Comair has reported a 175% year-on-year increase in earnings per share in its fiscal 2019 financial results, a "direct consequence of a massive payout from South African Airways (SAA).
Comair, which operates British Airways in Southern Africa under a license agreement, won a legal settlement after a fight about SAA's incentive scheme for travel agents, which was in place from 2001 to 2006.
The settlement amounts to R1.1 billion (approximately $78 million), plus R168 million in interest. It has helped offset an 82% decline in ‘normalised’ profit before taxation, from R471 million to R86 million.
This comes despite a record revenue performance that grew 9% year-on-year partly due to a 4% increase in airline load-factors, a 3% increase in average airfare and 2% increase in combined sundry, ancillary and non-airline revenue.
Fuel cost and currency movements added R342 million and R87 million, respectively to operating expenses.
The well-documented problems with aircraft maintenance scheduling and parts inventories at SAA Technical in the first half was subsequently further compounded by the global grounding of the Boeing 737 MAX 8 in the second half of its full year 2019.
Comair took delivery of one of two 737 MAX 8 aircraft scheduled for delivery in the second half, shortly before the equipment type was grounded.
During the period, Comair sustained substantial losses as a result of both the maintenance challenges and the grounding of the 737 MAX, incurring fixed costs such as finance and maintenance costs, over and above short-term aircraft leases, without generating the commensurate revenue or contribution anticipated of the 737 MAX 8.
The computation of these costs is ongoing, the airline says, and will only be finalised once the 737 MAX 8 has been recertified, however, preliminary calculations estimate the combined amount to be R195 million.
During the reported period, Comair acquired 100% of the equity in Star Air Cargo and Star Air Maintenance, subject to Competition Commission approval to bring heavy maintenance capability back into the Comair Group.