Chief Executive Officer, commented: "We have completed a profitable first six months of business for 2006 with strong second quarter results. Among our many accomplishments, a significant highlight for this period was our ability to continue to add capacity and still generate increased, and in most cases record-breaking, load factors. We successfully increased our aircraft utilization by four per cent in the second quarter of 2006 compared to the same period in 2005, and by five per cent for the six-month period ending June 30, 2006 compared to the same period ending in 2005.

"Of greater significance, we transitioned 13.5 per cent of our total capacity during the three month period ending June 30, 2006, from our winter schedule of charter and sun destinations to our Canadian domestic operations. This represents the largest single increase in domestic flying in our 10 year history and the largest seasonal reallocation of capacity we have ever undertaken. It is particularly rewarding to see this capacity being absorbed by the market even though this shift dampened our increase in yields in the short-term. We do expect to see these yields improve as we move into the third quarter.

"April to June, 2006 marked the first quarter we exclusively operated one type of aircraft, the Boeing Next-Generation 737. We now operate only 737-600s, -700s and -800s, with the average age of our fleet now being 2.3 years. The last of our old 200-series was retired on January 9, 2006.

"During the second quarter, we took possession of two Next-Generation 737-600s, bringing our total registered fleet size to 57, as at June 30, 2006. We took delivery of five 600-series and one 700-series aircraft in the first six months of 2006. As a smaller aircraft, the 600s inherently have a slightly higher cost per seat mile. However, these smaller aircraft have a lower trip cost making many of our smaller markets more viable.

"After careful analysis, we elected not to install winglets on our 600-series aircraft as the cost and time associated with their installation on these aircraft was not warranted as they are primarily used for short-haul routes.

"For the remainder of 2006 we will accept delivery of five additional 600-series and one 700-series aircraft. In 2007 we have scheduled deliveries of six 737-700s and one 737-800. In 2008 we will be receiving five 700-series and one 800-series. We have further lease options for four additional aircraft in 2009, of which three are 737-700s and one is a 737-800, with the option to convert any of the 700s to 800-series aircraft.

"The cost of jet fuel obviously remains a concern to us, however we are able to absorb these exceptionally high prices as our fuel costs have been offset by the strong Canadian dollar and the lower fuel burn associated with our young fleet of Next-Generation aircraft. These reasons, together with our higher load factors, have allowed us to cope with these fuel prices without significant increases in our fares.

"Our costs this quarter were also partially offset by the considerable increase in our non-fare revenues, including such items as buy-on-board food, liquor and headset sales. Although these items represent only 17 per cent of our $17.4 million ancillary revenues, we anticipate that these high margin revenue sources will continue to grow in the future.

"The second quarter saw the settlement of our dispute with Air Canada ending all legal proceedings between the companies, the costs of which we have fully absorbed in this second quarter.

"The launch of WestJet Vacations Inc., a wholly-owned subsidiary of WestJet, on June 1, 2006 also contributed to second quarter revenue. This new company is already exceeding targets and should continue to contribute to our results.

"We continue to build on the momentum established in the first quarter of 2006. Our accomplishments and growth will carry into the next three months, which is traditionally our strongest quarter for domestic travel. We successfully continue to add capacity, which is being absorbed by market demand. Our people remain our greatest asset, providing a guest experience that is unrivaled by our competition. We are committed to our people, guests and shareholders as we grow our fleet, add new destinations and routes, and build on the overall services that we offer."

WestJet's strong corporate health and industry-leading performance is maintained by an enviable balance sheet, reflecting a debt-to-equity ratio of 2.5 to 1 and a strong cash balance of $358.5 million. Marking its tenth anniversary this year, WestJet is Canada's leading low-fare airline offering scheduled service throughout its 33-city North American network. Named Canada's most respected corporation for customer service in 2005, WestJet pioneered low-cost high-value flying in Canada.

Second Quarter 2006 Management's Discussion and Analysis of Financial Results

Forward-looking Information

Certain information set forth in this document, including management's assessment of WestJet's future plans and operations, contains forward-looking statements. These forward-looking statements typically contain the words "anticipate", "believe", "estimate", "intend", "expect", "may", "will", "should", or other similar terms. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond WestJet's control, including the impact of general economic conditions, changing domestic and international industry conditions, volatility of fuel prices, terrorism, currency fluctuations, interest rates, competition from other industry participants (including new entrants, and generally as to capacity fluctuations and pricing environment), labour matters, government regulation, stock-market volatility and the ability to access sufficient capital from internal and external sources. Readers are cautioned that management's expectations, estimates, projections and assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. WestJet's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements.

Additional information relating to WestJet, including Annual Information Forms and financial statements, is located on SEDAR at www.sedar.com.

To supplement its consolidated financial statements presented in accordance with Canadian generally accepted accounting principles ("GAAP"), the Company uses various non-GAAP performance measures, including available seat mile ("ASM"), cost per available seat mile ("CASM") defined as operating expense divided by available seat miles, revenue per available seat mile ("RASM") defined as total revenue divided by available seat miles, and revenue per revenue passenger mile ("yield") defined as total revenue divided by revenue passenger miles. These measures are provided to enhance the user's overall understanding of the Company's current financial performance and are included to provide investors and management with an alternative method for assessing 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.

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

Three Months Ended ------------------------------------ Jun. 30 Mar. 31 Dec. 31 Sept. 30 2006 2006 2005 2005 ------------------------------------------------------------------------

Total revenues $ 425 $ 388 $ 368 $ 406

Net earnings $ 22 $ 13 $ 1 $ 30 Basic earnings per share $ 0.17 $ 0.10 $ 0.01 $ 0.24 Diluted earnings per share $ 0.17 $ 0.10 $ 0.01 $ 0.23

Three Months Ended ------------------------------------ Jun. 30 Mar. 31 Dec. 31 Sept. 30 2005 2005 2004 (1) 2004 ------------------------------------------------------------------------

Total revenues $ 326 $ 295 $ 274 $ 310 Net earnings (loss) $ 2 $ (10) $ (46) $ 21 Basic earnings (loss) per share $ 0.02 $ (0.08) $ (0.37) $ 0.17 Diluted earnings (loss) per share $ 0.02 $ (0.08) $ (0.37) $ 0.17

(1) Includes writedown of $47,577,000 related to 200-series fleet impairment

Highlights

The second quarter of 2006 marked significant accomplishments for our Company. The combined successes of our first and second quarter saw record high profits, to date, for 2006. In what is traditionally a weak first quarter, we achieved strong results through increased flights to our scheduled transborder and charter destinations. This seasonal and strategic deployment of our aircraft optimized the use of our fleet and positioned us to take advantage of the significant winter demand from Canadians for warmer vacation destinations. Early in the second quarter, we reallocated a significant amount of this capacity to the domestic market within Canada in preparation for the summer demand, which is typically our most profitable period. Because of the successful transition of capacity, we completed the second quarter of 2006 with strong financial and operational performance that was facilitated by upward revenue and booking trends.

During this quarter, our net income rose to $22.4 million, compared to $2.3 million in the same period in 2005. Similarly, our year-to-date net income climbed to $35.2 million from a net loss of $7.3 million in the same period last year.

Over the past several years, the airline industry has been challenged by spiralling jet fuel prices and highly competitive pricing. While the cost of jet fuel remained persistently high, we saw a very positive trend in our bookings, with travellers willing to pay higher fares in recognition of our higher cost of fuel. We are clearly seeing strong demand for air travel which is reflected in our improved load factors and stronger revenue per revenue passenger mile (yield). Again, this has been achieved in the face of our continuing increase in capacity.

Our load factor for the second quarter of 2006 increased by 6.5 percentage points to 77.5 per cent, as compared to 71.0 per cent in the second quarter of 2005. Our year-to-date load factor increased by 6.1 percentage points to 78.4 per cent, versus 72.3 per cent for the same period last year. Our yield rose by 0.5 per cent to 18.3 cents in the second quarter of 2006, as compared to 18.2 cents in the second quarter of 2005. Yield increased to 17.6 cents for the six months ended June 30, 2006, an increase of 6.0 per cent from 16.6 cents for the same period in 2005. With our increased stage length, however, we estimate that our yield would have decreased by approximately three per cent during the second quarter of 2006 and approximately one per cent during the six months ended June 30, 2006, compared to the same periods last year. As a result, this nets us an effective increase in yield of four per cent and seven per cent respectively.

During this quarter, we launched a new wholly owned subsidiary, WestJet Vacations Inc., providing guests with affordable, reliable and easy-to-book travel packages. By partnering with trusted companies, WestJet Vacations Inc. will offer a wide selection of packaged air, hotel and car rentals for all of our destinations in Canada and the U.S. We are optimistic that this new endeavour will generate additional value for our guests and increase bottom line contribution, particularly as early booking trends have exceeded our expectations.

In May 2006, we incurred a one-time charge totalling $15.6 million to fully settle our lawsuit with Air Canada. Under this settlement, we agreed to pay Air Canada's investigation and litigation costs of $5.5 million and make a donation of $10 million in the name of Air Canada and WestJet to various children's charities across the country. This settlement also provided for Air Canada and WestJet to withdraw their respective claims against each other and terminated all legal proceedings between the parties. These costs, along with other settlement costs totalling $100,000, have been segregated as a non-operating expense under non-recurring expenses in our consolidated financial statements.

To efficiently control our costs, we are continuously assessing the economic feasibility of our projects to ensure that their long-term benefits will outweigh their costs. In performing a re-assessment of our initiatives to install winglets on our 737-600 aircraft, we considered factors such as the resulting payback period on our upfront investment, as well as the operating efficiencies we have experienced on our 737-700s and 737-800s already equipped with winglets. From this data, we have determined that due to the shorter stage length that our 600-series aircraft will fly, the benefits of installing winglets on these smaller aircraft will be less significant than on our 700- and 800-series, which has led us to discontinue this program on this series of aircraft. Upon commencement of this initiative we capitalized the winglet certifications costs on the 600-series. As a result of the abandonment of this program on our 600-series, we incurred a one-time charge of approximately $609,000 in our maintenance expense in the second quarter of 2006 related to costs previously capitalized for this program.

Positive Trends

During the second quarter, our total revenues increased by 30.3 per cent to $425.4 million, up from $326.4 million in the second quarter of last year. This was generated from increased capacity, higher load factors and somewhat higher fares.

Our average scheduled net leg fare during the three months ended June 30, 2006 was approximately $146 as compared to approximately $141 in the second quarter of 2005. Similarly, our average scheduled net leg fare for the six-month period ended June 30, 2006 was approximately $140 versus approximately $127 in the same period last year.

Another key industry measure to analyze our revenue is revenue per available seat mile (RASM). Our RASM performance reflects the combined impact of our increased load factors and average fare. In spite of increasing our capacity by 18.5 per cent during the second quarter of 2006 from the second quarter of 2005, our RASM still increased by 10.1 per cent to 14.2 cents for the three months ended June 30, 2006, from 12.9 cents in the same quarter last year. For the six months ended June 30, 2006, RASM increased to 13.8 cents, a 15.0 per cent increase from the same period in the previous year; however this greater increase came about as a result of the failure of a competitor in early 2005.

Cost Management

------------------------------------------------------------------------ Three Three months months ended ended % increase June 30 June 30 (decrease) Cost per available seat mile (cents) 2006 2005 ------------------------------------------------------------------------ ------------------------------------------------------------------------

Aircraft fuel 3.5 3.2 9.4% Airport operations 2.1 2.0 5.0% Flight operations and navigational charges 1.9 1.8 5.6% Sales and marketing 1.3 1.3 0.0% Depreciation and amortization 0.9 1.0 (10.0%) General and administration 0.7 0.7 0.0% Aircraft leasing 0.6 0.6 0.0% Maintenance 0.6 0.8 (25.0%) Interest expense 0.6 0.5 20.0% Inflight 0.5 0.5 0.0% Guest services 0.2 0.2 0.0% ------------------------------------------------------------------------ 12.9 12.6 2.4% ------------------------------------------------------------------------ ------------------------------------------------------------------------

------------------------------------------------------------------------ Six Six months months ended ended % increase June 30 June 30 (decrease) Cost per available seat mile (cents) 2006 2005 ------------------------------------------------------------------------ ------------------------------------------------------------------------

Aircraft fuel 3.4 3.1 9.7% Airport operations 2.1 2.1 0.0% Flight operations and navigational charges 1.8 1.7 5.9% Sales and marketing 1.2 1.0 20.0% Depreciation and amortization 0.9 1.0 (10.0%) General and administration 0.7 0.7 0.0% Aircraft leasing 0.6 0.5 20.0% Maintenance 0.6 0.8 (25.0%) Interest expense 0.6 0.5 20.0% Inflight 0.5 0.5 0.0% Guest services 0.3 0.2 50.0% ------------------------------------------------------------------------ 12.7 12.1 5.0% ------------------------------------------------------------------------ ------------------------------------------------------------------------

As at June 30, 2006 we had a registered fleet of 57 Boeing Next-Generation 737 aircraft, with an average age of 2.3 years. Having the newest most efficient fleet in North America provides us with several advantages such as higher fuel efficiency and reduced maintenance costs.

In addition, these new aircraft provide the ability to fly longer distances than we previously could have flown with our 737-200 aircraft, the last of which was retired on January 9, 2006. Presently, 86 per cent of our current fleet is comprised of 737-700s and 737-800s, which we primarily deploy on our long-haul routes. The composition of our fleet is now better able to accommodate longer-haul flights on transborder destinations and on non-stop routes within Canada.

Our longer-haul flying during the first half of 2006, has translated into an increase in our overall average stage length. Our average stage length increased to 831 miles in the second quarter of this year from 792 miles in the same period last year, a growth of almost five per cent. On a year-to-date basis, our average stage length increased by approximately two per cent to 827 miles as compared to 812 miles during the same period last year. Flights over longer distances generate unit cost benefits such as fixed costs being distributed over more miles flown. Taking into account the impact of the increase in our average stage length, we estimate our CASM should have decreased by approximately three per cent to 12.2 cents during the second quarter of 2006, compared to the same period last year, and approximately one per cent to 12.0 cents during the first six months of this year in comparison to the first six months of 2005. However, as a result of increased variable costs, primarily fuel prices, our CASM climbed at a rate of 2.4 per cent to 12.9 cents per ASM for the three months ended June 30, 2006 from 12.6 cents per ASM for the same quarter last year. Similarly, our year-to-date CASM in the current year increased 5.0 per cent to 12.7 cents from 12.1 cents in the previous year.

Rising fuel costs continue to contribute to difficulties in our industry and remain the single biggest challenge on our costs. Fuel, representing approximately 27 per cent of our total operating expenses, is the one item of expenditure that is difficult for us to control and recover through our operations; however as fuel is denominated in US dollars, the escalation in our fuel costs have been mitigated significantly by the strengthening Canadian dollar. The raw cost of fuel however did increase by 16.5 per cent for the second quarter compared to the same quarter last year, and 19.5 per cent for the first half of this year versus the first six months of 2005.

Although we have been successful in increasing our average fares, the growth in the price of jet fuel remains a concern. However, our RASM increased by 10.1 per cent for the second quarter of 2006 and 15.0 per cent for the first six months of 2006, compared to the same periods last year, while our total CASM (including fuel) only increased by 2.4 per cent.

To reduce our risk related to volatility in jet fuel prices, we occasionally enter into short-term and long-term financial and physical derivatives. During the first quarter of 2006, we recognized a net loss of $2.2 million included in aircraft fuel expense from various hedging transactions. A net loss of $61,400 associated with aircraft fuel hedging transactions has also been recognized in the current quarter. We have no outstanding hedges as at June 30, 2006.

While we cannot accurately predict fuel prices, we have been proactive in creating a more resilient operating structure by investing in a fleet of new fuel-efficient aircraft to help minimize these costs to the extent possible. Along with the fuel-saving advantages of these aircraft, we also benefit from lower maintenance costs of operating new aircraft.

Our maintenance CASM was reduced by 25.0 per cent to 0.6 cents per ASM, for both the quarter and year-to-date periods ended June 30, 2006, and from 0.8 cents in both comparative periods in 2005. This is the first quarter we operated exclusively with Next-Generation aircraft, as we retired the last of our older 200-series aircraft in the first quarter of 2006. At the end of this quarter, we operated the youngest fleet in North America, consisting of eight 737-600 aircraft, 44 737-700 aircraft and five 737-800 aircraft. At the end of the same quarter last year, we were still operating 16 737-200 aircraft.

As with any new capital investment, the significant portion of ownership benefits is normally realized upfront during the early years of possession. This is due to the inherently lower costs of maintenance, particularly with regards to the costs of items which are being covered by warranties. As our fleet ages, we expect our overall maintenance costs to increase as our Next-Generation aircraft come off their warranty periods. As at June 30, 2006, we had six aircraft no longer under general warranty protection, with an additional eight aircraft coming off of general warranty by the end of this year. Generally, our higher maintenance cost is offset by a lower interest cost on our purchased aircraft due to the speed with which our principal redemption is taking place.

Our costs associated with airport operations represent our second largest expenditure, comprising approximately 16 per cent of our total operating costs during the second quarter of this year, and approximately 17 per cent of our total operating costs during the first six months of 2006. Our airport operations CASM increased by 5.0 per cent this quarter over the comparative quarter of 2005. This was primarily driven by higher airport fees associated with operating a fleet comprised of heavier aircraft, and by increased flying to the more expensive transborder destinations, since the second quarter of last year.

Although our quarterly unit costs associated with airport operations have increased, our year-to-date CASM for these costs remained constant at 2.1 cents compared to the same period in the prior year. While in the past few years, we were overburdened by the continuous upward trend in airport rates and fees, we have experienced the first signs of this trend easing. The effects of the alleviated increases in airport rates and fees during 2006 have moderated our higher cost of operating heavier aircraft thus far. While we expect that airport rates and fees may not remain stable in the long-term, we remain confident that their costs should remain stable in the short-term.

Aircraft leasing unit costs for this quarter remained consistent with the same quarter last year at 0.6 cents per ASM. However, for the six months ended June 30, 2006, we experienced an increase of 20.0 per cent in our cost per ASM from the same period in 2005. During the six-month period ended June 30, 2005 we intermittently received five 737-800s and three 737-700s. For the first half of 2006, we incurred lease payments on all of these same aircraft.

For the three and six months ended June 30, 2006, our depreciation and amortization CASM decreased by 10.0 per cent from both comparative periods in the previous year, as a result of one-time adjustments required in conjunction with the disposals of our 737-200 capital leases.

Our future committed aircraft deliveries consist of five 600-series (one received on July 28, 2006) and one 700-series aircraft, which are to be delivered in the second half of 2006, and 11 737-700s and two 737-800s scheduled for delivery between 2007 and 2008. In the first quarter of this year, we completed eight-year leasing arrangements with International Lease Finance Corporation for two of the 737-700 aircraft, which we will be receiving in the first three months of 2007. In addition, four of the deliveries in the later part of 2007 and the first half of 2008 are currently under a lease term-sheet agreement that we finalized in July 2006 with Singapore Aircraft Leasing Enterprise (SALE) for three 737-700 and one 737-800 aircraft. Under this same agreement, we also have options for three 700-series and one 800-series aircraft for delivery in 2009. Furthermore, we have the option to convert any of the 737-700 aircraft commitments into a 737-800 aircraft. Lease terms are for eight years for the 700-series and 10 years for the 800-series.

As we investigate financing alternatives to support our aircraft acquisitions, we focus on minimizing costs while maintaining flexibility to accommodate our operational growth plans. Leasing is a desirable alternative financing method that has several benefits such as safeguarding from the obsolescence that would otherwise occur with owned assets and conservation of up-front capital. While approximately a third of the aircraft in our fleet are financed through operating leases, when possible, we take advantage of attractive low-cost, long-term debt financing to purchase the majority of our aircraft.

Interest CASM has increased by 20.0 per cent for both the three and six months ended June 30, 2006 to 0.6 cents per ASM from 0.5 cents per ASM, in the same periods last year, due to the additional financing required to support our growing fleet. Since the second quarter of 2005, we have acquired an additional 13 Next-Generation aircraft by means of Canadian dollar loans supported by the Export-Import Bank of the United States (Ex-Im), ending this quarter with 39 of our aircraft financed with Ex-Im Bank guarantees. Having the support of Ex-Im Bank has allowed us to secure low interest rates on the financing for each of these aircraft, ranging between 4.62 per cent and 5.98 per cent, for all of these aircraft. The debt on these aircraft are financed over a term of 12 years and redeemed on a straight-line basis.

During the quarter, we received the last two aircraft supported under our Final Commitment with Ex-Im. Subsequent to the quarter end, we converted a portion of our Preliminary Commitment with Ex-Im Bank to a Final Commitment to cover six aircraft to be delivered between July and December 2006, the first of which we received July 28, 2006. At the same time, we successfully arranged financing facilities for all of these aircraft totalling U.S. $191.1 million, with the ability to forward fix the interest and foreign exchange rates in advance of delivery, thereby reducing our exposure to fluctuations in these rates until the time we receive the related aircraft. We have also received a Preliminary Commitment from Ex-Im to cover seven aircraft for delivery in 2007 and 2008.

Our cost of flight operations and the cost of navigational services provided by Nav Canada include costs associated with compensating our pilots, flight attendants and dispatchers. In February 2006, an overwhelming majority of our pilots voted in favour to accept a new agreement developed by the WestJet Pilots Association (WJPA) and WestJet's Flight Operations Leadership. This new agreement is for a three-year term and allows us to maintain our low-cost structure through greater productivity of our pilot group.

Under this new agreement, pilots have the choice of opting to receive various levels of cash in lieu of options as part of their compensation arrangement. Under the old pilot agreement, we were bound to issue another year of options to all of our pilots, which we fulfilled under the May 2006 option grant. In accordance with the new agreement, for pilots that elected to receive various levels of cash in place of options for next year's option grant, we will incur a charge of approximately $1.2 million per month through to April, 2007.

As our industry continues to evolve and we continue to expand our fleet and our network, it becomes increasingly important to invest in our sales and marketing efforts to compete effectively. Sales and marketing CASM remained stable at 1.3 cents per ASM for both the second quarter in 2005 and 2006. However, our sales and marketing CASM for the current six-month period increased by 20.0 per cent to 1.2 cents per ASM from 1.0 cent per ASM in the same prior period. These increases were largely due to the advertising campaign we launched earlier this year to refresh the WestJet brand, as well as total commissions and incentives paid to our valued travel agent partners. Of the total cost, 36.4 per cent is paid to travel agents as commission. This is significantly offset by higher average fares paid by the business traveller who tends to book flights closer to the time of departure.

The current tax expense of $1.5 million combined with the future tax provision of $5.4 million, resulted in a net income tax expense of $6.9 million for the six months ended June 30, 2006. Overall our total tax expense is significantly lower than otherwise expected as the federal government, together with several provincial governments, substantively enacted corporate tax rate reductions during the second quarter. The revaluation of our future tax liability resulted in an approximate $11.2 million recovery of future income tax expense. The federal government also eliminated the large corporations tax (LCT), effective January 1, 2006, which created a reversal of approximately $1 million of LCT already accrued in the year.

Strong Financial Position and Liquidity

Our financial position and liquidity continues to remain strong as we completed the quarter with a cash balance of $358.5 million versus $259.6 million at the end of 2005, and generated a working capital ratio of 0.9 to 1 compared to 0.8 to 1 on December 31, 2005. Our debt-to-equity ratio remains at 2.5 to 1 as at June 30, 2006, similar to the debt to equity ratio we experienced at year-end 2005. This is a significant accomplishment, given the $216.2 million in additional debt we incurred since year-end 2005 that was primarily used to acquire new aircraft. When calculating our debt-to-equity ratio we include the present value of our off-balance sheet financing related to aircraft operating leases, which totalled $441.4 million at the end of this quarter. This ensures that this ratio accurately represents the leverage on our balance sheet.

For the six months ended June 30, 2006 we generated $191.6 million in net cash flow from operating activities compared to $149.8 million in the same prior-year period. Operating cash flow in the current year was largely impacted by the positive trend in our bookings and higher unit revenues we earned from the sale of our flights.

We realized a net cash inflow of $147.9 million from financing activities during the first six months of this year compared to a net cash use of $37.5 million in the same period last year. Our financing cash flow, during the current year-to-date period, was largely impacted by $216.2 million in long-term debt financing we received, principally to pay for 85 per cent of the purchase price of six aircraft supported by Ex-Im. During the same period last year, all of our aircraft acquisitions were financed through sale and operating leaseback transactions so we incurred no direct debt. During this quarter we also financed $9 million to purchase our third Next-Generation flight simulator.

Our net cash used in investing activities during the first two quarters of 2006, was $240.6 million compared to $20.0 million dollars during the first six months of 2005. Our current period investing activities primarily relate to new aircraft acquisitions.

As at July 28, 2006, we had 129,578,305 shares outstanding: 122,468,780 common voting shares and 7,109,525 variable voting shares, as well as 15,529,807 stock options outstanding.

Our contractual obligations as at June 30, 2006 for each of the next five years have not materially changed as disclosed in the annual report, December 31, 2005.

Looking Forward

The summer is the most profitable time of the year for airlines. While we are currently in the midst of this busy time, we are encouraged by our positive operating results thus far and we are optimistic that we will continue to provide a strong financial performance through a mixture of prudent cost management and a positive revenue environment. We anticipate that our accomplishments this quarter will carry on throughout the remainder of this year and beyond.

WestJet Airlines Ltd. Consolidated Balance Sheets June 30, 2006, December 31, 2005 and June 30, 2005 (Unaudited) (Stated in Thousands of Dollars)

------------------------------------------------------------------------ June 30 December 31 June 30 2006 2005 2005 ------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents (note 3) $ 358,465 $ 259,640 $ 240,880 Accounts receivable 12,340 8,022 8,896 Income taxes recoverable 14,409 13,909 11,541 Assets held for sale - - 4,268 Prepaid expenses and deposits 33,708 31,746 29,675 Inventory 6,774 6,259 4,782 ------------------------------------------------------------------------ 425,696 319,576 300,042

Property and equipment (note 1) 1,993,522 1,803,497 1,568,188

Other assets 94,740 90,019 82,046

------------------------------------------------------------------------ $ 2,513,958 $ 2,213,092 $ 1,950,276 ------------------------------------------------------------------------ ------------------------------------------------------------------------

Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued liabilities (note 5(c)) $ 121,134 $ 100,052 $ 93,410 Advance ticket sales 202,430 127,450 163,673 Non-refundable guest credits 34,547 32,814 26,649 Current portion of long-term debt (note 2) 132,550 114,115 95,572 Current portion of obligations under capital lease (note 5(b)) 346 2,466 4,242 ----------------------------------------------------------------------- 491,007 376,897 383,546

Long-term debt (note 2) 1,183,234 1,044,719 859,535

Obligations under capital lease (note 6(b)) 1,663 1,690 861

Other liabilities (note 3) 14,548 16,982 16,624

Future income tax 108,045 102,651 75,342 ------------------------------------------------------------------------ 1,798,497 1,542,939 1,335,908 ------------------------------------------------------------------------

Shareholders' equity: Share capital (note 4 (a)) 429,711 429,613 414,542 Contributed surplus (note 4 (e)) 49,088 39,093 29,676 Retained earnings 236,662 201,447 170,150 ------------------------------------------------------------------------ $ 715,461 $ 670,153 $ 614,368 ------------------------------------------------------------------------

Commitments and contingencies (note 5) ------------------------------------------------------------------------ $ 2,513,958 $ 2,213,092 $ 1,950,276 ------------------------------------------------------------------------ ------------------------------------------------------------------------

WestJet Airlines Ltd. Consolidated Statements of Earnings (Loss) and Retained Earnings For the periods ended June 30, 2006 and 2005 (Unaudited) (Stated in Thousands of Dollars, Except Per Share Amounts)

------------------------------------------------------------------------ ------------------------------------------------------------------------ Three Months Ended June 30 Six Months Ended June 30 2006 2005 2006 2005 ------------------------------------------------------------------------ Revenues: Guest revenues $ 377,658 $ 287,490 $ 693,775 $ 511,301 Charter and other 44,463 37,644 113,538 107,428 Interest income 3,231 1,285 5,594 2,291 ------------------------------------------------------------------------ 425,352 326,419 812,907 621,020 ------------------------------------------------------------------------

Expenses: Aircraft fuel 104,543 81,358 200,045 159,027 Airport operations 62,045 51,141 126,869 108,418 Flight operations and navigational charges 56,423 44,418 105,269 86,349 Sales and marketing 39,662 32,686 72,044 52,591 Depreciation and amortization 27,781 26,351 51,832 51,876 General and administration 20,826 18,306 40,057 35,121 Aircraft leasing 17,610 15,449 36,103 27,014 Maintenance 17,163 18,352 37,600 38,548 Interest expense 16,897 13,378 32,453 26,813 Inflight 16,332 12,717 30,776 25,711 Guest services 7,471 5,704 14,983 12,607 ------------------------------------------------------------------------ 386,753 319,860 748,031 624,075 ------------------------------------------------------------------------ Earnings (loss) from operations 38,599 6,559 64,876 (3,055) ------------------------------------------------------------------------ Non-operating income (expense): Gain (loss) on foreign exchange (3,218) 436 (2,952) (105) Gain (loss) on disposal of property and equipment (33) 42 801 83 Non recurring expenses (note 5(c)) (15,600) - (15,600) - ------------------------------------------------------------------------ (18,851) 478 (17,751) (22) Employee profit share (note 6) 2,122 - 4,969 - ------------------------------------------------------------------------ Earnings (loss) before income taxes 17,626 7,037 42,156 (3,077)

Income tax (expense) recovery (note 7): Current (252) (991) (1,544) 3,752 Future 4,981 (3,748) (5,397) (7,971) ------------------------------------------------------------------------ 4,729 (4,739) (6,941) (4,219) ------------------------------------------------------------------------ Net earnings (loss) 22,355 2,298 35,215 (7,296)

Retained earnings, beginning of period 214,307 167,852 201,447 177,446 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Retained earnings, end of period $ 236,662 $ 170,150 $ 236,662 $ 170,150 ------------------------------------------------------------------------ ------------------------------------------------------------------------

Earnings (loss) per share (note 4(c)): Basic $ 0.17 $ 0.02 $ 0.27 $ (0.06) Diluted $ 0.17 $ 0.02 $ 0.27 $ (0.06)

------------------------------------------------------------------------ ------------------------------------------------------------------------ Operating highlights:

Available seat miles 3,002,241,066 2,533,992,650 5,899,348,947 5,164,173,275 Revenue passenger miles 2,325,802,995 1,798,293,275 4,626,250,470 3,732,974,264 Load factor 77.5% 71.0% 78.4% 72.3% Revenue per passenger mile (cents) 18.3 18.2 17.6 16.6 Revenue per available seat mile (cents) 14.2 12.9 13.8 12.0 Cost per passenger mile (cents) 16.6 17.8 16.2 16.7 Cost per available seat mile (cents) 12.9 12.6 12.7 12.1 Fuel consumption (litres) 146,386,704 132,626,512 288,678,322 274,090,261 Fuel cost/litre (cents) 71.4 61.3 69.3 58.0 Segment guests 2,700,404 2,173,899 5,321,596 4,451,299 Average stage length 831 792 827 812 Number of full time equivalent employees at quarter end 4,603 4,275 4,603 4,275 Fleet size at quarter end 57 60 57 60 Aircraft available for use 57 54 57 54 ------------------------------------------------------------------------ ------------------------------------------------------------------------

WestJet Airlines Ltd. Consolidated Statements of Cash Flows For the periods ended June 30, 2006 and 2005 (Unaudited) (Stated in Thousands of Dollars)

Operating activities: Net earnings (loss) $ 22,355 $ 2,298 $ 35,215 $ (7,296) Items not involving cash: Depreciation and amortization 27,781 26,351 51,832 51,876 Amortization of other liabilities (217) (144) (434) (170) Amortization of hedge settlement 347 347 695 695 (Gain) loss on disposal of property and equipment 33 (42) (801) (83) Stock-based compensation expense 5,417 4,549 10,100 8,085 Issued from treasury stock - 5,612 - 10,213 Future income tax expense (recovery) (4,981) 3,748 5,397 7,971 Decrease in non-cash working capital 57,560 51,249 89,571 78,537 ------------------------------------------------------------------------ 108,295 93,968 191,575 149,828 ------------------------------------------------------------------------

Financing activities: Repayment of long-term debt (30,727) (23,927) (59,247) (47,829) Increase in long-term debt 77,316 - 216,197 - Decrease in obligations under capital lease (84) (1,457) (310) (2,888) Increase in other liabilities - 7,686 - 8,530 Share issuance costs (10) (33) (10) (33) Increase in other assets (2,059) (4,568) (7,707) (8,201) Issuance of common shares - 7,252 - 13,496 Increase in non-cash working capital (1,071) (573) (1,071) (573) ------------------------------------------------------------------------ 43,365 (15,620) 147,852 (37,498) ------------------------------------------------------------------------

Investing activities: Aircraft additions (58,882) (249,748) (218,615) (391,118) Aircraft disposals 40 261,460 3,760 396,678 Other property and equipment additions (22,490) (17,308) (27,219) (25,613) Other property and equipment disposals 37 22 1,472 71 ------------------------------------------------------------------------ (81,295) (5,574) (240,602) (19,982) ------------------------------------------------------------------------

Increase in cash 70,365 72,774 98,825 92,348

Cash, beginning of period 288,100 168,106 259,640 148,532

------------------------------------------------------------------------ Cash, end of period $ 358,465 $ 240,880 $ 358,465 $ 240,880 ------------------------------------------------------------------------ ------------------------------------------------------------------------

Cash is defined as cash and cash equivalents.

Cash interest paid during the three and six months ended June 30, 2006 were $15,713,000 (2005 - $13,356,000) and $30,491,000 (2005 - $27,061,000), respectively.

Net cash taxes paid during the three and six months ended June 30, 2006 were $1,102,000 (2005 - $463,000) and $2,044,000 (2005- $2,868,000), respectively.

WestJet Airlines Ltd. Notes to Consolidated Financial Statements For the periods ended June 30, 2006 and 2005 (Unaudited) (Tabular Amounts are Stated in Thousands of Dollars, Except Share and 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, 2005. 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, 2005.

The Corporation's business is seasonal in nature with varying levels of activity throughout the year. The Corporation experiences increased domestic travel in the summer months and more demand for transborder and charter sun destinations over the winter period.

1. Property and equipment:

------------------------------------------------------------------------ ------------------------------------------------------------------------ June 30, 2006 Accumulated Net book Cost depreciation value ------------------------------------------------------------------------

Aircraft $ 1,846,743 $ 141,280 $ 1,705,463 Ground property and equipment 150,690 56,711 93,979 Spare engines and parts 84,700 10,938 73,762 Buildings 39,501 4,318 35,183 Leasehold improvements 6,519 4,273 2,246 Other assets under capital lease 2,481 445 2,036 ------------------------------------------------------------------------ 2,130,634 217,965 1,912,669 Deposits on aircraft 57,661 - 57,661 Assets under development 23,192 - 23,192 ------------------------------------------------------------------------ $ 2,211,487 $ 217,965 $ 1,993,522 ------------------------------------------------------------------------ ------------------------------------------------------------------------

------------------------------------------------------------------------ ------------------------------------------------------------------------ December 31, 2005

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

Aircraft - Next-Generation $ 1,619,850 $ 102,914 $ 1,516,936 Ground property and equipment 135,217 52,664 82,553 Spare engines and parts - Next-Generation 67,960 8,029 59,931 Buildings 39,636 3,825 35,811 Leasehold improvements 6,302 3,992 2,310 Other assets under capital lease 2,289 198 2,091 Spare engines and parts - 200-series 12,547 11,128 1,419 Aircraft - 200-series 3,892 2,861 1,031 Aircraft under capital lease 19,475 19,475 - ------------------------------------------------------------------------ 1,907,168 205,086 1,702,082 Deposits on aircraft 73,493 - 73,493 Assets under development 27,922 - 27,922 ------------------------------------------------------------------------ $ 2,008,583 $ 205,086 $ 1,803,497 ------------------------------------------------------------------------ ------------------------------------------------------------------------

------------------------------------------------------------------------ ------------------------------------------------------------------------ June 30, 2005

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

Aircraft - Next-Generation $ 1,312,456 $ 70,275 $ 1,242,181 Ground property and equipment 123,928 42,967 80,961 Spare engines and parts - Next-Generation 63,877 6,450 57,427 Buildings 39,636 3,332 36,304 Leasehold improvements 6,057 3,564 2,493 Spare engines and parts - 200-series 22,223 17,127 5,096 Aircraft - 200-series 62,785 57,006 5,779 Aircraft under capital lease 31,652 29,101 2,551 ------------------------------------------------------------------------ 1,662,614 229,822 1,432,792 Deposits on aircraft 115,010 - 115,010 Assets under development 20,386 - 20,386 ------------------------------------------------------------------------ $ 1,798,010 $ 229,822 $ 1,568,188 ------------------------------------------------------------------------ ------------------------------------------------------------------------

During the three and six months ended June 30, 2006, property and equipment was acquired at an aggregate cost of $NIL (2005-$1,031,000) and $172,000 (2005-$1,031,000), respectively, by means of capital leases.

2. Long-term debt:

------------------------------------------------------------------------ June 30 December 31 June 30 2006 2005 2005 ------------------------------------------------------------------------ $1,507,083,000 in 39 individual term loans, amortized on a straight-line basis over a 12-year term, repayable in quarterly principal instalments ranging from $686,000 to $955,000, guaranteed by the Ex-Im Bank and secured by 31 700-series aircraft and eight 600-series aircraft, and maturing between 2014 and 2018. 36 of these facilities include fixed rate weighted average interest of 5.32%. The remaining three facilities, totalling $101,220,000, includes weighted average floating interest at the Canadian LIBOR rate plus 0.08% (effective interest rate of 4.21% as at June 30, 2006) until after the first scheduled repayment date in July 2006, after such time the interest rate on the loans will be fixed at a weighted average rate of 5.01% for the remaining period the loans are outstanding. $ 1,260,933 $ 1,114,506 $ 910,777

$35,000,000 in three individual term loans, repayable in monthly instalments ranging from $104,000 to $166,000 including floating interest at the bank's prime rate plus 0.88% with an effective interest rate of 6.88%, as at June 30, 2006, maturing in June 2011, secured by three Next-Generation flight simulators. 27,580 19,615 20,648

$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. 10,597 10,767 10,912

$16,968,000 in 24 individual term loans, amortized on a straight-line basis over a five-year term, repayable in quarterly principal intstalments ranging from $29,000 to $47,000 including floating interest at the Canadian LIBOR rate plus 0.08%, with a weighted average effective interest rate of 4.26%, as at June 30, 2006, maturing between 2009 and 2011, guaranteed by the Ex-Im Bank and secured by certain 700-series and 600-series aircraft. 13,396 10,462 5,609

$4,550,000 term loan, repayable in monthly instalments of $50,000, including floating interest at the bank's prime rate plus 0.50%, with an effective interest rate of 6.50%, as at June 30, 2006, maturing April 2013, secured by the Calgary hangar facility. 3,278 3,484 3,690

$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% having matured in October 2005. - - 3,471

------------------------------------------------------------------------ 1,315,784 1,158,834 955,107 Less current portion 132,550 114,115 95,572 ------------------------------------------------------------------------ $ 1,183,234 $ 1,044,719 $ 859,535 ------------------------------------------------------------------------

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

------------------------------------------------------------------------ ------------------------------------------------------------------------ 2006 $ 66,228 2007 132,683 2008 145,885 2009 130,053 2010 129,253 2011 and thereafter 711,682 ------------------------------------------------------------------------ $ 1,315,784 ------------------------------------------------------------------------ ------------------------------------------------------------------------

Subsequent to the quarter ended June 30, 2006, the Corporation converted US $191.1 million of preliminary commitments with the Export-Import Bank of the United States ("Ex-Im Bank") into a final commitment to support the acquisition of five Boeing Next-Generation 737-600 aircraft and one Boeing Next-Generation 737-700 aircraft and their related live satellite television systems, to be delivered between July and December 2006. In addition, Ex-Im bank has provided a preliminary commitment of US $247.8 million to cover an additional seven aircraft to be delivered between 2007 and 2008.

Subsequent to the quarter ended June 30, 2006, the Corporation completed financing arrangements for US $191.1 million supported by loan guarantees from the Ex-Im Bank on six aircraft as outlined above. This facility will be drawn in Canadian dollars, in separate instalments, with 12-year terms for each new aircraft. Each loan will be amortized on a straight-line basis over the 12-year term in quarterly principal instalments, and interest calculated on the outstanding balance. Subsequent to June 30, 2006 the Corporation has taken delivery of the first aircraft under this facility and has drawn a total of CAD $34.4 million (US $30.1 million).

The Corporation is charged a commitment fee of 0.125% per annum on the unutilized and uncancelled balance of the Ex-Im Bank final commitment, payable at specified dates and upon delivery of an aircraft, and is charged a 3% exposure fee on the financed portion of the aircraft price, payable upon delivery of an aircraft.

3. Financial instruments:

At June 30, 2006, the Corporation had US dollar cash and cash equivalents totalling US $40,048,000 (December 31, 2005 - US $35,453,000, June 30, 2005 - US $33,928,000).

As at June 30, 2006 cash and cash equivalents i

Source: marketwire

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