While some of the state-owned enterprises are requesting bailouts to the tune of billions of rand, Comair invested in newer, more efficient aircraft and managed to keep costs down in other areas.
Comair, which also runs kulula.com, a leading airline for domestic flights in South Africa, is SA’s only JSE-listed airline and managed to rise above all odds stacked against the industry, including an oversupply of seats in the SA market.
Innovation is the key to success
With its non-airline business contributing 25% to net profit before tax, earnings per share (EPS) increased by 10% to 69.8 cents per share, while headline earnings per share (HEPS) increased by 4% to 69.5 cents per share. This surpasses the previous year's EPS of 63.7 cents per share and HEPS of 67.0 cents per share. Consequently, profit after tax was R326 million, which is up R29 million compared to the prior year.
"We're well placed to operate in these difficult conditions, with strong brands, committed staff, effective equipment, an efficient cost base, strong cash reserves and a diversification strategy into the non-airline segment of the business which yields comparatively higher margins and is less capital intensive than the airline segment “said Comair’s CEO Erik Venter.
"Our continued investment in efficiency, innovation and diversification have helped the business thrive despite a moribund economy and an increase in the fuel-price of nearly 15%. Our significant investment into new aircraft over the past five years is now clearly demonstrating the value of this strategy."
Venter added, "This year we acquired a pre-owned Boeing 737-800 and made pre-delivery payments on our order for eight new Boeing 737 MAX 8s, the first two of which will be delivered in February. It's a combined net cash investment of R305 million."
New aircraft burn 14% less fuel by volume, while carrying more passengers.
A combined increase of 4% in passenger volumes and a 3% increase in the average fare per passenger with seat capacity rising over 3% in the same period, increased the company’s airline passenger revenue by 7%.
Non-airline businesses contribute more to higher profits
Comair’s reported revenue is the highest after-tax profit in the company’s history. R6.5bn in the year to June, from R6.064bn which yielded a profit of R325.6m from R296.97m a year earlier.
Much of Comair’s success is attributed to their non-airline businesses. Comair has doubled its capacity for pilot training at its Rhodesfield facility.
"Our simulators run around the clock to accommodate and train personnel from 36 airlines, so we're adding four simulator bays to create the necessary capacity for expansion," says Venter.
The Group added, “Comair also acquired two businesses to bolster its training capacity: EPT Aviation Training, and Global Training College South Africa, both of which provide cabin crew training and passenger handling training. The group also acquired Metaco Holdings, which focuses on leadership development and change management.”
Comair has been operating since 1946 and is the only known airline to have increased profits for 72 consecutive years.
Image source: https://www.kulula.com/flights/fleet/gallery