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Aegean Airlines reports a 45% increase in net profits for the 9 month period to September 2007
Monday, 19-11-2007
Aegean Airlines reports a 45% increase in net profits for the 9 month period to September 2007
Key highlights
"I am pleased to report a positive set of 9-month results, showing net profits of €33.4m, 45% higher compared to the respective 2006 period. These improved results were driven by a consistent strong momentum in passenger traffic growth combined with successful cost efficiency measures.
I am also pleased to report progress on areas that have been set as key priorities on our strategic development plan and these include growing our international network, further strengthening of our relationship with Lufthansa, reinforcing our domestic position and last but not least achieve progress on the cost of distribution front.
Looking forward into 2008, where the major part of our fleet modernization would take place, we are focusing on the improved customer services as well as on further cost efficiencies that the renewal will bring, in an overall challenging cost environment. The oil price, which has repeatedly hit and exceeded record high levels, has become the most immediate challenge for the near future. While partially mitigated by the weak US dollar and the application of fuel surcharges, we believe its effect will be felt in 2008. To this end, among our goals is to accelerate the re-fleeting process – to the degree possible – so as to more rapidly improve the fuel efficiency of our fleet as well as enhance our revenue potential as a result of our improved services."
Financial information in this announcement is presented on the basis of International Financial Reporting Standards (‘IFRS’) and is available on our website: www.aegeanair.com.
Aegean Airlines at a glance
Overview
Total revenue rose by 20% to €370.5m from €307.6m attributed to strong demand trend, on a flying program 27% larger in ASKs. Growth was mainly driven by scheduled services revenue that grew 23% to €282.5m, accounting for 84% of total revenues (excluding airport taxes). Trends for the company’s key revenue performance indicators were aligned with trends evident up until June 2007 and within management’s expectations. Passenger yield for the 9-month period was down 4% to €13.2 cents while revenue per available seat kilometer (RASK) eased 5% to €9.4 cents, reflecting a combination of drivers like the recent new route openings, a longer stage length, a relatively weak yield environment prevailing on Western European routes and higher web sales contribution. Average fare edged 2% higher, reflecting the rising contribution of the international network travelers and the 8% rise in average stage length.
Aegean Airlines achieved excellent profitability during the 9 months of 2007. EBITDAR rose by 29% to €73.1m with the respective margin rising to 19.7% from 18.4%. Given higher aircraft leases, stemming from the addition of 3 new aircraft on our fleet in 2007, EBITDA increased 17% to €45.8m. Pre-tax profits showed an improvement of 36% to €41.7m from €30.7m. As a result, total cost per Available Seat Kilometer (CASK) dropped 7% to €8.3 cents, driven down by scale economies, increased RJ seat capacity (112 from 100 seats), distribution efficiencies and a stronger Euro against the US dollar.
Net earnings after tax for the 9-month period jumped 45% to €33.4m with a respective margin of 9%. Net earnings growth for continuing operations was even higher, standing at 59%. Worth a mentioned is the fact that net earnings for the 3-month period to September 2007, the most important season for the business, rose by 22% to €27m with a respective margin of 17%, a performance that places Aegean Airlines amongst the top in the European Airlines industry.
As far as the traffic development is concerned, Aegean Airlines welcomed more than 4 million passengers on board during the 9-month period, achieving a 19% y-o-y growth. Domestic demand remained strong with passenger traffic up 12% to 2.6 million passengers, confirming the success of Aegean’s strategy to further strengthen its presence as well as stimulate demand in the domestic market. Growth in international routes was higher, reflecting efforts for further international network expansion, with Aegean Airlines transferring 1.5 million passengers, 34% more compared to last year. Scheduled services load factor eased to 70.3% as a result of the increase in average aircraft seat capacity and the introduction of new international routes, especially seasonal. The number of average passengers per flight rose by 3% to 96 from 94.
Aegean Airlines network covers 7 countries on 30 year-round routes. In late 2006 Aegean Airlines opened Athens-Bucharest and Athens-Cairo routes while in early 2007, the company introduced new direct services from Athens to Frankfurt and Munich, code-shared with Lufthansa, whilst also doubling frequencies to Milan. As of mid September, the company is also adding frequencies to both Athens-Sofia and Bucharest, reaching 12 weekly frequencies each. The company’s objective is to gradually increase its coverage and flight density to European destinations so that business as well as leisure passengers are offered an attractive competitive product. The company’s international network will be enhanced with new destinations in 2008 which are due to be announced at the end of November 2007.
The fleet renewal programme proceeds according to schedule with a total of 25 new aircraft of the A320 family gradually replacing existing 737-300/400’s and adding capacity for growth. Aegean’s capacity has increased by 3 new A-320 aircraft in Q1 2007. The company expects the delivery of 10 new Airbus (8 A320 and 2 A321) in 2008 and an additional 6 A320 in 2009. Last, following the exercise of its options, Aegean will take delivery of 6 additional aircraft of the A320 family in early 2010.
About Aegean Airlines
Aegean Airlines is a full service airline, having a leading domestic position in Greece and a growing presence in international scheduled routes between Greece and destinations in Europe and neighboring countries. The company offers its passengers premium services such as a dual-class cabin configuration, in-flight catering and reserved seating, while maintaining a lean cost structure. Aegean Airlines is also a Regional Partner of Lufthansa providing access for its passengers to Lufthansa’s global network.
Conference Call
Aegean Airlines will host a conference call with financial analysts to discuss the 9-month 2007 financial results on 20 November 2007 at 17:00 Athens time (15:00 London time and 10:00 New York time). Interested parties can dial the following numbers:
Greek participants dial in: +30 211 180 2000, +30 210 94 60 800
UK participants dial in: +44 (0) 800 3769 250
US participants dial in: +1 866 288 9315
Other international dial in: +44 (0) 20 70753 205
- Turnover rose 20% to €370.5m from €307.6m
- Pre-tax earnings increased 36% to €41.7m
- Net profit for the period increased 45% to €33.4m from €23m
- Total passengers welcomed onboard rose by 19% to 4.1 million
- Average passengers per flight improved to 96 from 94. Scheduled services load factor at 70.3%.
- EBITDAR increased 29% to €73.1m against €56.5m in the previous year
- Total cost per available seat kilometer fell by 7%. Yield per passenger Kilometer eased 4%
- Balance sheet cash and cash equivalents totaled €166m
"I am pleased to report a positive set of 9-month results, showing net profits of €33.4m, 45% higher compared to the respective 2006 period. These improved results were driven by a consistent strong momentum in passenger traffic growth combined with successful cost efficiency measures.
I am also pleased to report progress on areas that have been set as key priorities on our strategic development plan and these include growing our international network, further strengthening of our relationship with Lufthansa, reinforcing our domestic position and last but not least achieve progress on the cost of distribution front.
Looking forward into 2008, where the major part of our fleet modernization would take place, we are focusing on the improved customer services as well as on further cost efficiencies that the renewal will bring, in an overall challenging cost environment. The oil price, which has repeatedly hit and exceeded record high levels, has become the most immediate challenge for the near future. While partially mitigated by the weak US dollar and the application of fuel surcharges, we believe its effect will be felt in 2008. To this end, among our goals is to accelerate the re-fleeting process – to the degree possible – so as to more rapidly improve the fuel efficiency of our fleet as well as enhance our revenue potential as a result of our improved services."
Financial information in this announcement is presented on the basis of International Financial Reporting Standards (‘IFRS’) and is available on our website: www.aegeanair.com.
Aegean Airlines at a glance
 |
Aegean Airlines at a glance |  |
|||
| In € millions (Cons) | Jan - Sept 2006 | Jan - Sept 2007 | Change In % | ||
| Revenue | 307,6 | 370,5 | 20% | ||
| EBITDAR | 56,5 | 73,1 | 29% | ||
| EBIT | 34.5 | 42.8 | 24% | ||
| Pre-tax profit | 30.7 | 41.7 | 36% | ||
| Net earnings after tax (continuing operations) |
21.1 | 33.4 | 59% | ||
| Net earnings after tax & minority interest |
23.0 | 33.4 | 15% | ||
| Total number of passengers (in thousands) | 3,408 | 4,063 | 19% | ||
| Average passengers per flight | 94 | 96 | 3% | ||
| Load factor - Scheduled services (RPK/ASK | 72.8% | 70.3% | |||
| Load factor - Scheduled services (Pax/AVS) | 71.5% | 70.1% | |||
| Average Fare (Scheduled - €) | 76.12 | 77.62 | 2% | ||
| RASK (Revenue per ASK, in € cents) | 9.94 | 9.40 | -5% | ||
| Yield (Revenue per RPK, in € cents) | 13.74 | 13.17 | -4% | ||
| CASK (EBITDAR level, in € cents | 8.12 | 7.55 | -7% | ||
| CASK (EBT level, in € cents) | 8.95 | 8.34 | -7% | ||
Overview
Total revenue rose by 20% to €370.5m from €307.6m attributed to strong demand trend, on a flying program 27% larger in ASKs. Growth was mainly driven by scheduled services revenue that grew 23% to €282.5m, accounting for 84% of total revenues (excluding airport taxes). Trends for the company’s key revenue performance indicators were aligned with trends evident up until June 2007 and within management’s expectations. Passenger yield for the 9-month period was down 4% to €13.2 cents while revenue per available seat kilometer (RASK) eased 5% to €9.4 cents, reflecting a combination of drivers like the recent new route openings, a longer stage length, a relatively weak yield environment prevailing on Western European routes and higher web sales contribution. Average fare edged 2% higher, reflecting the rising contribution of the international network travelers and the 8% rise in average stage length.
Aegean Airlines achieved excellent profitability during the 9 months of 2007. EBITDAR rose by 29% to €73.1m with the respective margin rising to 19.7% from 18.4%. Given higher aircraft leases, stemming from the addition of 3 new aircraft on our fleet in 2007, EBITDA increased 17% to €45.8m. Pre-tax profits showed an improvement of 36% to €41.7m from €30.7m. As a result, total cost per Available Seat Kilometer (CASK) dropped 7% to €8.3 cents, driven down by scale economies, increased RJ seat capacity (112 from 100 seats), distribution efficiencies and a stronger Euro against the US dollar.
Net earnings after tax for the 9-month period jumped 45% to €33.4m with a respective margin of 9%. Net earnings growth for continuing operations was even higher, standing at 59%. Worth a mentioned is the fact that net earnings for the 3-month period to September 2007, the most important season for the business, rose by 22% to €27m with a respective margin of 17%, a performance that places Aegean Airlines amongst the top in the European Airlines industry.
As far as the traffic development is concerned, Aegean Airlines welcomed more than 4 million passengers on board during the 9-month period, achieving a 19% y-o-y growth. Domestic demand remained strong with passenger traffic up 12% to 2.6 million passengers, confirming the success of Aegean’s strategy to further strengthen its presence as well as stimulate demand in the domestic market. Growth in international routes was higher, reflecting efforts for further international network expansion, with Aegean Airlines transferring 1.5 million passengers, 34% more compared to last year. Scheduled services load factor eased to 70.3% as a result of the increase in average aircraft seat capacity and the introduction of new international routes, especially seasonal. The number of average passengers per flight rose by 3% to 96 from 94.
Aegean Airlines network covers 7 countries on 30 year-round routes. In late 2006 Aegean Airlines opened Athens-Bucharest and Athens-Cairo routes while in early 2007, the company introduced new direct services from Athens to Frankfurt and Munich, code-shared with Lufthansa, whilst also doubling frequencies to Milan. As of mid September, the company is also adding frequencies to both Athens-Sofia and Bucharest, reaching 12 weekly frequencies each. The company’s objective is to gradually increase its coverage and flight density to European destinations so that business as well as leisure passengers are offered an attractive competitive product. The company’s international network will be enhanced with new destinations in 2008 which are due to be announced at the end of November 2007.
The fleet renewal programme proceeds according to schedule with a total of 25 new aircraft of the A320 family gradually replacing existing 737-300/400’s and adding capacity for growth. Aegean’s capacity has increased by 3 new A-320 aircraft in Q1 2007. The company expects the delivery of 10 new Airbus (8 A320 and 2 A321) in 2008 and an additional 6 A320 in 2009. Last, following the exercise of its options, Aegean will take delivery of 6 additional aircraft of the A320 family in early 2010.
 |
Operating figures | |
|||
| Jan - Sept 2006 | Jan - Sept 2007 | Change In % | |||
| Capacity | |||||
| Number of aircraft (at period end) | 21 | 24 | 14% | ||
| Average number of aircraft in operation | 20 | 23 | 16% | ||
| ASKs (in millions) | 3,095 | 3,941 | 27% | ||
| Total available seats (000) | 4,773 | 5,754 | 21% | ||
| Total Block Hours | 45,710 | 55,871 | 22% | ||
| Total Sectors Flown | 36,331 | 42,121 | 16% | ||
| Average capacity per aircraft employed | 142 | 146 | 2% | ||
| Network | |||||
| Number of year-round scheduled routes served |
26 | 30 | 15% | ||
| Average sector length | 597 | 643 | 8% | ||
| Passengers (000) | |||||
| By type of service: | |||||
| Schedule passengers | 3,021 | 3,639 | 20% | ||
| Charter passengers | 387 | 424 | 10% | ||
| By destination: | |||||
| Domestic | 2,323 | 2,610 | 12% | ||
| International | 1,085 | 1,453 | 34% | ||
|
|
|||||
| Total number of passengers | 3,408 | 4,063 | 19% | ||
| RPKs (in millions) | 2,239 | 2,813 | 26% | ||
| Load factor – Sceduled services | 72.8% | 70.3% | |||
|
Profit & Loss account | |
|||
| In € millions (Cons) | Jan - Sept 2006 | Jan - Sept 2007 | Change In % | ||
| Revenue | |||||
| Scheduled Services | 230.0 | 282.4 | 23% | ||
| Charter | 41.1 | 39.6 | -4% | ||
| Other (cargo, service charge, executive aviation) | 13.1 | 15.3 | 17% | ||
| Airport charges | 23.4 | 33.1 | 41% | ||
| Total revenue | 307.6 | 370.5 | 20% | ||
| Other operating income | 0.9 | 2.0 | 128% | ||
| Operating expenses | |||||
| Employee benefits | (40.9) | (48.2) | 18% | ||
| Aircraft fuel | (62.4) | (70.5) | 13% | ||
| Aircraft maintenance | (30.9) | (40.8) | 32% | ||
| Overflight expenses | (12.2) | (15.1) | 24% | ||
| Ground handling expenses | (8.7) | (11.3) | 29% | ||
| Airport charges | (41.2) | (52.2) | 27% | ||
| Catering expenses | (7.5) | (10.2) | 37% | ||
| Distribution expenses | (26.7) | (25.6) | -4% | ||
| Marketing and advertising expenses | (2.4) | (2.4) | 3% | ||
| Inventories consumption | (2.6) | (2.8) | 4% | ||
| Other operating expenses | (16.6) | (20.3) | 22% | ||
| EBITDAR | 56.5 | 73.1 | 29% | ||
| EBITDAR margin | 18.4% | 19.7% | |||
| Aircraft leases | (17.4) | (27.3) | 57% | ||
| EBITDA | 39.1 | 45.8 | 17% | ||
| EBITDA margin | 12.7% | 12.4% | |||
| Depreciation | (4.6) | (3.0) | -34% | ||
| EBIT | 34.5 | 42.8 | 24% | ||
| EBIT margin | 11.2% | 11.5% | |||
| Interest income | 3.9 | 5.6 | 44% | ||
| Interest expense | (7.7) | (6.6) | -14% | ||
| Gains on sales of subsidiaries | - | 0.0 | |||
| EBT | 30.7 | 41.7 | 36% | ||
| EBT margin | 10.0% | 11.3% | |||
| Income Tax | (9.7) | (8.3) | -14% | ||
| Profit / (loss) after tax from continuing operations | 21.1 | 33.4 | 59% | ||
| Profit from discontinued operations | 3.7 | - | n.m. | ||
| Profit after tax | 24.7 | 33.4 | 35% | ||
| Minority Interest | (1.7) | - | n.m. | ||
| Profit after tax and minority interest | 23.0 | 33.4 | 45% | ||
| Net profit margin | 7.5% | 9.0% | |||
|
Key performance Indicators | |
|||
| In € cents | Jan - Sept 2006 | Jan - Sept 2007 | Change In % | ||
| Passenger Yield (Revenue per RPK) | 13.74 | 13.17 | -4.2% | ||
| RASK (Revenue per ASK) | 9.94 | 9.40 | -5.4% | ||
| CASK (EBITDAR level) | 8.12 | 7.55 | -7.0% | ||
| CASK (EBT level) | 8.95 | 8.34 | -6.8% | ||
| Expenses per ASK | |||||
| Employee benefits | 1.32 | 1.22 | -7.5% | ||
| Aircraft fuel | 2.02 | 1.79 | -11.3% | ||
| Depreciation | 0.15 | 0.08 | -48.2% | ||
| Aircraft leases | 0.56 | 0.69 | 23.3% | ||
| Aircraft maintenance | 1.00 | 1.03 | 3.8% | ||
| Overflight expenses | 0.39 | 0.38 | -2.4% | ||
| Ground handling expenses | 0.28 | 0.29 | 1.5% | ||
| Airport charges | 1.33 | 1.33 | -0.5% | ||
| Catering expenses | 0.24 | 0.26 | 7.4% | ||
| Distribution expenses | 0.86 | 0.65 | -24.7% | ||
| Marketing and advertising expenses | 0.08 | 0.06 | -19.5% | ||
| Inventories consumption | 0.09 | 0.07 | -18.0% | ||
| Other operating expenses | 0.54 | 0.52 | -4.0% | ||
|
Balance Sheet - Summary | |
||
| In € millions (Cons) | Dec-06 | Sept-07 | ||
| Total fixed assets | 71.8 | 116.6 | ||
| Cash and cash equivalents | 24.4 | 166.1 | ||
| Other current assets | 70.6 | 79.6 | ||
| Total assets | 166.8 | 362.3 | ||
| Total equity | 16.5 | 171.2 | ||
| Long term Liabilities | 37.5 | 26.1 | ||
| Other Short term Liabilities | 112.8 | 165.1 | ||
| Total equity and liabilities | 166.8 | 362.3 | ||
|
Cashflow - Summary | |
||
| In € millions (Cons) | Jan - Sept 2006 | Jan – Sept 2007 | ||
| Net cash flows from operating activities | 51.0 | 27.1 | ||
| Net cash flows from investing activities | (21.1) | (12.7) | ||
| Net cash flows from financing activities | (20.1) | 127.4 | ||
| Net (decrease)/ increase in cash and cash equivalents | 9.7 | 141.8 | ||
| Cash and cash equivalents at the beginning of the period | 7.6 | 24.4 | ||
| Cash and cash equivalents at the end of the year | 17.3 | 166.1 | ||
About Aegean Airlines
Aegean Airlines is a full service airline, having a leading domestic position in Greece and a growing presence in international scheduled routes between Greece and destinations in Europe and neighboring countries. The company offers its passengers premium services such as a dual-class cabin configuration, in-flight catering and reserved seating, while maintaining a lean cost structure. Aegean Airlines is also a Regional Partner of Lufthansa providing access for its passengers to Lufthansa’s global network.
Conference Call
Aegean Airlines will host a conference call with financial analysts to discuss the 9-month 2007 financial results on 20 November 2007 at 17:00 Athens time (15:00 London time and 10:00 New York time). Interested parties can dial the following numbers:
Greek participants dial in: +30 211 180 2000, +30 210 94 60 800
UK participants dial in: +44 (0) 800 3769 250
US participants dial in: +1 866 288 9315
Other international dial in: +44 (0) 20 70753 205
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