Comair hikes earnings despite soaring fuel costs
JOHANNESBURG - South African aviation group Comair Limited on Tuesday announced record earnings with a R326 million profit after tax for the year ended 30 June 2018, which was up R29 million to the prior year, despite dismal trading conditions.
Comair said that difficult trading conditions included poor GDP growth, rising fuel prices and a domestic airline market characterized by surplus capacity.
The group operates under its low-fare airline brand, kulula.com, as well as under the British Airways livery, as part of a license agreement.
With its non-airline business contributing 25 percent to net profit before tax, headline earnings per share (HEPS) increased by four percent to 69.5 cents per share, surpassing the previous year's HEPS of 67.0 cents per share.
The group generated cash of R946 million from operating activities, resulting in a closing cash balance of R685 million, and has thus approved a final gross cash dividend of 17 cents per ordinary share.
Erik Venter, chief executive of Comair, said there was still room for improvement. He said that the group's continued investment in efficiency, innovation and diversification have helped the business thrive despite a moribund economy and an increase in the fuel-price of nearly 15 percent.
"While profits for the year were good, we're still not achieving the margins that will allow for the optimum pace of upgrading our fleet. The weak economy will maintain pressure on consumer spending while the oversupply of seats in the domestic market suppresses pricing across most routes," Venter said.
"We're well placed to operate in these difficult conditions, with strong brands, committed staff, effective equipment, an efficient cost base, strong cash reserves and a diversification strategy into the non-airline segment of the business which yields comparatively higher margins and is less capital intensive than the airline segment."
During the period, Comair has also invested R141 million in aviation training facility, lounge business, and technology solutions, in line with its diversification.