Comair announces weak quarter

Sep 13 2011 14:30

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Comair Limited [JSE:COM]

Last traded 6
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Cumulative volume 21442
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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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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 economy.

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 to R234m.

"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 by 23%.

"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 this."

The group said that it would further strengthen its competitive position by reducing costs and improving productivity, while maintaining its focus on customer service.



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