Fiji's Air Pacific back in the black after two year turnaround 25 Jun 2012
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By Pattrick Smellie
June 25 (BusinessDesk) - Fiji's national airline, Air Pacific, has returned its first operating profit since plunging to a F$91.8 million loss two years ago, declaring a group surplus before tax of F$13.4 million for the year to March 31, compared with an operating loss of F$3.7 million a year earlier.
Group statutory profit was F$10.7 million for the year, compared with F$25.3 million in the previous year, but the earlier year's profit reflected one-off items relating to cancellation of aircraft deliveries.
Group operating revenue of F$678.3 million was up 15.6 percent for the year, the company said in a statement.
The group result includes the international Air Pacific operation, local subsidiary Pacific Sun, and a 38.75 percent stake in the Sofitel Fiji resort on Denarau Island. On an Air Pacific-only basis, the extent of the turnaround is more apparent, with a pre-tax operating profit of F$16.7 million comparing to a F$3.7 million loss in the year to March 2011.
The result is a comeback from the F$91.8 million loss recorded two years ago, when Air Pacific suffered a burst of competition from the arrival of Australian budget carriers Jetstar and Virgin.
"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," said the airline's chief executive, Dave Pflieger, who has led a turnaround strategy for the carrier over the last two years.
However, the turnaround was "far from complete" and "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," Pflieger said in a statement.
The turnaround was achieved on a combination of significantly increased passenger numbers, a large drop in costs associated with the airline's previously poor record for on-time departures, a more competitive schedule into the highly competitive Sydney market, and more efficient use of a smaller fleet of aircraft.
The company is now embarking on the third leg of its turnaround plan, rebranding to its pre-1971 name of Fiji Airways to align with its role as a destination airline, and preparing to take receipt of three new Airbus A330-200 planes, financing for which was achieved in the last financial year.
While the airline is guarded about its passenger metrics, it carried an additional 85,000 customers last year, compared with the year before, and 122,000 more than in the 2010 financial year.
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