Business

Comair takes off on the JSE after boosting earnings by 184%

Comair takes off on the JSE after boosting earnings by 184%

DURBAN - Comair shot up more than 7percent on the JSE yesterday after the low-cost airliner boosted its earnings 184 percent for the year to end June on national carrier SAA’s settlement for anti-competitive behaviour.

The group said the settlement pushed its headline earnings per share (Heps) up to 197.2 cents a share from the 69.5c reported during the corresponding period last year.

The settlement, an outcome of a 14-year court case, amounted to R1.1billion and R168million in interest after SAA introduced an incentives scheme for travel agents.

The group reported a 175percent increase in earnings per share (Eps) to 192.4c, up from 69.8c compared to last year.

However, profit before taxation, excluding the SAA settlement, declined 82percent to R86m from R471m last year, while revenue increased 9percent to R7.1bn.

The group said revenue increased partly on a 4percent increase in load factors, a 3percent rise in average fare and a 2percent hike in combined sundry, ancillary and non-airline revenue.

The group said fuel costs and currency movements added R342m and R87m respectively to operating expenses.

The group declared a final gross cash dividend of 18c a share, declared out of income reserves.

Finance director Kirsten King said the group had navigated a very difficult year that brought some unprecedented challenges, especially to its airline operations.

“The fact that Comair - South Africa’s only JSE-listed airline operator - has maintained its unbroken record of profitable operations is testament to the prudent and far-sighted approach adopted in its management, ongoing investment in diversification and innovation, and the dedication of its personnel in day-to-day activity,” King said.

Comair operates kulula.com and British Airways in southern Africa.

King said Comair was well-placed, with strong brands, skilled and committed staff, effective equipment, an efficient cost-base, adequate cash reserves and investment into the diversified, non-airline segment of the business, which is progressing well and on which we will continue to focus.

She said the well-documented problems with aircraft maintenance scheduling and parts inventories at SAA Technical in the first half was subsequently further compounded by the global grounding of the Boeing 737 MAX 8 in the second half of financial year 2019.

“Comair took delivery of one of two 737 Max 8 aircraft scheduled for delivery in the second half, shortly before the equipment type was grounded,” King said.

Comair sustained substantial losses as a result of both the maintenance challenges and the grounding of the 737 Max, incurring fixed costs such as finance and maintenance costs, over and above short-term aircraft leases, without generating the commensurate revenue or contribution anticipated of the 737 Max 8.

The group said the computation of these costs was ongoing and would only be finalised once the 737 Max 8 had been recertified.

However, preliminary calculations estimate the combined amount to be R195m.

Comair shares closed 2.90 percent higher at R3.55 on the JSE yesterday.

BUSINESS REPORT