euro adhoc: SkyEurope Holding
quarterly or semiannual financial statement /
SkyEurope enjoys continued growth and further expansion into new markets
. Passenger growth of 52.8% in the first half of FY2006
. Significant investments made towards reac
@@start.t1@@-------------------------------------------------------------------------------- Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement. --------------------------------------------------------------------------------@@end@@
Vienna, 26 May 2006
In the first half of its financial year, to 31 March 2006, SkyEurope continued its very strong operational growth. Passenger volumes grew by 52.8%, compared to the same period during the previous year, and reached 866,843 passengers.
While seat capacity (ASK) increased by 43.8%, SkyEurope improved its load factor by 2 percentage points to 68.4%.
This growth was primarily achieved in the second quarter of the financial year, when the number of passengers rose by 63.2% as compared to the same period during the previous year.
The positive load factor reflects the favourable market response to SkyEurope's increased capacity and extension of the network.
In February 2006, SkyEurope announced a new base in Prague. The entry into the Czech market is a logical step reinforcing SkyEurope's leadership in Central Europe. Prague is the No.1 tourism destination in Central Europe and enjoys the highest disposable income per capita in the region. SkyEurope has based two aircraft at Prague Airport, with an initial network of 9 destinations.
The decision to open a new base was an opportunistic move as slots became available at short notice at Prague Airport. To address this opportunity, SkyEurope reallocated capacity to Prague from less profitable routes.
In the first half of 2006, 17 new routes were added, with SkyEurope's network now consisting of 70 routes to 37 destinations in 19 European countries.
The first four of 16 firm orders for brand new Boeing 737-700 Next-Generation aircraft were delivered in March, April and May 2006. These new aircraft are equipped with blended winglets technology and leather seats. By the end of 2006, six new Boeing 737-700s will become part of SkyEurope's fleet, contributing to the fleet's modernisation and anticipated further cost reductions. This is the first season that SkyEurope will have operated a single Boeing aircraft type fleet following the phasing out all of its Embraer aircraft.
Of the 16 firm aircraft order, the first 12 are financed under operating leases from GECAS. The four remaining aircraft are expected to be delivered in the second half of 2007 have been purchased directly from Boeing and will be financed "on-balance sheet". SkyEurope is pleased to announce that it has mandated Bank of Scotland Corporate to provide pre-delivery payment and long term loan financing for these four new Boeing 737-700s (with a combined value of USD 220m at list prices). These four owned aircraft will strengthen SkyEurope's balance sheet and are expected to provide a competitive cost of aircraft ownership. In line with its peer group, SkyEurope aims to achieve a balanced finance mix between owned and leased aircraft due to join its fleet.
In order to provide SkyEurope with capacity for its future expansion, the Company intends to exercise in June 2006 purchase rights for five Boeing 737- 700 aircraft delivering in 2008.
|Financial Highlights of the Group (according to IFRS) |
|(in million EUR) |H1 2006 |H1 2005 |Change |
|Passengers (in 000) |866,843 |567,410 |52.8% |
|Operating Revenues |51.2 |36.6 |40.0% |
|EBIT |(34.4) |(21.9) |57.4% |
|Adjusted EBIT * |(31.2) |(21.9) |42.9% |
|Margins (Adjusted EBIT*)|(61%) |(60%) |1.7% |
|Net Loss |(33.7) |(18.9) |78.6% |
|* adjusted for delayed revenue recognition of service fees and |
|re-delivery provisions for Boeing 737 Classics |@@end@@
Operating revenues increased from EUR 36.6m in the first half of 2005 to EUR 51.2m in the first half of 2006, an increase of 40%. SkyEurope managed to improve its adjusted unit revenues and controllable costs despite its strong business growth. The revenue per available seat kilometre (RASK), adjusted for non-recurring items, increased by 3% to EURc 3.87. In January 2006, SkyEurope introduced a new fare structure. Under this tariff model SkyEurope no longer charges customers surcharges such as those relating to fuel and insurance, as these costs are now to be reflected in the base fare of the ticket, allowing for a more transparent supply-and-demand based pricing model, also used by Europe's leading low cost airlines. Moreover, under this new model, revenues from service fees previously accounted for at the time of booking are now released later (at the time of flying), resulting in a seasonal shift of revenues. During the transition phase, these changes negatively impacted the Company's revenues, although the new pricing policy is expected to help boosting load factors in the future.
Operating expenses rose by 47% in the first half year 2006, to EUR 85.6m compared to EUR 58.4m in the same period during the previous year. Fuel prices increased by 31% compared to the prior year period. This had a negative impact on SkyEurope's operating income in the first half year 2006, amounting to EUR 5.5 m. On a unit costs base this corresponds to a 25% increase in fuel costs per available seat kilometre, to EURc 1.62.
SkyEurope managed to lower costs per available seat kilometre excluding fuel (CASK after fuel and non-recurring items), from EURc 4.85 to EURc 4.59, a reduction of 5 percentage points, due to efficiency gains and effective cost management. However, the reduction in unit costs was offset by the impact of fuel price increases.
In the first half year, SkyEurope introduced a currency hedging programme covering its entire USD foreign exchange risk for the financial year 2006. In addition, the Company was able to enter into a favourable fuel hedge contract covering 90% of its jet kerosene demand in the period from March to May 2006 at a rate of USD 60.5 per bbl Brent equivalent.
The Company reported in the first half year a negative EBIT in an amount of EUR 34.4m, an increase of EUR 12.5m, and a net loss of EUR 33.7m. This reflects the significant investment made by the Company in terms of capacity expansion, opening of 17 new routes, reallocation of capacity in connection with the establishment of a new base in Prague and the effects of changing its pricing model.
Negative EBIT adjusted for non-recurring items amounted to EUR 31.2m for the first half year 2006. This is related to the delay in revenue recognition of the previously charged service fee of EUR 2.4m and redelivery provisions of EUR 0.8m for the Boeing Classic fleet.
The transition to the new pricing system generated a temporary shortfall in revenues, while at the same time, revenues were affected by the fact that in 2006, Easter was in April compared to 2005 when it fell in March. Together with the increase in fuel prices, these explanatory items amounted to a further negative impact of EUR 8.3m on the Company's first half year earnings.
On a like-for-like basis, negative EBIT for the first half year, adjusted for non-recurring events and explanatory items, is EUR 22.9m versus EUR 21.9m negative EBIT in the first half year of FY2005.
Position regarding the group's property and finances
As at 31 March 2006, total equity amounted to EUR 0.2m compared to EUR 33.8m as at 30 September 2005.
Income tax credits booked during the first half year amounted to EUR 0.8m. In the second quarter of FY2006, the Company wrote-off income tax credits in an amount of EUR 1.7m.
Total non-current assets rose from EUR 15.8m to EUR 21.0m as a result of pre- delivery payments related to the purchase of four Boeing 737-700 aircraft (to be delivered in 2007) in an amount of EUR 4.8m. Deferred tax assets increased from EUR 8.7m to EUR 9.2m during the first half year.
Total current assets declined from EUR 67.9m as at 30 September 2005 to EUR 50.1m as at 31 March 2006 mainly as a result of the financing of growing business operations and aircraft investments during the winter season through the Company's working capital.
Total liabilities rose to EUR 70.9m as at 31 March 2006 from EUR 49.8m as at 30 September 2005, due to higher unearned transport income.
Cash flows used in operating activities were negative at EUR 25.4m in the reporting period, because of seasonal effects in the airline business and significant investments towards achieving a critical mass, as explained under "Financial Results" above.
As expected, the weaker winter months left their mark on the first half of the financial year 2006. SkyEurope has undertaken significant investments towards achieving critical mass by continuing to pursue its growth strategy. In the medium term, this should result in a solid basis for further growth in revenues and earnings. For the second half year 2006 (which includes the peak summer season), higher passenger numbers and revenues are expected that should have a positive effect on the further development of the business.
An anticipated increase in capacity and further cost reductions in the second half year are also expected to have a positive impact on the development of the Company.
@@start.t3@@To take advantage of growth opportunities in countries expected to join the European Union in the future, as well as to develop the SkyEurope brand in large emerging markets in Eastern Europe, the Company will focus its development on its "Go East" strategy. To provide the adequate capacity to enter these markets, SkyEurope intends to exercise purchase rights for additional aircraft to be financed in part by debt and in part by issuance of@@end@@
new shares. Against this background, the Company is convening an Extraordinary General Meeting (EGM) of its shareholders on Tuesday 20 June 2006 in Vienna to authorize its management to issue new shares to finance the fleet and continued network expansion.
Shareholders attending the EGM will be invited to approve the
following resolutions: i) Ordinary capital increase of up to 20
million new shares, thereby increasing the Company's share capital
from its current level of E20 million to up to E40 million, and
on terms such that the shareholders' subscription rights will
be preserved. Determination of the final volume and specific terms
of any future capital increase will be on such terms as
the Company's Management Board sees fit in connection with future
capital raisings by the Company to finance its future growth, in
the light of effective demand and market conditions. ii)
Proportional increase of authorised share capital of up to 10
million shares from the current level of 5 million shares,
thereby increasing the Company's authorised share capital from
its current level of E5 million to up to E10 million for general
corporate purposes, including ensuring that the Company remains
owned and controlled by EEA member states and/or nationals
of EEA member states (and in such case the subscription rights of
existing shareholders would be excluded).
*** About SkyEurope Airlines ***
SkyEurope Airlines was founded on 6 September 2001 by Christian Mandl and Alain Skowronek. With bases in Bratislava, Budapest, Krakow, Warsaw and Prague, SkyEurope is the leading low cost low fare airline in Central & Eastern Europe. SkyEurope operates a network of 70 routes to 37 destinations in 19 European countries, with its fleet of 16 Boeing 737 aircraft.
SkyEurope Airlines ordered up to 32 Boeing Next-Generation 737-700 aircraft (of which 16 are subject to purchase rights). The first 16 firmly ordered new Boeing 737-700 will join the fleet in 2006 and 2007; to the extent that those purchase rights are exercised, the remaining 16 aircraft are to be delivered to SkyEurope until the end of 2010.
SkyEurope has been listed on the Vienna and Warsaw Stock Exchanges since 27 September 2005.
@@start.t4@@end of announcement euro adhoc 26.05.2006 08:00:00
ots Originaltext: SkyEurope Holding
Im Internet recherchierbar: http://www.presseportal.de
Branche: Air Transport
Börsen: Wiener Börse AG / official market