Air Pacific returns to profit

Air Pacific, the national airline of Fiji, has achieved a significant milestone in its transformation plan, posting a return to profit for the first time in three years, with its financial results for the fiscal year ended 31 March 2012.

Despite a challenging aviation market over the last 12 months, Air Pacific Ltd. and Air Pacific Group both reported operating profits combined with a significant increase in passenger numbers and revenue:

• Air Pacific Ltd. reported an operating profit of $16.5m (NZD11.5m), compared to an operating loss of $3.7m (NZD2.6m) for the previous financial year

• Air Pacific Group reported an operating profit of $13.4m (NZD9.3m), compared to an operating loss of $4.3m (NZD3m) for the previous financial year. (Air Pacific Group includes the national airline, its wholly owned subsidiary Pacific Sun, and a 38.75% stake in the Sofitel Fiji Resort & Spa on Denarau Island).

On a net basis, Air Pacific Ltd. reported an after tax statutory profit of $11.4m/NZD7.9m ($24.8m/NZD17.3m for last fiscal year), and Air Pacific Group reported an after tax statutory profit of $10.7m/NZD7.5m ($25.3m/NZD17.6m) for last fiscal year).

A focus on increasing passenger numbers, improvements to its network and achieving significant efficiencies across the airline saw Air Pacific also record its highest ever revenue of $645.9m (NZD450.2m), an increase of $90.5m (NZD63.1m) in passenger revenue over FY2010/2011 and an increase of $130m (NZD90.6m) compared to FY2009/2010. Without any increase in the size of the airline’s fleet, the carrier increased passenger numbers by 85,000 for the fiscal year 2011/2012, and carried 122,000 more passengers compared to FY2009/2010.

Mr. Nalin Patel, Chairman of Air Pacific’s Board of Directors, attributed the airline’s continued financial improvement and successful turnaround to the transformation measures put in place by Air Pacific’s new MD/CEO Dave Pflieger, his new management team, and Air Pacific’s dedicated and hard-working employees.

“The fact that we managed to return the airline to an operating profit only two years after we experienced the biggest loss in our history speaks volumes about the experience and capability of our new management team and the soundness of their turnaround plan. The strong, positive results during a time when other airlines were struggling validates the Board’s decision to hire Dave and support his new team’s seasoned strategic focus,” Mr. Patel said.

“Under the new team’s direction and with full support of the Board, Fiji’s national airline has benefited from a more than FJD100m improvement in its operating performance over the past two years – a remarkable feat when one considers the challenges the industry and our own airline were facing.”  Air Pacific Ltd. announced an operating profit of $16.5m for this fiscal year, compared to an operating loss of $91.8m two years ago and an operating loss of $3.7m last year.

Dave Pflieger, Air Pacific’s Managing Director and CEO, attributed the continuing improvement in the airline’s finances to the many transformation measures underway and the dedicated contributions and hard work of every member of the staff.

“Over the last two years, the Air Pacific team has not only designed, but delivered on a turnaround plan focussed on returning it to profitability for shareholders, staff, and the Fijian people. To report a profit in a year that witnessed significant fuel cost increases, strong and continued competition in a key market from two low cost carriers, and two major flooding crises, is a rousing testament to the hard work, dedication and effectiveness of the men and women who proudly represent Fiji’s national airline.”

The latest initiatives in the turnaround strategy include the recent announcement that Air Pacific will re-brand and revert to its former name ‘Fiji Airways’, coinciding with the delivery of brand-new Airbus A330-200 aircraft in 2013.

Although the turnaround strategy is clearly delivering great results, with improved schedules and network, significant investments in new aircraft, onboard product and service training, the CEO cautioned that it is far from complete: “While we are focussed on doing what it takes to win new customers and provide our passengers with the best flying experience in the South Pacific, we remain mindful that a spike in fuel prices or changes to market conditions and therefore travel plans could impact our success while we finish restructuring and transforming Fiji’s national airline.”

In May, the airline announced that it had secured best-in-class partners to fit out its new A330-200s –Rolls-Royce for new engines, Panasonic for a new in-flight entertainment system, Zodiac company Weber for seats, and Singapore Airlines Engineering Company (SIAEC) for the Cabin Design.

Other highlights of FY2011 /12 include:

·         Signing a purchase agreement for three brand new Airbus A330-200 aircraft and obtaining initial financing for those aircraft at a difficult time in the financial marketplace;

• Retiring a vintage B767 aircraft, introducing a new B737-800, and starting B747 services to Hong Kong;

• Improving Air Pacific’s network and schedules, including introducing double daily flights into Sydney, in order to make the airline more competitive and more customer friendly in a core market;

• Entering into a new codeshare agreement with American Airlines;

• Finalising multiple strategic partnerships to enhance the flight experience of customers traveling on board new A330s.

• Adding a new Tabua Club business lounge at Nadi International Airport;

• Being voted one of the “Top 10 Small Airlines in the World” in the prestigious 2011 Condé Nast Traveler’s Readers’ Choice Awards; and

• Improving Pacific Sun’s network, fleet, and schedules with better connectivity to Air Pacific’s international schedule, as well as adding new weather radar and avionics systems on all DHC-6 Twin Otter aircraft.

 

Air Pacific Ltd – financial result highlights

Financial Results (FJD millions)                2011/12                      2010/11

Revenue                                                            645.9                           555.3

Operating Profit / (Loss)                                   16.5                              (3.7)

Statutory Profit after Income Tax                     11.4                             24.8*

 

Air Pacific Group – financial result highlights

Financial Results (FJD millions)              2011/12                       2010/11

Revenue                                                          678.3                            586.7

Operating Profit / (Loss)                                 13.4                             (4.3)

Statutory Profit after Income Tax                   10.7                             25.3*

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* FY2010/11 statutory profit included net amounts received due to the cancellation of delayed aircraft deliveries partially offset by associated contractual commitments.

All amounts are in Fijian dollars, unless specified otherwise. Conversion rates based on 1NZD = 1.43471FJD (www.nzforex.co.nz)

 

ABOUT AIR PACIFIC

Air Pacific and its subsidiary Pacific Sun together fly over 300 flights per week. The company operates B747 and B737 aircraft from Fiji to 15 cities in 10 countries. Destinations include Hong Kong, USA, Australia, New Zealand, Samoa, Tonga, Tuvalu, Kiribati, Vanuatu, and Solomon Islands. Air Pacific aircraft bring in 68 percent of all visitors who fly to Fiji. The two companies employ over 900 employees, earn revenues of over F$600 million, and directly contribute a significant portion of the country’s Gross Domestic Product (GDP). Pacific Sun operates a combination of ATR 42-500s and De Havilland Twin Otter aircraft on Fiji’s 10 domestic island routes and regional flights to Tonga, Tuvalu and Vanuatu.

Air Pacific will soon be ‘Fiji Airways’. Stay tuned to www.fijiairways.com for updates.