Flying nowhere fast
SOUTH AFRICA’S only listed airline released a solid set of results which showed diluted HEPS up 47.8c/share from the previous year’s 3.8c/share. This on the back of a share price that has more than doubled in the last year as the company faced less competition and improved its internal cost structures. But the fact remains they operate in an industry that has a history of troubled times and, while Comair has certainly been one of the better operators globally, the future is not so bright.
One of the biggest boosts to profits was the demise of 1Time, which resulted in an effective duopoly of Comair and SAA in the local market. However, almost every month sees news of a new airline wanting to enter the local market and eventually one of these will take off, slicing profits off the two incumbents. The oil price also does not look like it’s weakening, and while we may see some rand strength that’ll help costs, I can’t see improved earnings and would suggest that earnings have peaked for now.