Comair announces improvement in profitability

Sep 10, 2013

COMAIR LIMITED, South Africa’s only private domestic airline operator, today announced a significant improvement in profitability for the 12-month period ending 30 June, 2013. Revenue grew by 29% to R5.38 billion South African Rands (2012: R4.16 billion).The airline declared a headline profit of R231 million (2012: R18 million).

Comair also reported the realisation of its strategy, implemented from the end of 2011, to address sustained higher operating costs driven mainly by the escalation of the fuel price and the exchange rate. This included a freeze on all non-critical costs, the implementation of a new enterprise system platform, and taking delivery of four more fuel efficient new Boeing 737-800 aircraft towards the end of 2012.

The new IT platform from Sabre Airline Solutions delivered substantial improvements in revenue integrity, inventory management and optimised ticket pricing, as well as improved productivity. The Group’s new-generation Boeing 737-800 aircraft delivered to expectation, with a 24% fuel saving per passenger, compared to the 737-400 aircraft they replaced.

These initiatives delivered a turnaround in earnings per share from 1.6 cents in the comparative period to 47 cents for the year under review. The increase in turnover was mostly as a result of increased ticket prices in response to exchange rate related cost inflation, as well as improved inventory management.  The exit of the last remaining privately-owned competitor airline helped to restore seat occupancy to prior year levels. Cash generated was strong and resulted in a cash balance of R778 million at year end. A gross cash dividend of 10 cents per ordinary share was declared.

Comair CEO Erik Venter said: “The escalation of the dollar oil price since 2011 was exacerbated by the rapid devaluation of the rand against the dollar, impacting on the rand fuel price as well as various hard-currency based maintenance, lease and distribution system costs. The fuel efficiency of our new 737-800 aircraft, as well as the termination of some dollar-based leases on aircraft that they replaced, helped to marginally reduce exposure to the currency and fuel price.”

Venter said kulula launched the East London route in March, 2013, providing much needed cost-efficient flights to the Eastern Cape. Comair also started BA flights from Johannesburg to Maputo in May, 2013. The airline’s affiliated businesses of flight training, travel product distribution and airport lounges continued to perform well and in line with the prior year. Food Directions, its catering operation, launched in March, 2012, has been successful in delivering substantial cost savings while improving the airline’s control over menu flexibility and quality.

Commenting on the year ahead, Venter said despite current industry challenges, Comair remained confident that recent capital investments had elevated the airline operator to a new level of efficiency.  “2014 will be the first full year of operation for the new B737-800s, and we look forward to the delivery of the next four aircraft in late 2015 as well as potential further aircraft orders for delivery post 2018.

“Our much improved infrastructure as well as our reputation and ongoing focus on safety, customer service and efficiency have built a sustainable foundation to accommodate growth opportunities and ensure that Comair continues to play a major role in the Southern African aviation and travel industry,” he concluded.

Comair Limited, SA’s only domestic airline operator listed on the Johannesburg Stock Exchange (JSE) and proudly local, has been operating successfully for more than six decades with a safety record which is internationally recognised. Since 1996, the company has operated under the British Airways livery as the local franchise partner of British Airways. Comair also operates Africa’s first low-fare airline, kulula.com, which celebrated its 10-year anniversary in 2011. This adventurous brand has since its inception revolutionised air travel in South Africa by making flying much easier and more affordable to customers.