Comair's turnaround strategy pays off

Johannesburg, 12 February 2013: JSE-listed Comair Limited's strong focus on re-engineering its operations to deliver improved revenue, operating efficiency and customer service ensured continued profitability for the country's only private domestic airline operator.

During the interim period leading up to December 2012, revenue grew by 20% to R2,41-billion (2011: R2,05-billion) due to the fuel surcharge on British Airways tickets and improved pricing capability for kulula which was made possible by its new inventory management system. In addition its four new, larger Boeing 737-800's introduced during the period contributed to increased revenue per flight, while at the same time improving fuel efficiency and  accommodating an oil price above $110 per barrel.  The increased overall revenue was achieved despite a 6% decline in the total domestic passenger market.

A strong focus on managing its cost structure, with initiatives such as its new aircraft and in-house catering facilities, contributed to containing the increase in operating expenses to 9% over the comparative period. This ensured a substantial increase in profit before interest, dividends and taxation to R124 million, compared to a loss of R40 million in the corresponding period. It declared a profit for the six months of R79 million (2011 first half: a loss of R34 million).

CEO of Comair, Erik Venter commented that its  re-engineering initiatives, which already delivered results in the second half of the 2012 financial year, continued to pay off, but more importantly its new state-of-the-art reservations and logistics system ensured improved revenue through enhanced inventory management practices. "We are particularly proud of the fact that the improvement in profitability was achieved without the retrenchment of any staff, largely as result of their own commitment towards implementing the changes required to turn the business around."

Headline earnings per share grew to 16.4 cents (prior period headline loss per share of 4.9 cents), while its cash generation was solid as result of the tax allowances on its new fleet, as well as robust advance ticket sales during the December holiday period. Cash generated from its operations remained strong at R262-million (2011: R161-million) resulting in a cash balance of R529 million at 31 December 2012.  An interim gross dividend of 5 cents per share was declared.

Commenting on the next six months, Venter says the company does not expect an increase in local consumer spending and market volumes will be flat. Ticket prices will remain at current levels so as to recover the escalating costs brought about by the devalued Rand which impacts on the fuel price as well as on US dollar-based technical services.

"We are attentively optimistic of further improvements to profitability and cash generation in the second half of the 2013 financial year, particularly as kulula flights from Johannesburg (O.R. Tambo) to East London will commence from 1 March, and British Airways flights from Johannesburg (O.R. Tambo) to Maputo from May onwards. There are also further growth opportunities for our travel business, flight training facility, catering business and airport lounges in the year ahead," he concluded. 

ENDS


About Comair

Comair Limited, SA's only domestic airline listed on the JSE and proudly local, has been operating successfully in this country 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 inception revolutionalised air travel in South Africa by making flying much easier and more affordable to customers. For more information, visit www.comair.co.za

For further information, please contact:

Atmosphere Communications

Marisé Lerm (Account Director)
Tel: 021 469 1568,
Cell: 082 826 0457,
Email: marise@atmosphere.co.za

Comair Limited

Erik Venter (CEO Comair)
Tel: 011 921 0273,
Cell:  082 805 2688,
Email: erik.venter@comair.co.za