CityJet set to post first profits as seat sales take off
JUST under a year after it went into High Court Examinership with debts of up to £8m, CityJet yesterday announced it had boosted passenger numbers significantly on its key Dublin/London route, and predicted it would make its first net profits next year.
Last night, CityJet founder and chief executive Pat Byrne announced a 50pc increase in the numbers of passengers carried on the Dublin/London City Airport route during the six months to September compared with the same period last year.
``We now expect to carry in excess of 200,000 passengers to London in the current year, up from 150,000 last year.
``This is not just because the overall market is more buoyant. We have also increased our market share from 4.4pc to just over 6pc.
``More significantly, revenue on this route has grown by 52pc on last year following the airline's increase in frequency and capacity earlier in the year. UK originating traffic and revenue have grown by 45pc and 65pc respectively, boosted considerably by our code share arrangement with Air UK,'' he added.
He said CityJet was now generating operating profits on both the London City and the more recent Dublin/Paris routes.
``At the bottom-line, having incorporated all our costs, we are just about breaking even now. But we expect to make a modest profit in the first half of 1998 and significant profits in the later stages of the year,'' he forecast.
If so, it will be the first sustained profits made by the small airline since it was founded in January 1994.
Last December it was placed under High Court protection from its creditors. Chief among these were Dermot Desmond's London City Airport, owed about £2.4m and the Revenue Commissioners, owed up to £800,000.
Hindered rather than helped by its early relationship with Richard Branson's Virgin brand, CityJet had generated up to £13m in trading losses up to the time it was placed in Examinership.
Following a successful Examinership process, during which up to £4m in debts were written off, the privately-owned Swedish airline, Malmo Aviation, acquired a 43pc stake in the company. Other sources of equity capital were the institutional investor, Standard Life, and Paul Coulson's Yeoman, which acquired a 17pc stake.
Mr Coulson has become chairman of the airline within the past two weeks, succeeding corporate financier Luke Mooney, who remains a director.
Pat Byrne said the company's code share arrangement with Air France on the Dublin to Charles de Gaulle route covered all the operating costs on the three daily flights to that destination.
``In addition, we fly on contract for them from Paris to London City Airport and more recently from Strasbourg to the same destination.
``The fees for this work give us great stability, and because we do not ourselves incur any costs, this revenue is covering up to 40pc of our total overhead. We would expect to capture additional short-haul contract work with Air France over the coming years.''
He said all the new shareholders had been very supportive and that there was no impending change in the shareholder mix.
``In fact, Paul Coulson is helping us with a financial package whereby we hope to purchase three jets currently on operating lease and also increase our fleet next year.''