Despite seasonality and a traditionally weak second quarter for airlines in the region, the second quarter of the year proved to be strong for Avianca. Between April and June 2016, operating income (EBIT1) reached $37.6 million, posting an operating margin1 of 3.9%, a 341 bps increase over the same quarter of last year.
Furthermore, operating revenues amounted to $966.2 million while total operating costs1 dropped 12.1%. The latter was mainly driven by the cost saving and network optimization initiatives, stronger domestic markets and robust traffic numbers in Avianca"™s key markets such as South America, the Caribbean and Europe. As such, during June 2016, routes to Europe reached an average consolidated load factor of 92.8%.
As part of our network optimization process, the Company continues to selectively grow in specific high potential markets. Accordingly, Avianca is the first airline to launch an international direct service to Cuzco, with 3 weekly frequencies from our Bogota Hub. Furthermore, over the second quarter of 2016 and in line with the optimization strategy, Avianca transported more than seven million passengers and maintained a stable load factor of 78.1%.
During the quarter, our loyalty program LifeMiles, continued to expand as the cobranded credit card base grew 25.5%, reaching 485,000 credit cards by quarter end. Furthermore the program ended with more than 6.7 million members, which represents a 9.3% increase over the same quarter of 2015.
Hernán Rincón, Chief Executive Officer of Avianca Holdings stated: "As we continue to strengthen the Company, we acknowledge that growing technology penetration in our markets, allow our customers to better compare different offerings in more detail. As such, our clients demand best in class products and services which Avianca strives to provide throughout its product offering"
"Supported by technology, our aim is to enhance customer experience and boost productivity. In order to set forth this action plan, we have defined five fronts that we will prioritize as follows: strengthen our hubs and core markets, develop a world class technological platform to constantly improve customer satisfaction and operational excellence, promote the full development of other business units and finally, develop long term strategic partnerships that will set the base for profitable business sustainability. As such we reaffirm our 2016 EBIT margin guidance between 5.5% and 7.5%", said Mr. Rincon.
In line with the Company"™s fleet plan, the Company took delivery of one Airbus A320S (equipped with sharklets), while phasing out five aircraft: three Airbus A319 and two Embraer E190. Avianca Holdings S.A. and its subsidiaries ended the quarter with a consolidated operating fleet of 174 aircraft.
