Skywest update
For immediate release
17 MAY 2007
ADVENT AIR LIMITED
("Advent Air" or the "Company")
COMPANY UPDATE
FLEET DEVELOPMENT
Skywest has previously announced that it recently purchased outright two
additional F-50 turbo-prop aircraft bringing the number of F-50s operated by the
Group to seven. Skywest is actively seeking one or two additional F-50 aircraft
in the market, for outright purchase.
Skywest's management plans to lease a further three 100 seat jet aircraft in the
period to March 2008. This is subject to aircraft availability, a factor which
remains an issue for the airline, as worldwide demand for this type of aircraft
is currently high. If successful in securing the aircraft, this would bring the
number of F-100 aircraft operated by the group to six. These additional aircraft
may be leased from Avation PLC (a related corporation) or another aircraft
leasing company.
The Airbus A320 project in conjunction with XL Airways remains an important
medium term growth opportunity for the Group.
GROWTH PERFORMANCE
The Company continues to grow its airline business in both the traditional
regular passenger transport scheduled airline activity along with the resource
charter business. Skywest is in a unique position, in that it can combine RPT
and scheduled charter on the same flight, thus servicing the public and resource
clients to maximum capacity whilst fully utilising a single aircraft. This
represents a valuable proposition for the larger resource sector clients of
Skywest who are required to support local communities in consideration for their
right to mine certain resources.
The following comparisons are unaudited, are for the 9 months to the end of
March 2007 and are extracted from the management accounts of Skywest.
Comparisons are made to the 9 months to the end of March 2006.
• Skywest Net Profit increased 475%
• Total Revenues increased 33% with Scheduled Charter Revenue
increasing 62% and RPT Revenue has increasing 25%
• The Average Fare (RPT) increased 15%
• Passenger Numbers (RPT) increased 8.7%
FURTHER GROWTH OPPORTUNITIES FOR RPT BUSINESS
The operational management of Skywest believes that the following are potential
additional opportunities for further growth:
1. Additional capacity is planned to several existing destinations:
• Geraldton (currently 34 services per week)
• Exmouth (through continued growth of the offshore drilling by
Woodside, Apache and BHP Billiton)
• Newman (through expansion of the mining operations in this area)
• Kalgoorlie
• Albany (based on existing growth rates, this route will demand
additional frequency in the 3rd Quarter of 2007)
• Darwin.
2. New destinations under consideration:
• Karratha
• Port Hedland (earmarked to commence by July 2007).
• Kalgoorlie - Melbourne
• Broome - Singapore
Skywest continues to grow its ancillary revenue lines of business and those
associated with on-line website sales. Website sales of airline tickets have
increased by 46% on the prior year as at May 2007. On-line website sales of
tickets now comprise 32% of all ticket sales.
GROWTH OPPORTUNITIES FOR SCHEDULED CHARTER
The Company understands that with over AUD$80 billion in major resources
projects underway or planned, Western Australia is leading Australia in economic
growth. Importantly for Skywest, nearly all of these projects are totally
dependant on air transport from Perth to their mining sites in typically remote
and largely inaccessible regions. Since Skywest is a strong Western Australia
brand with over 43 years of experience in the state, its brand strength provides
strong leverage over competitors when marketing services to these resource
sector clients.
The Company's strategy includes the aggressive pursuit of long-term scheduled
resource charter contracts as and when they become on offer from resource sector
clients in the regions served by the airline. This strategy has already resulted
in an increase of 62% in scheduled charter revenues (unaudited) in the 9 month
period to March 2007, compared with a similar period in 2006.
CHALLENGES AND RISKS
Congestion at Perth Domestic Airport due to increased passenger and aircraft
movements and other factors has caused a lowering of Skywest's on time
performance ("OTP") compared with last year. Notwithstanding that airport
congestion may be outside the control of the management, improving the OTP is a
challenge faced by the Company.
The availability of additional aircraft and moreover trained crews to fly those
aircraft may limit the growth performance for the airline and the scheduling of
additional flights. The time taken to train and secure the services of flight
crew is an issue faced by management as the business continues to expand its
scale.
--ENDS--