Icelandic travel industry corporation Icelandair Group hf (OMX: ICEAIR) reported quarterly earnings on Friday. The group is the owner of national carrier Icelandair and 8 other smaller inter-related travel industry subsidiaries.
Fourth quarter performance matched the group’s expectations. EBITDA was 0.1 billion Icelandic krónur (about 620 000 Euros) on the minus side, which is 1.2 billion lower result than in Q4 2010. Net loss was 0.2 billion ISK. The decline resulted from 48% higher fuel price than in the comparison period. Sales actually grew by 7% to 20 billion ISK.
Full-year operating income was 96.9 billion (+10%), EBITDA 10.4 billion (-17.5%) and profit for the period positive at 4.5 billion (-2%). The business is highly seasonal with peak season from May to September generating most of the revenues. Icelandair is focusing on growing winter tourism in Iceland to mitigate the seasonal business effect.
The company has an equity ratio of 36% and has cash, cash equivalents and marketable securities of ISK 13.1 billion. Interest bearing loans total 24.4 billion ISK. Assets total nearly 90 billion with 37 aircraft forming the bulk of that. Market cap is about 27 billion (5 billion shares, Friday close of 5.43 ISK, up 4% for the week.).
Icelandair recently said that the company is exploring the possibility of a secondary listing on the Oslo Stock Exchange and a change of reporting currency to USD. This would increase access to capital via share and bond issues, bring more visibility in increase analysts’ coverage and expand shareholder base.
During the quarter Icelandair announced a partnership with Frontier Airlines expanding travel options from Denver International Airport. Icelandair will start flying to Denver four times a week starting May 11th 2012. Travellers from Denver benefit from connections to over 20 destinations in Scandinavia, the UK and Continental Europe with a stopover in Iceland at no additional airfare. Travellers from Iceland may utilize the 500 daily Frontier Airlines flights from Denver, Milwaukee and Kansas City servicing for more than 80 gateways in the US, Mexico and Costa Rica.
Fuel prices expected to remain high in 2012. EBITDA forecast for 2012 is 11-12 billion assuming EUR/USD exchange rate of 1.25, fuel price (hedges included) of 1,050 and continued organic growth. Two B757 are added to fleet in H1 2012.
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