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18 Nov 2008Travel: Sa Express Report Rapid Growth In Passengers and Profit
Recent Gauteng Business News
Releasing the airline’s financial results, SAX CEO, Sizakele Mzimela and her CFO, Sikhumbuzo Zulu expressed delight at the carrier’s sustained financial performance and stronger balance sheet.
The CEO attributed the growth to the “airline’s focus on operational efficiencies while maintaining customer service, especially on-board our aircraft”.
The airline increased the number of passengers carried during the 2007-08 financial year by 6% compared to the previous year.
The combined passenger and cargo revenue grew by 18.3% to R1.327 billion.
Commenting on the results, Zulu said: “the focus on tight financial management has resulted in an improved bottom-line”.
GROWTH
The operating profit margin increased from 19% in 2007 to 25% in 2008 due to a positive growth in revenue and operational efficiency gains. The economic growth in the airline industry prevailing throughout the past year, had a positive impact on passenger turnover leading to a revenue of R1.311 billion compared to R1.109 billion last year.
EBITDA
Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 40.1% to R437.58 million (2007: R312.35 million) enabling the EBITDA margin to increase to 29% (2007: 23%) in the current year. This profit increase is attributable to productivity improvements and cost-saving initiatives undertaken, resulting in operating expenses increasing by only 6.5% to R1.087 billion (2007: R1.021 billion).
Depreciation and amortisation of assets for the year increased by 3.3% to R61 million (2007: R59 million). The planned increase is mainly due to the increase of capitalisation from C-Checks and rotable spares. The other minor items would be acquisition of furniture and fittings which is not material.
The EBIT paints a picture of our success this year as we had positive growth trends in our earnings.
OPERATIONAL COST
One of the most challenging cost in the airline industry has been the increasing price of fuel. Over the past three financial years the fuel price has increased by about 59%. The airline industry remains under pressure as the cost of fuel is forever changing to the detriment of cost-effective operations.
Despite these challenges, the total fuel cost of SAX decreased by 0.1% to R286.87million (2007: R287.17 million) due to the aircraft (regional aircraft and turbo-props) utilised which are more fuel efficient on short routes. The average price of fuel increased by 11.59% however SAX benefited by utilising efficient aircraft.
SUCCESS
Mzimela attributed the company's success to three main factors. "One reason is that SAX has a clear business model it religiously sticks to. We have stayed focused and connected to our bigger ideal and our goal of being the regional carrier of choice.
"Our financial success is also the result of investing in the right aircraft. Our aircraft are more efficient with lower fuel burn."
Mzimela added that the most significant factor contributing to the airline's success was the SAX employees. We are fortunate to attract and retain highly energised employees with vast experience in the airline industry.
“The unprecedented fluctuating oil prices continue to pose great challenges for SAX and the entire airline industry. In response, we have acted swiftly to manage capacity, preserve liquidity and aggressively manage our costs, Mzimela said.
Six years ago Transnet announced that that it would dispose of its non-core assets. They articulated a clear business case for relinquishing control of South African Express to the Department of Public Enterprises (DPE).
Under an act of parliament, the airline will be established as a standalone company within DPE once the sale of the share agreement has been concluded between DPE and Transnet.
“I am proud to say SA Express has extensively participated in our country’s aviation growth”.
Zulu said SAX is on course to meet its targets for the 2008/09 financial year “Though the fuel price increased considerably in the first few months, SAX is on track to meet its targets for the next financial year. We are building on the successes achieved in the previous and maintaining the momentum.”
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