Comair announces weak quarter
Johannesburg - Comair [JSE:COM], operator of British
Airways in southern Africa and low-budget airline kulula.com, on Tuesday
announced diluted headline earnings per share of 15.9 cents for the
year ended June, from 21.8c previously amid a rise in jet fuel
prices, crippling escalations in airport charges and a stagnant local
The group noted dilutes earnings per share of 15.9c, from 21.8c in 2010.
Revenue advanced to R3.59bn from R3bn
previously, but profit before tax slipped to R106.5m, from R124m.
"A particularly weak fourth quarter made this a tough year for
our business and the global aviation industry in general," Comair said.
The group said that external factors played their part
including a 20% increase in the average price of jet fuel, crippling
escalations in airport charges and a stagnant local economy. "Our
performance over the period was thus below our expectations and short of
our medium-term objective of a 10% profit margin," Comair said.
It added that while cash generation remained strong,
investment in flight simulator equipment and deposits on new aircraft
resulted in a reduction in the year-end cash on hand from R374m
"Our affiliated businesses performed well over the period,
particularly our online travel business and flight training business."
During the year Comair introduced a further three new
generation Boeing 737-800 aircraft into its kulula fleet. "Our order of
further new aircraft from Boeing due for delivery mid-2012, will result
in kulula operating the newest and most efficient fleet in the domestic
industry. Over the past five years our fuel usage per seat has declined
"We are implementing a leading enterprise system solution from
Sabre that will improve our revenue potential as well as improving
staff productivity and efficiency through better rostering, and the
automation of administrative functions," the group said.
Comair said that while it added capacity in the local market
over the period, post-World Cup there had been little revenue growth in
the market. "As a result, while we have grown market share, our average
selling price declined putting pressure on our margins."
Subsequent to year-end the airline said it had adjusted its capacity on certain routes.
During the year Comair entered into a joint operation with
Solenta Aviation, operator of smaller gauge (50 to 70 seat) aircraft.
"Early indications are that this new venture will allow us to
successfully access smaller, lucrative routes both in South- and southern Africa," it said.
Looking ahead, Comair said: "Our outlook for the next year is
one of caution. We are anticipating a flat travel market due to a weak
economy and ongoing financial pressure on consumers.
"A stubbornly high
oil price and unaffordable airport fees will be, unavoidably, passed on
in the form of higher ticket prices, putting further pressure on the
consumer. We have adjusted capacity on certain routes in anticipation of
The group said that it would further strengthen its
competitive position by reducing costs and improving productivity,
while maintaining its focus on customer service.