Fiji Airways Group Announces Highest-Ever Operating Profits of $60.8m

Monday, 23 February 2015: Air Pacific Ltd, trading as the Fiji Airways Group, today announced its financial results for the fiscal year ended 31 December 2014. Mr. Nalin Patel, Chairman of the Board of Directors of Air Pacifc Ltd., trading as Fiji Airways said the airline and its consolidated group (Fiji Airways Group) made record operating profits. The Group comprises of Fiji Airways, Fiji’s National Airline, its subsidiaries Fiji Link & Pacific Call Comm Ltd, and a 38.75% stake in the Sofitel Fiji Resort & Spa on Denarau Island, Nadi. Fiji Airways reported another record breaking year in terms of revenue and passenger numbers.

• Fiji Airways reported a profit before income tax of $65.2m compared to a profit before income tax of $8.3m for the nine-month period ended 31st December 2013.
• Air Pacific Ltd (the Group) reported a profit before income tax of $60.8m compared to a profit before income tax of $14.2m for nine-month period ended 31st December 2013.

On a net basis, Fiji Airways reported an after tax profit of $55.6m and the Group reported an after tax profit of $52.9m (versus after tax profits of $8.7m and $14.5m respectively for the nine-month period ended 31st December 2013.

These results are more than two times better than the best operating profit achieved in the history of APL back in 2005.

Mr. Patel stated: “We’re obviously delighted with this performance, which has been achieved through the hard work of the entire team. All of the key business and financial metrics outperformed the previous financial year, with passenger numbers, load factor and average fares all improving significantly, coupled with growth in line with productivity levels of the best global airlines.”

Fiji Airways Group earned $770m revenue in 2014, compared to $541m for the nine-month period ended 31st December 2013. The airline grew passenger numbers by 4.5% compared to the previous year, flying 1,244,596 passengers in 2014. Load factor is up by 8.2% to 83% and average fare increased by 2.7%. Unit cost decreased by 2% in line with productivity growth, reflecting the Group’s strong overhead and fixed cost discipline and focus.

Based on the PwC audited financial statements for 2014, the Group has announced the following profit-share and management bonus initiatives:
➢ All eligible non-management staff of Fiji Airways and Fiji Link (835 in total) will receive a profit-share payout of $3,000 each, subject to tax and superannuation deductions as required.
➢ All eligible Fiji Airways and Fiji Link managers will receive a Management Bonus of $7,000 each, subject to tax and superannuation deductions as required.

In total, this represents a fair and equitable distribution of the Group operating profits to its staff as part of this profit-share and management bonus programme. In addition, non-management staff for both airlines already stand to earn quarterly KPI-related bonuses of up to $1,200 per year, on achievement of key business objectives.

Mr. Patel stated: “Credit must be given to all our hard-working and dedicated staff. It’s extremely important that they share in the success of our company. The profit share and bonus programme is testament to our commitment to our people.”

The Group also announced an interim dividend payout to its shareholders of $0.19 per share, which amounts to F$5.0m.

Stefan Pichler, the Outgoing Managing Director & CEO and Member of the Board commented: “All international markets performed strongly, with our core markets in New Zealand and Australia delivering strong returns; coupled with demand growth from Hong Kong and Los Angeles. Fiji Link’s regional and domestic services also contributed positively to the Group performance.”

“The 2014 performance we have achieved is testament to the 5-year strategic plan we commenced in December 2013 and provides us with the foundation to continue to build the business over the remainder of the 5 year plan.”

“Our results are also sustainable and not merely driven from lower than anticipated fuel prices in the second half of the year. Any upsides we did realise have been largely off-set by foreign currency exposures on aircraft US dollar-based loans, given the strength of the US dollar; exceptional costs and investments in building long terms capability. These exceptional costs related to the hard landing of the A330 in Sydney on 18th March 2014, while the investments relate to improvements in the on-board product, the re-fleet of the Fiji Link ATR fleet and the pilot localisation and progression programme between Fiji Link and Fiji Airways.”

Mr. Pichler added: “It’s important not to lose sight of the fact that aviation is a volatile industry. The fuel price relief will not last, and indications are that the price is increasing again. So we will maintain our cost-management discipline and focus, and only make wise investment decisions.”

“The airline is already prepared for a busy year ahead, with the addition of a B737-800 and a new A330-300 to its fleet, the launch of new routes (Nadi-Wellington) and increased frequencies to key destinations. It is also assessing a new long-haul route in Asia. Our guests can also look forward to further enhancements to our on-board offering, as well as further enhanced customer service at its airports and new Reservations Centre.”

The announcement of the record result was described as a “wonderful day for Fiji” by the Attorney General, Aiyaz Sayed-Khaiyum.

“All Fijians will be celebrating with tremendous pride this historic achievement by our national airline and its management and staff. Because so many ordinary Fijians stand to benefit from the company’s profit sharing program. The fact that even the lowest paid worker in Fiji Airways is to receive a bonus of $3000 is unparalleled in Fijian corporate history. And it is a tremendous vindication of all the hard work that the staff and management have put in over the past few years to turn Fiji Airways around and secure its future”.

The AG said the result was also a vindication of the FijiFirst Government’s program to reform the airline working closely with the Fiji Airways Board and Management. “Together, we replaced trade union confrontation with cooperation and transformed the working environment. We empowered the workers of Fiji Airways and gave them a stake in the airline’s future. And this partnership has not only paid a handsome dividend for the airline and all who work for it but is a model of excellence and performance for every industry in Fiji".

The AG said Fiji Airways was flying higher than ever before and was achieving iconic status not only in Fiji but in the global marketplace. "This result vindicates the FijiFirst Government’s decision to rebrand the airline to make it a genuine expression of the Fijian spirit. It vindicates our decision to invest in new aircraft, such as our state-of-the-art A330s and new ATRs. And it vindicates our confidence that with the right attitude and commitment, Fiji Airways could not only turn its fortunes around but become a symbol of pride for every Fijian. On behalf of the Government, I extend my warmest congratulations to everyone associated with the airline’, the AG added.

Highlights for Fiji Airways Performance for 2014:
➢ Underlying Operating Profit: $60.8m
➢ Increase in RASK (Unit Revenue) 6.9%
➢ Increase in CASK (Unit Cost) (2.0%) – in line with productivity growth
➢ Increase in passengers flown: 4.5%
➢ Increase in load factor: 8.2%
➢ Increase in trips: 5.3%
➢ New routes launched: Suva-Sydney, Suva-Apia
➢ Increased frequencies: Australia, New Zealand, Hong Kong, Tuvalu,