Comair records 17% fall in profit

COMAIR yesterday recorded a 17 percent decline in annual profits, saying that all gains from the collapse in the oil price had been returned to customers when it was drawn into a price war with new entrants to the South African domestic airline market.

The airline, which operates services as a British Airways franchisee and under its own Kulula brand, said revenue for the year to June had been steady at R5.9 billion.

Profit was down from R265 million to R219m, thanks largely to a price war with new competitors FlySafair and Skywise, which entered the market “with very aggressive, but more than likely unsustainable pricing”. Headline earnings a share came in at 47.9 cents, down from 57.8c last time.

Despite the new capacity in the market, Comair said it had maintained its passenger volumes largely due to the strength of the Kulula and British Airways brands.

Another price war may be on the horizon, though, thanks to Skywise’s latest offering of unlimited flights between Johannesburg and Cape Town for R7 999 a month.

Time will tell how happy it will make those who must frequently commute between the Mother City and the City of Gold to effectively get flights for free after a certain number of trips in a month.

Comair, in the meantime, remains focused on more traditional ways of keeping customers and shareholders happy. A final dividend of 10c a share was declared, bringing the total for the year to 18c, up from 15c last time.

Comair also noted that its black economic empowerment transaction with the Thelo Consortium matured in September, creating realised value of R152m for participants.