euro adhoc: SkyEurope Holding
quarterly or semiannual financial statement /
SkyEurope continues to grow strongly and reduces its operating loss
in Q1 2007
Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement.
3-month report
28.02.2007
45% passenger volume growth, with 10.5pp increase in load factors 8.4% increase in unit revenues and 4.4% reduction in unit costs Improvement in EBIT margin by 16.6pp, on target for
positive EBITDAR in 2007 Launch of flights from Vienna in March 2007
Bratislava, 28 February 2007
Development of operations
In the first quarter of its 2007 financial year, SkyEurope improved very significantly its aircraft utilisation, both in terms of capacity generated and number of passengers carried on board.
Despite the reduction in the average number of aircraft operated (12.1 in Q1 2007 vs 13.7 in Q1 2006), the introduction of six (larger) Boeing 737 NG aircraft allowed SkyEurope to increase the daily utilisation by 20.4% to 9:15 hours per day (7:41 hours in Q1 2006), resulting in an 18.5% increase in capacity for the Q1 2007 period to 812 million ASKs (685 million in Q1 2006).
The implementation of a load factor active policy (+10.5pp increase in load factor to 76.4% in Q1 2007) offset the slowed capacity growth compared to previous quarters, allowing SkyEurope to deliver an impressive 45% growth in passengers carried, reaching 595,332 during the three months ended 31 December 2006 (409,946 passengers for three months ended 31 December 2005).
The new Boeing 737-700 NG aircraft have also contributed fuel and maintenance efficiencies and allowed SkyEurope to achieve an 83.3% on-time performance during the quarter, making it one of the most punctual low-cost airline operators in Europe.
Financial development
The very significant growth in traffic for the period was partly stimulated by promotional fares for the seasonally weak October-December quarter, resulting in some yield erosion (6.7% down from Q1 2006), which was fully offset by the 10.5pp increase in load factor. As a result of this and a surge in ancillary revenues (75% higher Q1 2007 than Q1 2006), unit revenues grew strongly (by 8.4%) to EURc 4.14, resulting in total revenue for the period of EUR 33.6 million (+27% growth from Q1 2006).
Ancillary revenues contributed to 18% of SkyEuropes operating revenue vs only 13% in Q1 2006. This growth is attributable to an increase in the booking fees and to the enhanced portfolio of products offered to customers, including seat assignment, car rental and hotel bookings, options which are available through SkyEuropes website.
Unit costs in Q1 2007 have been reduced by 4.4% to EURc 5.64, despite targeted increases in sales and marketing expenditure to continue promoting SkyEuropes brand in key markets and increases in salaries of pilots and mechanics to competitive levels. New fleet efficiency, improved airport contracts and other cost management initiatives have driven the overall cost base down. For the full FY 2007, SkyEurope targets a reduction in unit costs of 5%.
The overall improvement in unit margin for the quarter resulted in a reduced EBITDAR loss of EUR 3.8 million (negative EUR 7.7 million in Q1 2006). The operating loss (EBIT) for Q1 2007 amounted to negative EUR 12.2 million vs negative EUR 14.0 million in Q1 2006, reflecting an improved EBIT margin by 16.6 percentage points. The net loss, excluding the impact of deferred income taxes (loss before income taxes), was reduced by EUR 700 thousand.
SkyEurope has pursued an active risk management policy for the FY 2007 and has hedged approximately 90% of the planned fuel consumption for the FY 2007 at a price of USD 62.5 bbl/equivalent and the US Dollar exposure at a USD/EUR rate of 1.32. These hedges together lock in savings in the region of EUR 10 million for FY 2007 vs the oil price and FX levels at which costs were incurred in FY 2006.
Development of the groups property and finances
As a result of the reduced operating loss for the period, net cash outflow from operating activities was EUR 3.0 million lower in Q1 2007 than in Q1 2006. Further to this improvement, investing cash outflow incurred in Q1 2007 of EUR 2.1 million was received back January 2007, as SkyEurope secured pre-delivery payments financing for its 2008/09 Boeing aircraft orders.
Property, plant and equipment increased due to capitalised pre-delivery payments made to Boeing for aircraft to be delivered between 2007 and 2009, financed by pre-delivery loans obtained from Bank of Scotland Corporate.
Outlook
By the end of FY 2007, SkyEurope expects to have fully renewed its fleet with new Boeing 737 NGs, thereby operating with one of the youngest fleets among European airlines, helping the Company to continue improving utilisation and further reduce its unit fuel and maintenance costs.
SkyEuropes strengthened revenue management team will continue implementing a load factor active policy, targeting an average load factor of 80% for the FY 2007.
In March 2007, SkyEurope will commence flights from Vienna, where its brand is already well known, to capitalise on the high revenue potential of the larger Vienna/Bratislava catchment area (6 million inhabitants), further strengthening the Companys position as the leading low cost carrier in the region.
With the overall improvements in revenue and a rigorous cost savings programme, the Company is optimistic about delivering a significant improvement in financial performance in coming months, and is on track to deliver a positive EBITDAR for the FY 2007.
end of announcement euro adhoc 28.02.2007 08:02:52
Further inquiry note:
SkyEurope Holding AG
Christian Mandl, CEO
Tel.:+421 2 4850 1180
mailto:investor.relations@skyeurope.com
http://www.skyeurope.com
Branche: Air Transport
ISIN: AT0000497003
WKN: A0F5WU
Index: WBI
Börsen: Wiener Börse AG / official market