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Fiji Airways Reports Record $17.2m Operating Profit for First Half- Year

Best Half Year Operating Result in National Carrier’s History

Thursday, 17 July 2014: Fiji Airways Group today reported its unaudited interim results for the first half of 2014, announcing a massive increase in operating profits to the corresponding period last year. The Group, legally known as Air Pacific Limited, comprises of Fiji Airways (Fiji’s National Airline), its subsidiary Fiji Link and a 38.75% stake in the Sofitel Fiji Resort & Spa on Denarau Island. The Group recorded an underlying operating profit of $17.2m from January 1st to June 30th 2014.

The amount is the total adjusted operating profit excluding release of aged management accruals and one-off items like the introduction cost of the first A330 in 2013 and the hard landing cost in 2014. In the corresponding period of 2013, the Group’s underlying operating profit was $0.5m.

Stefan Pichler, Managing Director and CEO attributed the strong performance to higher load factors, more efficient cost management, streamlined management structures and a highly motivated staff.
“It has been an excellent start into 2014 and now we have to keep the pace as we want to pay a profit share to our staff for 2014 as well as a dividend to our shareholders,” he stated. “The key driver of this underlying profitability was the 10% higher load factor across the whole network. We flew 4% more passengers and produced 5% more sectors, but in a much more efficient way. Our company was not in a good shape back in 2013, with a lack of leadership and strategy and a rather dysfunctional management structure. We put in place corrective measures and laid the challenge to our entire team. I’m delighted with the spirit of a winning team we have created. We have now gained momentum and the focus is to work hard to keep the ball rolling.”

The New Zealand, United States and South Pacific markets performed strongly in this period. Australia and Hong Kong performed weaker than expected due to a weaker exchange rate for the Australian dollar and lower than budgeted load factors for Hong Kong. The domestic network reported a small loss. This is the first time the Airline Group has released interim results for half its financial year, the best ever in the airline’s history.

“We believe that reporting provisional results for the first half of the financial year is an important step for Fiji Airways. We are committed to improving transparency and credibility, not only at home in Fiji but also for our international financial partners. We will continue our strategy of increasing revenues while controlling costs. Our pricing remains competitive in the market and we will continue to make investments in our customer experience across all touch points. This includes the on-board and on-ground experience, our customer service and the training for our team.”

“Today we are sailing in nice weather, but we also have to be ever-ready for difficult times as the airline industry is highly volatile. Although the outlook for the remaining Fiscal Year remains positive, there is no leaning back. This is like a rugby game, we have to pick and drive continuously.”

The Attorney General and Minister for Civil Aviation, Aiyaz Sayed-Khaiyum, hailed the result as a "great achievement" for Fiji Airways and the nation as a whole and congratulated the airline and its staff.
"From being on the verge of bankruptcy four years ago, we have achieved a remarkable turnaround in the fortunes of our national airline. This has been the direct result of the Bainimarama Government's reforms, its insistence on financial discipline and the introduction of a new culture of management and staff working together with clear objectives and their eyes set firmly on the future.”

“Our decision to invest in new fuel-efficient aircraft is paying dividends and we have established a firm foundation for Fiji Airways to expand to more destinations and fulfil its vision to become the world's best boutique airline. I especially want to thank the staff of Fiji Airways for their dedication and commitment to securing the airline's future. Every single worker now has a personal stake in the airline through our profit sharing scheme and an incentive to help us take the airline to even greater heights.”

“This is also good news for every Fijian, whose fortunes are tied to the airline because of its critical role in supporting our biggest export revenue earner, tourism. This result also demonstrates beyond doubt that the debt facility provided to Fiji Airways to buy new aircraft by the FNPF - our national superannuation scheme - has been a wise investment in our collective future", the Minister said.

Highlights for Fiji Airways Performance for First Half of 2014

  • Underlying Operating Profit:        $17.2m
  • Increase in load factor:              10%
  • Increase in passengers flown:     4%
  • Increase in flying sectors:           5%
  • New routes launched:                 Suva-Sydney, Suva-Apia,
  • Increased frequencies:               Australia, New Zealand, Hong Kong, Tuvalu, Samoa

Summary of Results:

Air Pacific Ltd. -- profit & loss statement H1'14 H1'13 H1 H1 YoY %
Reported Operating Profit 15.4 6.6 8.8 134%
Accrual releases & adjustments (8.0) (13.0) 5.0  
Provisions 1.2 - 1.2  
A330 landing gear 8.6 - 8.6  
Fleet transition - 6.9 (6.9)  
Total Adjustments 1.8 (6.1) 7.9  
Underlying Operating Profit 17.2 0.5 16.7 3340%

 

Air Pacific Ltd. -- operating & load statistics H1'14 H1'13 H1 H1 YoY %
Passengers flown 579,952 559,467 20,485 4%
Seat factor 82% 75% 7.1 pts 10%
Sectors 8,629 8,209 420 5%

Note: The provisional results are subject to final review by Group external auditors after conclusion of 2014 financial year (31st December 2014)

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