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Sama to cease operations on 24-Aug-2010; 1time predicts lower earnings per share

23-Aug-2010

Unlisted Sama's CEO, Bruce Ashby, confirmed reports the Saudi Arabian LCC will cease operations from 24-Aug-2010 until further notice, as the company failed to receive government support and efforts to find strategic investors to invest in the company failed. The decision was taken after the airline recorded a loss of ZAR1 billion (USD266 million), as the carrier suffered from heavy losses between Oct-2009 and Mar-2010, due to declining airfares and reduced passenger demand.

It has been reported that Sama, which received ZAR200 million as a loan from the government to cover fuel costs and SAR500 million from shareholders, fell short by SAR300 million to keep operations on track. Sama has informed the General Authority of Civil Aviation of its plan.

1time shares fell by -16.3% on the Johannesburg Stock Exchange on Friday (20-Aug-2010) after the carrier stated it expects to report lower earnings per share in the six months ended 30-Jun-2010 (to be released on 30-Aug-2010) with earning per share anticipated at ZAR 3.65-7.00 cents and headline earnings per share of ZAR 5.25-8.00 cents. 1time achieved headline earnings per share of ZAR 24.22 cents in the six months ended Jun-2009.

The airline has previously warned that while it witnessed passenger and revenue growth in the first half of 2010, this had largely been offset by increases in fuel and airport costs. The carrier added that its maintenance subsidiary, Safair Technical (Jetworx), was unprofitable in the six months to Jun-2010.

See related CAPA profile: Financial results

Selected African and Middle Eastern airlines share price movements (% change): 20-Aug-2010


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