Picture: ISTOCK
Picture: ISTOCK

Comair‚ which rewarded shareholders with a 40% higher interim dividend on Tuesday‚ said upgrades to its fleet and a focus on efficiencies would be the best response to the expected upward trend in the oil price and flat consumer demand.

The British Airways franchisee‚ which operates low-cost airline Kulula‚ said on Tuesday its aftertax profit for the period ended December 2016 had doubled to R199m from the previous period’s R84m. Comair declared a interim gross cash dividend of 7c per share to be paid on March 27, up from 5c in the corresponding period.

Price elasticity in the market meant Comair was posting relatively equal revenue performance by its two brands, CEO Erik Venter said, with the company seeing better margins in its non-airline operations, including its travel businesses and catering operations.

Costs were flat as rand strength offset inflation. This saw a 5.7% growth in revenue to R3.1bn, without a comparable rise in passenger numbers.

Earnings per share and headline earnings per share were 42.8c, compared with earnings per share of 18c and headline earnings per share of 13.1c in December 2015.

Comair reported a R71m loss in its interim results a year ago due to a fuel-price hedge. It has not taken any fuel hedges since 2015, though it expects currency volatility and higher oil prices.

"From a pure cost and revenue perspective they are relatively the same, with a trade-off between higher volume at a lower price.

"It just highlights the level of price elasticity in the market," Venter said.

Transport economist and aviation expert Joachim Vermooten said there had been growth domestically, but excessive capacity remained, especially on trunk routes.

"They seem to have been successful in operating the dual business model, due to good management," he said.

Airports Company SA said on Tuesday domestic passenger demand had grown 5.3% year on year in 2016, with regional growth of 6%.

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