Comair Limited - Trading Update And Cautionary Announcement
Release Date: 09/06/2004 17:15:00 Code(s): COM
COMAIR LIMITED - TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
Comair Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/006783/06)
JSE Share code: COM
ISIN: ZAE000029823
(`Comair` or `the company`)
TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
Comair`s shareholders are advised that the company`s results for the year ending
30 June 2004 are expected to be substantially lower than those of the prior
corresponding period due to the continued depressed international aircraft
values and the strength of the Rand:
* As reported in the interim results, operating profits will be affected by
losses of R16.7m on forward cover on the acquisition of three Boeing B737-
300 aircraft.
* Aircraft deposits of approximately R27 million, on options to be exercised
in the next financial year, will be expensed as an exceptional item. It is
unlikely that the underlying aircraft will be purchased as the option
prices were negotiated prior to September 2001, and no longer support a
positive investment value.
* As a result of the fleet replacement programme, three aircraft have been
withdrawn from service, with a further two to follow in the next financial
year. These aircraft will be further written down as an exceptional item
of approximately R15 million.
* Failure of aircraft values to adequately recover since September 2001 has
resulted in a prudent decision to write down the value of the Comair owned
stage 2 noise level Boeing 737-200 aircraft that remain in operation. The
effect of this is an impairment write down of R100m that will be disclosed
as an exceptional item.
Despite the above non cash flow write downs, operations will continue to
generate positive cash flows for the year ending 30 June 2004. The recent
increases in the fuel price should be recovered through the implementation of a
fuel surcharge on certain ticket sales.
Although Comair has achieved good growth in both passenger volumes and market
share, yields remain under pressure due to continued over capacity in the
domestic market and the translation effect of dollar-based traffic from
international markets.
As the forecast results for the year ending 30 June 2004 have not been reviewed
or reported on by Comair`s auditors, shareholders are advised to exercise
caution when dealing in Comair shares until the aforementioned annual results
are published on or about 9 September 2004.
By order of the Board
Johannesburg
9 June 2004
Sponsor
Nedbank Capital
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