PNG Air announces 2016 half year results

PNG Air has announced its results for the 6 months to June 2016.
The company returned a K22.6 million loss before abnormal items and tax. The abnormal items included ATR induction costs of K2.31 million and over K18 million from the required accounting treatment of future maintenance reserve recoveries being lost as a result of the early termination of aircraft leases (notwithstanding that the early returns are expected to generate substantial future benefits for the company, well in excess of those abnormal costs).

When announcing these results, the company’s Directors commented that the company is going through a transition phase with the introduction of its brand new ATR aircraft, and is yet to acquire enough scale to maximise the benefits of the new aircraft. They also pointed to the company being impacted by the downturn in the PNG and global economies. In particular, activity in the charter market for the resources sector has tailed off.
Bringing in the new ATR aircraft meant there had been some short term excess capacity in the company’s fleet (which has been addressed by the agreed return of leased aircraft and restructuring other aircraft leases), and had also involved investment to upgrade infrastructure and systems. However, the Directors considered that this pain in the short term is necessary for the company’s long term future, as it positions itself to be able to service increasing demand when the PNG economy recovers and resource sector activity increases, and to be the airline of choice for passenger transport in PNG.
While the lack of Charter revenue opportunities affected the company’ performance, passenger revenue (including cargo) from regular services increased by approximately 8% compared to the same period last year despite the downturn in the economy. Much of this can be attributed to operating the ATR. The PNG Air Directors concluded that with the company introducing 3 more ATRs by the end of 2017, meaning more of the company’s flights will be flown with the ATR, regular passenger services can therefore be expected to generate increased revenue and profitability in the longer term.
The Directors and management expressed confidence that the company’s commercial strategy is the right one, and will see the company to a sustainably profitable operation in the future.
PNG Air Limited
PNG Air Ltd operates ATR 72-600 and Dash 8 aircraft to 22 ports throughout PNG, with 470 flights each week carrying over 400,000 passengers each year.
For further information contact PNG Air Media Relations (Telephone 302 3194 or Email media.relations@pngair.com.pg) or PNG Air Investor Relations (Telephone 302 3234 or Email investor.relations@apng.com)