Comair Limited is a scheduled and non-scheduled airline services company based in South Africa, with its core business within South Africa, sub-Saharan Africa and the Indian Ocean islands. The company is a franchisee of British Airways, while also being a low-cost carrier through kulula.com.
The company’s history stems back to 1943 as Commercial Air Services, beginning charter operations in 1946. Scheduled services were established between Johannesburg and Durban in 1948. Comair has since expanded to operate 28 Boeing 747 aircraft and employs some 2 000 staff. Comair became a franchise partner of British Airways in 1996, taking on the colours and insignia of this world-renowned airline. Kulula.com became South Africa’s first low-cost airline when it was established in 2001, and has maintained its leading position in this market. Comair shares have been available to buy on Johannesburg Stock Exchange (JSE) since1998, and the live online stocks chart shows that Comair share price has enjoyed good gains.
The company also boasts South Africa’s largest digital travel distribution network, with brands including Holiday Tours, Harvey World Travel, GoTravel24 and Mtbeds.
Comair Shares Growth Driver
The 2015 financial year was one of mixed performance for Comair, with the group recording very strong profit in the first six months followed by a more mundane second half. A significant drop in the price of jet fuel granted relief from high costs in previous years. Two new competitors entered the market in the second half of the year, offering aggressive pricing which forced Comair to drop its rates in order to retain market share. This reversed the earlier revenue gains. Despite passenger volumes still trying to recover since the global financial crisis in 2008, Comair has managed to maintain respectable volumes due to the established strength of kulula.com and British Airways.
Operating profits reflected a 17% reduction from the previous year and reduced earnings per share of 47.8% compared to 58.4%. The company invested R147 million to buy five Boeing 737-400 aircraft for the British Airways fleet, and is currently in the process of upgrading its entire fleet to the more fuel-efficient, comfortable Boeing 747-800, while putting some older aircraft up for sale.
The company has also pumped significant capital into developing technological solutions to enhance operating performance, whilst diversifying its portfolio to include travel and holiday packages. Looking ahead, the forecast from management is that weak economic growth, new visa regulations and overcapacity of the domestic aviation market may continue to affect performance.
Comair Group Investor Tip
Despite a difficult economic environment and increased competition, Comair has plenty of cash on hand and continues to buy into operating efficiency and infrastructure to protect Comair share price.
Comair share price however dropped sharply from R5.86 in early 2015 to R3.29 in June 2016. The airline may be starting to lose its strong grip on the low-cost market, but its historically sparkling financial data should retain investor confidence. Comair shares may not be the most profitable purchase at present, but the company’s history shows that it has the clout to bounce back from tough market conditions and attract investor buy in.
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