Avianca Sees Record Growth, Reports Quarterly Net Income Of US$102.1 Million

During the third quarter of 2015, Colombia’s Avianca Holdings S.A. (NYSE: AVH, BVC: PFAVH) announced operating revenues amounting to US$1.12 billion and a net income of US$102.1 million, an increase of US$ 68.9 million over 3Q 2014. As such, net margin was 9.1%, 6.4% above the margin recorded in the same period of 2014.

During the same quarter, operating income (EBIT) increased 16.4%, reaching US$81.8 million, while posting an operating margin of 7.3%; 1.5% over the same quarter a year ago.

The figures exclude one-time expenses: $1.9 million related to fleet Foreign Object Damage (FOD) events and $7.7 million of maintenance provisions for operational lease return conditions.

These results were driven primarily by a leaner cost structure as Avianca continues to implement cost saving initiatives, along with the expansion of its cargo business and the continued growth of the Lifemiles loyalty program, which ended the quarter with more than 6.3 million members. As a result of the cargo expansion, “other revenues” increased 20.6% to US$221.7 million during the quarter, offsetting a 13.4% decline in passenger revenues, due to a weaker demand resulting from the currency depreciation in the region, which led to fewer discretionary voyages by Andean passengers.

During 3Q 2015, cost per available seat kilometer (CASK¹) decreased 17.0% to 8.9 cents, compared to 10.7 cents in 3Q 2014. This result was mainly boosted by lower jet fuel prices, the itinerary redesign and network optimization, cost control initiatives as well as the positive effect of currency depreciation on Avianca’s Colombian pesos denominated costs.

EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization And Rent) was US$222.6 million, while the EBITDAR margin reached 19.9%, 3.3% above the EBITDAR margin reported for 3Q 2014.

Capacity, measured in ASKs (available seat kilometers) increased 8.8%, mostly due to the new service from Bogota to Los Angeles, and incremental frequencies (from four weekly flights to one daily flight) from Bogota to London and Barcelona. Furthermore, passenger traffic, measured in RPKs (revenue passenger kilometers) grew 8.7%, reaching a consolidated load factor of 81.3%.

In accordance with the company’s fleet renovation and modernization plan, between July and September 2015 Avianca took delivery of four new Airbus A320 and A321, all equipped with wing sharklets for higher performance and efficiency. Consequently, Avianca Holdings S.A. and its subsidiaries ended the quarter with a consolidated operating fleet of 176 aircraft.

Andean market passenger traffic

With regards to traffic, Avianca carried 2,400,716 passengers in October, up 5.3% compared to October 2014. Capacity, measured in ASKs (available seat kilometers), increased 10.8%, while passenger traffic, measured in RPKs (revenue passenger kilometers), increased 10.5%. The load factor for the month was 79.0%.

In October, the subsidiary airlines of Avianca Holdings transported within Colombia, Perú, and Ecuador, a total of 1,452,813 travelers, up 2.3% compared to October 2014. Capacity (ASKs) increased 4.2%, while passenger traffic (RPKs) increased 5.9%. As a result, the load factor for the month was 78.1%.

International market passenger traffic

In October, the affiliated airlines of Avianca Holdings transported 947,903 passengers on international routes (Excluding Perú and Ecuador), up 10.4% compared to October 2014, Capacity (ASKs) increased 12.7%, while passenger traffic (RPKs) increased 11.9%. The load factor for the month was 79.2%.

¹Pax: Passengers carried

²ASKs: Available Seat Kilometers

³RPKs: Revenue Passenger Kilometers

⁴Load Factor:Represents utilized seating capacity

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