Airlines PNG records another profit

Despite a challenging operating year for the airline, comprehensive income before tax for 2011 was K3.9m which represents a K1.5m improvement to the corresponding period in 2010.

This also represents the Group's third consecutive profitable half year result.

Operating revenue for the period was up 24% to K261m on account of the following:

• 21% increase in charter revenue driven by full year impact of the Esso Highlands and increased charter rates arising from the 2010 review on pricing;
• 18% increase in Regular Passenger Transport (RPT) operations which were achieved by introducing New Guinea Islands operations in June 2011; and
• 25% increase in freight revenue which is a direct result of the increase in RPT operations.

Direct costs and overheads were up by 19.2% to K262m as a consequence of the Group's increased operational activities.

The Group is pleased to deliver an improved full year financial result in line with previous guidance to the market. The improved performance demonstrates the effectiveness of the Airlines PNG Board's strategy to increase management expertise; focus on safety and efficiency; and increase the airline's capacity to capitalise on the growth in the aviation market primarily driven by the current resources boom.

The Group introduced two additional aircraft during 2011 - one Dash 8 and one Twin Otter aircraft. These acquisitions increased the fleet size to 22 aircraft by year end. These additional aircraft were mostly utilised to cater for the increased capacity in the domestic RPT sectors where new routes and additional allocation to existing routes have been introduced during the period.

A key benchmarking tool for the Group is Earnings Before Interest Tax Depreciation Amortisation and rentals (EBITDAr). Compared to 2010 the Group has increased its full year EBITDAr from K44.8m to K56.3m which represents an increase of 26%. (Note: EBITDAr is a measure of the airline's ability to provide a return on assets invested.)

As a percentage, Net Assets has increased from 39% for 2010 to 51% for 2011.

Looking forward, both the Dash 8 and Twin Otter aircraft markets have tightened which will have a twofold effect in the coming year:

• aircraft values will be driven higher improving the Group's balance sheet, and
• the Group's ability to introduce additional capacity may be limited.

The Directors believe that Airlines PNG remains well poised to deliver a profitable result for the coming year with its ability to attract and maintain long term charter contracts whilst continuing to develop its international and domestic RPT operations.

Whilst the Group is pleased with its full year performance there are still a number of developments necessary to undertake to ensure delivery of consistent positive results. Accordingly, the Group will not be declaring a dividend for the period instead electing to continue to invest in aviation assets directed at enhancing the Group's ability to produce increased revenue leveraging off its current cost base.
For further information contact: