Fly­ing nowhere fast

Finweek English Edition - - INVESTMENT - SI­MON BROWN

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.

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