THE BOTTOM LINE
On your marks, jet set ... what keeps Comair cooking?
Maybe the airline is not consistently brilliant at what it does, but its competitors are consistently bad
Comair might like to rub the noses of its competitors, such as they are, into the fact that it has produced an operating profit without fail for the past 72 years. This must be meaningful, but does it mean Comair gets it right every time?
No one is perfect, as they say. Assuming the airline, which operates in SA, sub-Saharan Africa and the Indian Ocean islands, does sometimes get it wrong, what would account for its extraordinary run?
Bear in mind that Comair ranks among the top JSE-listed companies on an average annual growth of 41.5%, which it maintains in a highly regulated, capital-intensive and volatile industry in which profit margins are notoriously negligible.
The domestic airline business got no easier over the past year. CEO Erik Venter complains about SA’s economy being in the doldrums and fuel prices going through the roof, yet Comair reported record results for the year to June 30 2018 on revenue of R6,5bn from R6bn a year ago. Headline earnings per share were up 4% to 69.8c a share from 67c a share in 2017.
One scary answer is that it is not that Comair is consistently brilliant at what it does, but that its competitors are consistently bad. If that is the case, what will happen to Comair’s record when SAA pulls up its socks?
Venter is too polite to pooh-pooh the notion, but he does hope such an event will bring an end to the irrational pricing in the market.
SAA’s woes are not necessarily Comair’s gains. Shareholders may agree, but will its passengers?