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Avianca Holdings Reports an Operating Profit of $118.4 Million for the Fourth Quarter of 2014
Posted On March 4, 2015
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Avianca Holdings S.A., (NYSE: AVH) (BVC: PFAVH), announced this week its fourth quarter 2014, financial and operational results. The carrier earned an adjusted net income for the quarter ended December 31, 2014 of $47.4 million, excluding special items, while posting an adjusted net income margin of 3.8%. For all of 2014 the Company earned an adjusted net income of $129.1 million, while the adjusted net income margin came in at 2.7%.
Operating revenues amounted to $1.24 billion, up 3.1% over the same quarter in2013, largely due to a 46% increase in cargo business. Operating revenues during 2014 totaled $4.7 billion, up 2.0% when compared to the same period of 2013.
Operating income totaled $118.4 million, and as a result the operating margin for the fourth quarter of 2014 reached 9.54%, in line with the margin recorded for the same period of 2013. The operating income for the twelve-month period of 2014 was $293.0 million, while the 12-month operating margin in 2014 was 6.2%.
Between October and December 2014, the company took delivery of one Airbus A321, one A319 three ATR72, one A330, one A330F and four Boeing 787 Dreamliners, while phasing-out two Fokker 50. Avianca including its subsidiaries ended the year with a consolidated operating fleet of 181 aircraft.
“We launched new international routes between Bogota and London, Pereira and Cartagena to New York as well as incremental frequencies to destinations in South America, the Caribbean and Central America. On the domestic front, we opened routes from Lima to Iquitos and Bogota to Villavicencio,” said Avianca CEO Fabio Villegas Ramirez. “Over the course of the year we continued to address the challenges related to our operation in Venezuela, and quickly adopted a more defensive and conservative approach, which enabled us to readjust our network as well as to recover the profitability levels we reached by the end of 2013. Consequently, we successfully reduced our exposure to a difficult market, while allowing us to strengthen our presence on other profitable routes. As such we increased the frequencies from Bogota to Santiago, Puerto Rico, Guatemala City, La Habana, Cancun and Barcelona; Lima to Cali and Bogota; Guatemala City to San Jose, and finally from San Jose to Panama.”
“In order to improve service to our clients and optimize capacity utilization we relocated the service of our high density domestic routes to the new terminal T1 at the El Dorado Airport, from where routes to Barranquilla, Cali, Cartagena, Medellin and Pereira are now served. We added new VIP lounges to key international destinations such as San Salvador and Santiago as well as to domestic key cities in Colombia such as Rionegro, Bucaramaga and Cucuta to better assist our corporate travelers and our Lifemiles elite members,” added Villegas in his statement to shareholders.
As a result of the continued expansion in Avianca’s domestic markets, in hand with the increase of frequencies to international destinations, such as the initiation of the Bogota-London route, capacity measured in ASKs (available seat kilometers) grew 7.6% during Q4 2014. Consequently passenger traffic measured in RPKs (revenue passenger kilometers) increased by 6.1%, reaching a consolidated load factor of 79.6% for the quarter ended December 31, 2014. For the full year, ASKs increased by 5.9%, while passenger traffic measured in RPKs increased by 4.5%, ending the year with an overall load factor of 79.4%.
During 4Q 2014, cost per available seat kilometer (CASK)1 decreased by 4.2% from 11.1 cents in 2013 to 10.6 cents in 2014. As such, cost per available seat kilometer excluding fuel (CASK ex-fuel) 1, for the same period, reached 7.6 cents, mainly due to the increase of 18.1% in the number of takeoffs (cycles).
In 2014, the cost per available seat kilometer (CASK)1 was 10.7 cents, a decrease of 1.5% when compared to 2013. These results were mainly driven by the cost saving initiatives implemented by the carrier throughout 2014 and the drop in fuel prices recorded in the fourth quarter.
| Consolidated Financial and Operational Highlights1 |
4Q-13 | 4Q-14 | ∆ Vs. 4Q-13 | |||||
| ASK’s (mm) | 9,837 | 10,586 | 7.6% | |||||
| RPK’s (mm) | 7,938 | 8,422 | 6.1% | |||||
| Total Passengers (in millions) | 6,327 | 6,909 | 9.2% | |||||
| Load Factor | 80.7% | 79.6% | -1.4% | |||||
| Departures | 62.711 | 74.044 | 18.1 | |||||
| Block Hours | 121.437 | 135.808 | 11.8% | |||||
| Stage length (km) | 1,272 | 1,202 | -5.5% | |||||
| Fuel Consumption Gallons (000’s) | 104,166 | 111,267 | 6.8% | |||||
| Yield (cents) | 13.0 | 11.7 | -9.8% | |||||
| RASK (cents) | 12.2 | 11.7 | -4.2% | |||||
| PRASK (cents) | 10.5 | 9.3 | -11.1% | |||||
| CASK (cents) | 11.1 | 10.6 | -3.9% | |||||
| CASK ex. Fuel (cents) | 7.7 | 7.7 | 0.0% | |||||
| CASK Adjusted (cents) 1 | 11.1 | 10.6 | -4.2% | |||||
| CASK ex. Fuel Adjusted (cents) 1 | 7.7 | 7.6 | -0.50% | |||||
| Foreign exchange (average) COP/US$ | $ | 1,913.2 | $ | 2,185.7 | 14.2% | |||
| Foreign exchange (end of period) COP/US$ | $ | 1,925.8 | $ | 2,392.5 | 24.2% | |||
| WTI (average) per barrel | $ | 97.3 | $ | 73.2 | -24.8% | |||
| Jet Fuel Crack (average) per barrel | $ | 24.0 | $ | 18.7 | -22.4% | |||
| US Gulf Coast ( Jet Fuel average) per barrel | $ | 121.4 | $ | 91.8 | -24.4% | |||
| Fuel price per Gallon (including hedge) | $ | 3.23 | $ | 2.84 | -12.0% | |||
| Operating Revenues ($M) | $ | 1,204.4 | $ | 1,241.3 | 3.1% | |||
| EBITDAR ($M) | $ | 245.8 | $ | 255.1 | 3.8% | |||
| EBITDAR Margin | 20.4% | 20.5% | +15 bp | |||||
| EBITDA ($M) | $ | 176.0 | $ | 172.1 | -2.2% | |||
| EBITDA Margin | 14.6% | 13.9% | -75 bp | |||||
| Operating Income ($M) | $ | 114.7 | $ | 114.5 | -0.2% | |||
| Operating Margin ($M) | 9.5% | 9.2% | -30bp | |||||
| Net Income ($M) | $ | 65.4 | 97.0 | +48.2% | ||||
| Net Income Margin | 5.4% | 7.8% | +238pb | |||||
| EBITDAR (Adjusted) ($M) | $ | 245.8 | $ | 258.1 | +5.0% | |||
| EBITDAR Margin (Adjusted) | 20.4% | 20.8% | +39bp | |||||
| EBITDA (Adjusted) ($M) | $ | 176.0 | $ | 176.0 | 0.0% | |||
| EBITDA Margin (Adjusted) | 14.6% | 14.2% | -44bp | |||||
| Operating Income ($M) (Adjusted) | $ | 114.7 | 118.4 | +3.2% | ||||
| Operating Margin (Adjusted) | 9.52% | 9.54% | + 2 bp | |||||
| Adjusted Net Income ($M) | $ | 68.4 | $ | 47.4 | -30.7% | |||
| Net Income Margin (Adjusted) | 5.7% | 3.8% | -186bp | |||||
Financial Highlights
(12 months ended December 31st)
| 2013 | 2014 | |||
| Revenues | 4.6Bn | 4.7Bn | ||
| EBITDAR | 828.2 | 783.7 | ||
| EBIT | 384.9 | 284.6 | ||
| Net Income | 248.8 | 120.5 | ||
| Net income* | 236.7 | 129.1 |
*Excluding Special Items
| Q4-13 | Q4-14 | |||
| Revenues | 1.20 Bn | 1.24Bn | ||
| EBITDAR | 245.8 | 255.1 | ||
| EBIT | 114.7 | 114.5 | ||
| Net Income | 65.4 | 97.0 | ||
| Net income* | 68.4 | 47.4 |
*Excluding Special Items
Profitability
(12 months ended December 31st)
| 2013 | 2014 | |||
| EBITDAR % | 18.0% | 16.7% | ||
| EBIT % | 8.4% | 6.1% | ||
| Net income % | 5.4% | 2.6% | ||
| Net Income%* | 5.1% | 2.7% |
*Excluding Special Items
| Q4-13 | Q4-14 | |||
| EBITDAR% | 20.4% | 20.5% | ||
| EBIT % | 9.5% | 9.2% | ||
| Net income % | 5.4% | 7.8% | ||
| Net Income%* | 5.7% | 3.8% |
*Excluding Special Items
During Q4 2014, total operating costs exclude incremental costs for COP ~$ 860,000 in rent payments (Wet Lease) associated with the late delivery of the B787 Dreamliners as well as non-recurring expenses of COP~$3.0 million for the project to optimize personnel. In addition to the above, the 2014 figures exclude COP~$4.6million related to expenses incurred during Q1 2014 associated with the grounding of the Fokker 50 fleet.
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