Result noted as best half year Operating Result in National Carrier’s History
RACHNA LAL
SUVA
The Fiji Airways Group has reported an underlying operating profit of $17.2 million for first six months of this year as at June 30.
In the corresponding period of 2013, the group’s underlying operating profit was $0.5 million.
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.
Managing director/chief executive, Stefan Pichler, said: “In the first half year, we financed the extra cost of the hard landing and made some provisions for the next ATR 72 to join the fleet in December this year.
“But, we also released some aged management accruals from previous years. If you net those things off, then we have achieved an underlying operating profit of $17.2 million.
“And, if you do the same exercise for the previous half year 2013, it gets you to a break even result of $0.5 million.
“So, in a nutshell, we are $16.7 million better than in 2013.”
He 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,” Mr Pichler stated.
“The key driver of this underlying profitability was the 10 per cent higher load factor across the whole network.
“We flew four per cent more passengers and produced five per cent 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.”
Hard landing cost
Meanwhile, the airline reported a net cost of around $8.6 million for fixing the Airbus A330 which got damaged in the hard landing incident at the Sydney Airport earlier this year.
Mr Pichler confirmed this net cost was the cost they had to bear after claiming a substantial amount of money back from the insurance.
“So, it is an expensive exercise and therefore we have made some changes in management as well as in operational processes. We need to try to avoid this kind of expense in the future,” he said.
Commitment
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.
Mr Pichler said they believe 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,” he said.
“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.”
Despite the good results, Mr Pichler is not taking this for granted.
“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,” he said.
“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.”
Feedback: rachnal@fijisun.com.fj