South Africa’s Comair expanding in Africa; strong annual earnings

South African carrier Comair has unveiled a 21% increase in earnings per share for the 12 months ended 30-Jun-2010, shrugging off challenging market conditions and intense competition.

Joint CEO, Erik Venter, stated: “While the increase in earnings per share is encouraging, we believe our operating margin remains too low, at under 5%. A margin of 10% is feasible and necessary if we are to achieve our growth objectives."

The impact of the FIFA World Cup was in line with the company’s expectations, as normal business and leisure travel patterns were disrupted.

Both the British Airways and kulula.com brands “performed well” during the year, according to Mr Venter. The carrier stated: “We extended our kulula capacity substantially, mostly out of Lanseria airport. Our plan is to continue growing our low-cost Lanseria base so that we can achieve critical mass and greater efficiencies once the high capacity runway is in place."

Comair plans to continue to expand in Africa, with new services to Dar es Salaam and Maputo to commence in the next few months.

The airline will have three B737-800s in its fleet by Dec-2010 to support its expansion. Comair has orders for a further eight of the type.

Mr Venter was optimistic about the outlook, stating: “We don't anticipate much growth in the market, but we do anticipate continuing growth in market share, based on our strong brands and competitive pricing. And with our new fleet and focus on further efficiencies, we are well positioned for much stronger profit performance in future.”

Investors liked what they heard, sending the carrier’s shares 2.4% higher yesterday.

Selected African and Middle Eastern airlines share price movements (% change): 14-Sep-2010