SkyEurope Holding

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 results

@@start.t2@@|                                                                                                                    |
|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:

Further inquiry note:
SkyEurope Holding AG
Mag. Erhard Schmidt, CFO
Tel.:+421 2 4850 1180

Branche: Air Transport
ISIN:      AT0000497003
WKN:        A0F5WU
Index:    WBI
Börsen:  Wiener Börse AG / official market

Weitere Meldungen: SkyEurope Holding

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