SHARE PRICE UP
Rand to boost Comair earnings
The airline group attributes its improved outlook to a stronger rand and improved international traffic volumes
Comair, which operates low-cost carrier Kulula, says it expects to receive a fillip to its headline earnings per share for the six months to December as a result of 2016’s stronger-than-expected rand.
The announcement on Wednesday sent the company’s share price almost 5% higher by the JSE’s close.
The group, which operates the British Airways brand in southern Africa, said it expected basic and headline earnings per share to be at least 20% higher than the 18c it posted in the same period in 2015.
The expected rise was primarily due to the rand strengthening against the dollar, resulting in the reversal of unrealised translation losses on a dollar-denominated aircraft loan amounting to R98m, Comair said in a trading statement. Furthermore, all loss-making open oil hedges had matured by December 31 2015 and no further hedges were entered into, the company said.
Comair’s share price rose 4.88% higher to close at R4.30.
Comair’s reported earnings per share of 18c and headline earnings per share of 37.6c in its half-year results for the year ended December 31 2015.
For its full-year results ended June 2016, the company declared a dividend of 11c per ordinary share, posting an aftertax profit of R192m — 12% down year on year.
Earnings per share for the period were 41.5c, and headline earnings per share 36.5c.
The company said at the time it expected pressure on consumer spending to continue in 2017, despite recent growth in passenger volumes.
"The forward price of oil reflects an increase, making it imprudent to take out any further hedges at these forward rates, despite the low spot price.
"The ongoing upgrades to our fleet provide mitigation to the expected recovery in the fuel price, while also providing an improved customer proposition," Comair said at the time.
The company declined to comment further on the trading statement, saying it was in a closed reporting period.
Transport economist and aviation expert Joachim Vermooten said on Wednesday that despite the struggling economy, demand in the South African sector had grown steadily.
"SA has been fortunate in that international traffic volumes have been improving despite [economic] difficulties. In the past two years, traffic volumes have steadily been improving," he said.