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Cimber Sterling: reduction of forecast for FY2009/10, substantial improvement for FY2010/11

25-Feb-2010 12:17 PM

Cimber Sterling Group reduced (24-Feb-2010) its full-year outlook for a second time since its listing on the stock market less than three months ago, with the Danish LCC stating it believes the negative market conditions will continue in the fiscal fourth quarter. The reduction is due to "increased competition with severely squeezed fares, lower demand and extra costs related to the severe winter weather". Details of the revision (which compare to a forecast made on 17-Dec-2009 upon the release of the carrier's interim 1H2009/10 report) include:

  • Operating result (FY2009/2010): The carrier is now anticipating an operating loss of DKK200-220 million (EUR27-30 million), before IPO costs of of DKK10 million (EUR1.3 million), down from a previous forecast of a DKK60 million (EUR8.1 million) loss;
  • Revenues (FY2009/2010): Sales are now expected to be DKK1.55-1.61 billion (EUR208-216 million), down from a previous guidance of DKK1.68-1.73 billion (EUR226-232 million), with the carrier adding that the forecast could be altered again, if yields deviate from the carrier's expectations;
  • Average passenger revenue (3QFY2009/2010): Was 7% lower than expected at DKK577 (EUR77.51) as a result of intense competition in the market;
  • Passenger numbers (3QFY2009/2010): Passenger numbers increased 60% to 369,334 but were 11% lower than forecast in the interim 1H2009/10 report;
  • FY2010/11 operation results: Expecting an operating result of between a DKK30 million (EUR4 million) loss and a DKK30 million profit. The expected significant improvement as compared with the current financial year is, according to the carrier,  "driven by the great interest in the Summer programme 2010, a substantially optimised production programme, the effects of the already initiated project programmes “Odin” and “Thor, and an assumption that we have now reached the bottom with the dramatic price falls";
  • Liquidity: Liquidity has been stable at the level of DKK100 million (EUR13.4 million) since the turn of the year;
  • Capacity plans: Plans to optimise capacity utilisation and reduce the activity level to 23 aircraft in own production, down from an expected 28. Two CRJ200 aircraft will be returned to the lessor at the end of Apr-2010, the carrier will no longer lease two B737s and the carrier expects to continue leasing out one ATR72 instead of insourcing it to the fleet in late 2010. However, the carrier still expects to increase capacity (ASKs) by more than 20% in its Summer 2010 schedule. [more]

Cimber Sterling Group: "We can guarantee that we continue to improve our internal processes and our way of managing the company, that we are strengthening the management team and that we are doing our utmost to lower costs and compensate from the drop in demand. We have included an expectation for demand not to pick up in the fourth quarter and we expect the competitive situation to remain at the current level. But within aviation you never know. It can go both ways," Jacob Krogsgaard, CEO. Source: Reuters, 24-Feb-2010.