Despite rising costs, the devaluation of the rand and payments towards the purchase of more fuel-efficient aircraft, Comair lifted headline earnings 12-fold in the year to June.
The only privately owned domestic airline in South Africa said yesterday that revenue leapt 29 percent year on year to R5.3 billion.
Earnings a share surged to 47c from 1.6c, headline earnings a share to 47.9c from 3.8c and profit from operations to R330.6m from R10.8m.
A gross cash dividend of 10c a share was declared. Comair’s shares closed flat at R2.75.
The directors reported that this significant improvement in profitability was the result of transformation plans started at the end of 2011 to deal with market weakness and escalating operating costs, which included a cost and salary freeze until January this year.
The profit surge was not only due to a reduction in competition resulting from the closure of low-cost airline 1time.
Comair said cash generation was strong during the year and resulted in a cash balance of R778m at year-end.
Chief executive Erik Venter said he expected to spend some time in court as a result of Comair’s objection to state-owned SAA being provided with a R5bn subsidy by the government enabling it to compete unfairly with the private sector.
While SAA is acquiring a new-generation fuel-efficient fleet, it is following government policy in expanding its route network into Africa. Venter said this was likely to lead to further losses at the flag carrier since, despite the increasing prosperity of some African countries, it would be some time before these routes could be profitable.
He said a requirement for a transit visa for passengers to pass through Johannesburg’s OR Tambo International Airport on the way from one African country to another was partly to blame for this. It had made Johannesburg unpopular as a transit hub and foreign airlines, including Emirates, were using Harare and other cities instead.
Venter suggested that it would be fairer to put out tenders for other South African airlines to fly these routes.
Comair is also objecting to Safair, in which an Irish company has a stake, being given a licence to start a scheduled service in the domestic market.
He claimed Safair did not meet the requirement that a domestic airline must be 75 percent South African-owned.