The group attributes the growth to a 15 per cent increase in capacity due to a replacement of their Boeing 700-300s with larger 800s.
“The four new Boeing 737-800s that were introduced into the Kulula fleet during the comparative period, contributed for the full six months of the first half of the current financial year,” said Comair [DATA COM:COMAIR LTD.].
Earnings per share and headline earnings per share grew from 16.4 cents to 34.3 cents. The company also announced that an interim cash dividend of 5 cents per ordinary share has been declared.
Cash generation was also strong, resulting in a cash balance of 695 million rand. Comair attributes this to several investments they have in place, including pre-delivery payments towards its next four Boeing 737-800s which will be delivered in late 2015-2016.
Ticket prices however were driven by the weakening rand. The exchange rate resulted in a 14 per cent escalation in fuel prices and also affected their US dollar based maintenance costs.
“By December the jet fuel price had reached a new high, 225 per cent up on its previous stable level of 4 rand per litre in 2010,” the company added.
“The continued devaluation of the [South African currency] has driven the rand price of fuel and dollar-based technical services to record highs. We therefore do not foresee early growth in market volumes as ticket prices will remain at the levels necessary to recover such escalating costs.”
As a result, the domestic passenger market will continue to shrink 5 per cent year-on-year however, Comair believes that their new aircraft will resolve fuel price challenges as well as allow them to maintain a healthy lead over the profitability of their competitors.
“We remain well placed for the full 2014 financial year, despite a further 12 per cent increase in the fuel price since December, driven mainly by the depreciation of the rand,” the company explained.