Comair lifts revenue, profits

Cape Town - Comair's unaudited interim results for the six months ended December 31 2016 saw revenue growth of 6% as a result of a recovery in yields, but without any increase in volumes.

Profit after taxation for the period was R199m compared to R84m during the prior period. Earnings per share and headline earning per share were 42.8 cents (18c during the prior period).

Following on the strong cash earnings for the interim period a gross interim cash dividend of 7c per share (compared to 5c during the previous period) was approved for ordinary shareholders. The dividend was declared out of income reserves.

Growth in the contribution from Comair’s non-airline segment was strong.

The cycle of very low yields, which drove volume growth, as seen in the comparative first half, partly reversed in the six months under review, but at the expense of passenger numbers.

Apart from its low-cost airline, Comair has a franchise agreement with British Airways.

The first half of the 2017 financial year also brought a return to a profit growth trend in the absence of the extraordinary costs of the comparative period that arose from losses on oil hedges and the revaluation of the dollar based aircraft loan.

"For me the real issue was more about last year than this year. Last year there was the dent in our profitability because of the dollar based loan impact due to the weaker rand. That is the anomaly of our growth trend, but now we are back on our growth path," Venter told Fin24 on Tuesday afternoon.

The dollar-based loan still has six years to go to be paid off.

Venter added that the lack of GDP growth in SA is still impacting the industry. That is why Comair will put the focus on efficiency.

"From a growth perspective we must focus on the other businesses we have, since we cannot expect passenger growth," said Venter.

"Everyone in the local airline industry is suffering because of low GDP growth, so it is about how long one can hang in there. Comair has diversification to offset and we benefit from each new aircraft that brings an increase in efficiency is an ongoing trend," said Venter.

He said looking ahead Comair will continue to focus on efficiency and there are a lot of projects in this regard. The company is also looking at growth opportunities, both in and outside SA.

READ: Comair profitable without Govt help - CEO

Revenue growth for the domestic aviation industry is reliant on a strong economy and gross domestic product (GDP) growth. At the same time the local aviation industry continues to see surplus capacity in the market, resulting in occupancy levels that remain low by international standards.

Comair's costs remained flat, with local inflationary pressure being offset by the improved exchange rate applicable to foreign currency based expenses.

During the period Comair took delivery of one new Boeing 737-800 aircraft and one leased Boeing 737-800 aircraft to replace Boeing 737-400 aircraft in the British Airways fleet, due for retirement as part of Comair’s fleet replacement programme. This contributed to further operating efficiency and enhancement of the customer experience.

The company will be making pre-delivery payments of $9.7m during the remainder of the financial year towards its first deliveries of Boeing 737-8 Max aircraft in 2019.


The current weak economy is expected to maintain pressure on consumer spending, and Comair, therefore, foresees continued pressure on margins in the industry. It feels, however, that it is well placed to operate in these conditions, with strong brands, committed staff, effective equipment, an efficient cost base and strong cash reserves.

It anticipates that the exchange rate will remain volatile and that the price of oil is on an upward trend. The ongoing upgrades to its fleet provide mitigation to the expected increase in the fuel price, while also providing an improved customer experience, in its view.

Comair's travel business, flight training facility, catering business and airport lounges are regarded as opportunities for further growth.

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