Cimber Sterling's (CPH: CIMBER) quarterly accounts released last Wednesday were a stark reminder of the hardships that small airliners face. The company described its Q2 2011/12 performance as highly unsatisfactory. The airliner lowered its sales and profit guidance for the full business year. Revenue is expected to come in at around 2 billion DKK (2.1) and EBIT to show a loss from 160 to 200 million (20-60 million in losses). The company blamed increased competition and escalating Euro crisis for the outlook decline.
Cimber Sterling’s Board of Directors and Executive Board have together with the majority shareholder Mansvell Enterprises Ltd agreed on a new three-year strategy with the aim to make Cimber the leading regional airline in Nordic region. The oft speculated closer collaboration with Skyways is on its way and Cimber will focus on domestic traffic in Denmark and Sweden, regional travel to and from Scandinavia and over the longer haul in the entire Northern Europe. Leisure travel from smaller cities outside of capital to holiday destinations will remain a focus area.
In order to reach their goals, several cost-cutting and route optimizing measures have been started. The company admits it has suffered from quality problems, with many flight cancellations and vows to rectify that. The company will do away with its Boeing 737 aircraft and focus on smaller planes. A New CFO was hired couple days before the interim numbers were released and CEO switch took place in late summer.
CEO Palmér told newspaper Jyllands-Posten that Manswer, controlled by Ukrainian billionaire Igor Kolomoisky, has promised to continue to provide additional capital to see through this process. Manswer has since its summer capital injection invested some additional capital to the company. Should the current trend continue, further injections will be needed. The present subscription agreement with Manswell allows Kolomoyski to raise his stake in Cimber Sterling to around 70%. Cimber Sterling was down nearly 25% in the week, but gained half of that back on Friday.
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