Cape Town - Comair on Monday recorded a 17 percent decline in annual profits, saying all the 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 R219 million, 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 per share came in at 47.9 cents, down from 57.8 cents 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 10 cents per share was declared, bringing the total for the year to 18 cents, up from 15 cents last time.
The company said in a statement: “We continued to focus on our customers through the application of service metrics, feedback surveys, customer journey mapping, and extensive investment in training programmes for front-line staff. Operating performance therefore remained good, with on-time performance exceeding our threshold target of 85 percent across both the British Airways and kulula.com brands.”
Comair also noted its black economic empowerment transaction with the Thelo Consortium matured in September, creating realised value of R152 million for participants.
The company added it continued to invest in transformation initiatives, including its pilot cadet programme, airport learnerships, enterprise development and social responsibility, and maintained a level 4 empowerment score.
ANA