| Wed 16 Feb 2005, 11:33 | | BA/Comair flies to profitable heights |
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BA/Comair flies to profitable heights
February 16, 2005
Cape Town - Despite fiercely competitive conditions and high fuel charges, British Airways/ Comair and its low-cost subsidiary, kulula.com, returned to profitability in the six months to December after showing a loss in the comparable period in 2003.
Attributable earnings were R27.3 million compared with a loss of R9.2 million a year earlier. At share level, attributable earnings were 6.8c compared with a loss of 2.3c.
Revenue increased by 14 percent to R831 million. Headline earnings per share were 5.4c compared with a loss of 1.4c.
The rise is partly due to additional routes and more aircraft, giving an 11 percent increase in available seats and a 15 percent increase in passenger numbers.
Operating profit was R40.7 million, compared with an operating loss of R2.9 million for the same period in 2003.
The company does not separate the results of full-service airline BA/Comair and kulula, which together have an estimated 27 percent of the total domestic airline market, according to Stuart Cochrane, Comair`s executive brand manager.
Piet van Hoven, the managing director, said passenger load factors improved from 74 percent to 76 percent.
The results of the two airlines are stated as one and neither Cochrane nor Gidon Novick, the executive director of kulula, would divulge their separate market shares yesterday.
But industry sources suggested that some passengers booking with kulula on the internet were carried on BA/Comair full-service flights with spare capacity.
Cochrane said BA/Comair had a substantial number of incoming foreign visitors among its passengers, although its main market was domestic passengers, but it `helped out` kulula when the subsidiary airline`s planes were undergoing maintenance.
Another industry source said that according to the International Air Transport Association`s recent bank settlement plan figures, BA/Comair`s market share had shrunk from 25 percent to about 12 percent, while kulula`s had risen to about 16 percent since the start of the low-cost airline, indicating that its success was at the expense of its parent company.
Rival low-cost airline 1Time is expected to announce a new route today.
But the biggest industry success at present seems to be Nationwide, which was once thought to be threatened by the two low-cost airlines.
Peter Griffiths, Nationwide`s financial director, said its passenger mix of business and economy class, together with the incoming foreign visitors it carried on domestic routes, enabled it to offer special fares that undercut competitors while making a profit.
He said its market share had almost doubled in December and January from 8 percent three years ago to 15 percent.
Comair shares yesterday fell 2c to close at R1.45, while the transport sector lost 0.61 percent.
