Comair weathers higher fuel-price

  • Record first-half revenue increase
  • Investment in new aircraft will improve efficiency, customer offering
  • Non-airline operations perform well

Comair (JSE: COM) today (SUBS: Tuesday 19 February 2019) announced a record first-half increase of 12% in revenue despite negative GDP growth for two consecutive quarters. This revenue growth was offset, however, by sharply increased fuel prices and the need for short-term aircraft leases.

Consequently, earnings per share (EPS) and headline earnings per share (HEPS) declined by 38% to 27.2 cents per share respectively compared to the prior period (EPS and HEPS of 43.6 cents respectively).

The elevated fuel-price also contributed to the increase in airline operating costs of 17%, and a decline in cash generated from operations by R187m to R436m (R623m in the comparative period). This yielded a closing cash balance of R331m (R777m in the comparative period).

Airline operating costs increased by 17% with the most significant driver being a 35% increase in the Rand price of fuel per litre amounting to an additional R263m compared to the prior period, following a sharp escalation in the Dollar price of oil combined with Rand volatility.

The translation profit of the comparative period that arose from the effect of the exchange rate on a Dollar-based aircraft loan, was reversed as the currency deteriorated from R12.36 to R14.38 against the Dollar as at 31 December 2018. This resulted in a reported loss of R11m in the current period on the loan value of USD15.7m, compared to a profit of R11m on the revaluation of the loan at 31 December 2017.

In addition, increased aircraft depreciation amounting to R46m arising from the re-assessment of depreciation on certain aircraft components as well an additional R50m in hard currency-based operational costs, resulted in a higher cost base compared to the comparative period.

Despite this, airline passenger revenue increased by 11% and average seat occupancy increased on both brands but remains below global industry standards.

Comair’s ongoing diversification into non-airline business continues to offset the narrow margins and volatility of commercial aviation. These businesses continued to perform well, with an overall contribution to Net Profit before Taxation of 27% (prior period: 19%) and sustained prospects for further growth.

These operations include the group’s ongoing investment in an extensive aviation training academy with a global customer base, as well as its SLOW lounge business, its Food Directions catering unit, its travel business and its investment in technology solutions for tourism, travel and aviation.

Comair CEO Erik Venter said, “We’re very grateful to our customers and other stakeholders for their support. Special thanks must go to our personnel in our airline operations who’ve worked hard – sometimes in difficult circumstances – to ensure our customers reach their destinations for work or a holiday.”

Venter adds that the well-documented problems with maintenance scheduling and parts inventory at SAA Technical hampered on-time departures and operations, resulting in unbudgeted, incremental costs of around R34m, which included short-term aircraft leases to sustain fleet availability. R253m was invested in heavy maintenance of aircraft, of which a large portion was performed overseas.

Comair will take delivery of two Boeing 737 MAX 8 aircraft in February and March, the first of eight MAX 8s as part of its ongoing fleet renewal strategy.

The efficiency of the new aircraft will help reduce the airline brands’ exposure to fuel-price volatility and enhance potential revenue per flight, while improving the customer experience. The new aircraft will be maintained at the newly established Lufthansa Technik at ORTIA.

“Despite these pressures, the group maintains an unbroken record of 72 years of profitability, thought to be unique globally,” says Venter.

Other investments and highlights in the reported period include:

  • A R89m predelivery payment on the Boeing 737 MAX 8 aircraft order;
  • Investing R8m to develop a distribution platform for luxury inbound tourism;
  • A R19m acquisition of a data integration platform to seamlessly connect applications and data sources across the group’s distribution platforms.

About Comair Limited

Managed and owned by South Africans through its listing on the JSE, Comair has operated successfully in this country since 1946. This proudly South African aviation and travel group comprises four business units:


Comair offers scheduled and non-scheduled airline services within South Africa, Sub-Saharan Africa and the Indian Ocean Islands, as its main business. The Group operates under its low-fare airline brand,, as well as under the British Airways livery, as part of a license agreement. is the market leader in affordable, easily accessible air travel and continues to grow in the cost-conscious business and leisure markets. It has become one of South Africa’s iconic consumer brands, while British Airways continues to grow in the corporate and public sectors, as well as in the inbound tourist markets.

Hospitality and Tourism

Comair’s catering service, Food Directions, originally launched to cater to the airline brands, now also provides a range of health and other food products to retailers. Its award-winning domestic and international SLOW Lounges have set the standards for airline hospitality in South Africa. The SLOW Lounge concept is based on the theme that time plays a significant part of life and the concept has been expanded to SLOW in the City, SLOW XS and The Course. Investment in technology to improve operational efficiency and offer innovative products to travel agencies and consumers has seen the Group become the country’s largest digital travel distribution network, covered under the Comair Travel brand.

Aviation Training

The Comair Training Centre – originally founded in early 2000 to train the airline’s own flight and cabin crew – has grown considerably and now provides operational training for pilots and crew from other domestic and international airlines and even overseas air forces. Comair acquired EPT Aviation Training (Pty) Ltd and Global Training College South Africa (Pty) Ltd in 2017 with the primary objective to enhance its already formidable proposition, increasing its capacity for external commercial training of cabin crew, passenger handling, and travel and tourism training. It holds benefits for not only Comair, but the many young South Africans who envisage a career in aviation. Comair’s most recent acquisition is that of the leadership development consultancy company, Metaco Holdings (Pty) Limited. The acquisition fits well with Comair’s training business that already encompasses courses for pilots, cabin crew, ground operations staff and travel and tourism. Through Comair’s existing client base, it has identified the demand for leadership and team coaching, and Metaco fits this requirement.

Aviation IT Solutions

In 2018, Comair entered into a joint venture with an IT company, Infinea SA Holdings (Pty) Ltd, establishing a jointly held company called Nacelle (Pty) Ltd. Nacelle is a service provider in aviation and related sectors, providing services such as IT operations and support, IT project deployment, process design and software development.

Comair is the only known airline to have achieved operating profits for 73 consecutive years, has a safety record which is internationally recognised and a level 4 B-BBEE recognition. Comair has independently been certified by the Top Employers Institute as one of the Top Employers South Africa 2019. For more information, visit