Johannesburg - Regional airline Comair [JSE:COM]
which operates British Airways in southern Africa as well as kulula.com, lifted diluted headline earnings per share from 19.4 cents to 21.8 cents for the year ended June.
The group said it was the 65th straight year of achieving operating profits which it believes to be a world record in the airline industry.
"Turnover remained similar to last year, with higher volumes on our British Airways and kulula brands, offset by lower average fares. While the 21% increase in earnings per share was encouraging, our operating profit margin remains too low at just under 5%.
"A margin of 10% is achievable and necessary if we are to realise our growth objectives," Comair said of the results.
Major cost variables, being fuel and the rand dollar exchange rate, were stable during the year, the airline said. Cash generated from operations remained strong at R247m with the group's cash balance increasing to R374m at year end.
The Boeing 737-800 is now established around the world as the leading aircraft for short haul and low cost operators. During the year Comair placed an order for eight new 737-800's for future delivery and took delivery of two on long-term leases.
"The performance of these aircraft has been exceptional, with low fuel consumption, negligible technical delays, and an overall improved experience for our customers," the airline enthused.
"During the year we extended our kulula capacity substantially, mostly out of Lanseria airport. Our plan to continue growing our low cost Lanseria base so that we can achieve critical mass and even greater efficiencies once the planned new high capacity runway is in place.
"During the year we obtained the rights to fly to several new African destinations and will be commencing services to Maputo, Mozambique and Dar es Salaam, Tanzania, in the next few months," Comair stated.
It said its affiliate businesses performed well over the period.
"Our travel business, which includes kulula travel and MTBeds, is showing great potential. Our flight training business is growing strongly and after year end we commenced with the installation of our third flight simulator, for Boeing 737-800 type training.
"Commuter Handling Services and Imperial Air Cargo, in which we have minority stakes, both reported small losses during the year.
Looking ahead, Comair said the airline industry is very sensitive to business activity levels and economic growth rates in South Africa, and it has only seen a very moderate recovery from the 2009 recession.
"We therefore don't anticipate much growth in the market but do anticipate continuing growth in market share, based on the strength of our brands and our competitive pricing.
"The past year was very significant in that for the first time since start up, we placed an order for brand new aircraft. The eight 737-800s, that were ordered from the Boeing Company, will further enhance our high efficiency, low cost business model and will set the standard for the industry in Southern Africa, while maintaining Comair's leadership position.
The R2bn order will increase our gearing, but together with our other efficiency initiatives, position us for a much stronger profit performance in the future," Comair concluded.