CONTINUED PROFITABILITY FOR COMAIR

Johannesburg, 9 September 2014: Comair Limited, South Africa’s only listed domestic airline operator, has announced the continuation of its 68-year profit history with strong results for the 12-month period ending 30 June 2014. Revenue grew by 17% to R6.28 billion (2013: R5.38 billion). Total comprehensive income increased by 16% to R265 million, while earnings per share were further enhanced by the repurchase of 10% of issued shares in November and December 2013, resulting in a 24% increase to 58.4 cents. Headline earnings per share grew to 57.8 cents (2013: 47.9 cents). A final gross cash dividend of 13 cents per ordinary share was declared.

Comair’s increase in revenue was mainly as a result of improved yields, as well as a 3% increase in passenger numbers despite the domestic market shrinking by 4%. The growth in passengers was achieved due to the strength of the kulula and British Airways brands and Comair’s ongoing focus on customer service. The capacity growth by Comair and its competitors has, however, resulted in a decline of 6% in average seat occupancy rates compared to the prior year.

Comair CEO, Erik Venter, said the greatest challenge for the 2014 financial year was to accommodate an 18% weakening of the average exchange rate, contributing to an increase of 19% in the price of fuel. “Excluding the effect of this increase, the cost per available seat decreased by 1.5%, achieved mainly through the efficiencies derived from the ongoing upgrading of the fleet. The new Boeing 737-800s, acquired 18 months ago, continued to perform exceptionally well, and Comair purchased a further, pre-owned ‘800 early in the year, followed by another ‘800 on lease. Both of these aircraft replaced Boeing 737-300s that were retired.”

Cash at year-end remained strong at R868 million, after accommodating outflows of R120 million for the 50% cash component of the purchase of the 737-800 aircraft, R151 million for the share buy-back, R152 million on pre-delivery payments for four new 737-800s from Boeing in late 2015 and 2016, and a R102 million deposit on the first African order for eight next-generation 737-8 Max aircraft from Boeing, to be delivered from 2019 to 2021.

Venter said Comair’s affiliated businesses of flight training, travel product distribution and airport lounges continued to perform well and in line with the prior year. The airline operator continued to invest in transformation initiatives, including its pilot cadet programme, airport learnerships and social responsibility, and it anticipates an improvement in its BEE score.

Commenting on the year ahead, Venter said despite the sluggish economy, declining passenger market and high operating costs, Comair remained confident in further growth in group profits. “The ongoing upgrades to the fleet will continue to improve operating efficiency while at the same time enhancing the revenue potential per flight. We are also focused on implementing technology solutions to enhance our operating performance, customer service experience and revenue generating opportunities.

“Despite the challenges of the industry and the additional capacity arising from potential new competitors, Comair’s much improved infrastructure and continued focus on customer service bode well for reasonable results in the year ahead,” he concluded.