AEROLÍNEAS

Avianca posts $36 million 2Q loss on fuel costs, strike effects

Avianca Holdings had an unadjusted net loss of $35.7 million for the 2018 second quarter, reversed from a $10.6 million net profit in 2Q 2017, as the Colombia-based company faced currency volatility, increased fuel prices, infrastructure disruptions and continuing after-effects of a 51-day pilots’ strike in 4Q 2017.

On an adjusted basis, in which one-time operational expenses related to the pilots’ strike totaling $29 million are figured in, Avianca’s 2Q net loss came to $6.7 million for the quarter. Avianca CEO Hernan Rincon said the pilots’ strike’s effects, which were evident in a 6.9% YOY decrease in Colombian domestic passenger traffic (as capacity fell 6.8%), “should be mitigated during the second half of this year.”

The company is sticking with its previously announced 6% to 8% EBIT guidance range for full-year 2018, though its passenger growth guidance for the year was lowered two points to between 5% and 7%. Total capacity growth for the year is expected to fall between 8% to 10%, and load factor for the year was adjusted upward one point to between 81% and 83%.

Avianca’s second-quarter operating revenue increased 9.8% year-over-year (YOY) to $1.2 billion, the company’s strongest 2Q revenue since its June 2013 IPO on the NYSE, according to CFO Roberto Otero. The rise in revenue was related to a 17% YOY average fare increase, the company said, partially offsetting an average 27.1% rise in fuel prices and an 20.1% increase in labor expenses. Total expenses for the quarter were up 14.4% YOY to nearly $1.2 billion, leading to an operating profit of $20.8 million, down 66.5% YOY…

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